Understanding Labour’s proposed water tax

21 Aug 2017


Farmers and growers need reliable water supply to feed New Zealand and grow our exports. To achieve that, farmers and growers need certain and reliable water policy. Labour announcing that it will impose a water tax, but work out the details later, causes uncertainty. 

A prime example of that uncertainty is the tax rate that will be charged; in a report of a meeting held in Ashburton on Friday night, Labour’s David Parker is quoted as saying "the highest number we ever said was less than half a billion dollars per annum. Probably about $100m dollars per annum across the country." So it goes from a few cents, to double digit cents for water tax. 

The promise is that if elected into Government, consultation and research will be undertaken then. David Parker is quoted as saying "the risk is that if we were to lock in details now without genuine consultation and without access to all the information you get with being in government, then it would be unfair. The policy would be flexible around drought or very wet areas, but a rate won't be set until Jacinda Ardern had an opportunity to consult on the issue, if in government after September 23.” So while there appears to be some details settled, work will be done to develop the policy working with the primary sector; I hope that would see some radical changes to the policy as it stands.

David Parker is also reported as saying, "the point in pricing is not grounded only in the clean-up of waterways, it is grounded in the principle that if a public input has been used for private profit this is a contribution from that user back to be public. There should be a contribution to the public for that resource”.  So the proposed water tax will not only be used to clean up New Zealand’s waterways, but it will also be a resource rental. This is a very different concept to revenue gathering to fund cleaning up water ways. It is an additional business tax, but will only be paid by users of water in the rural sector. So if indeed it is a resource rental, then logically both urban and rural commercial operators using our renewable water resource should be taxed equally. 

No one, including urban users, pays for water in New Zealand; both urban and rural users pay for infrastructure and treatment costs only. Pollution is caused by all people, both urban and rural, so shouldn’t there be equal treatment? This also raises the disconnect that underlines the proposed policy, namely: because you use water, that does not mean that you pollute water. Ironically, heavy rainfall is one of the major causes of pollution and, that being the case, shouldn’t everyone contribute to clean water ways?

There is one aspect of the proposed policy that can hopefully be resolved during the post-election consultation phase; drinking water for animals is exempt from the water tax. Animals are a source of food, so on the basis that vegetables and fruit are food, shouldn’t water for these also be exempt? The more healthy food that is eaten by New Zealanders, the less obesity, heart disease, diabetes, and other health issues we will face as a nation. 

In the consultation phase we will urge Labour to consider the wider picture, and understand horticulture growers’ contributions to our country as employers, contributors to the economy with all the secondary businesses they support, exporters, tax payers, and producers of healthy food.


- Mike Chapman, CEO