IrrigationNZ applauds National’s Water Policy

3 September 2014

IrrigationNZ applauds National’s Water Policy

Irrigation New Zealand supports National’s 2014 Water Policy announced today which recognises the value of irrigation and which continues to place the responsibility of cleaning up New Zealand’s waterways with the community.

“Instead of penalising irrigators National is taking pragmatic steps to sorting out New Zealand’s waterways issues,” said Andrew Curtis, IrrigationNZ CEO.

“Ensuring riparian fencing and planting, especially in the lowland plains, will lead to big wins for restoring habitats and supporting aquatic life. This is what New Zealanders’ want to see – fresh water good enough to gather food from and enjoy recreationally.

“With the new freshwater fund and fencing requirements, plus objectives set by the National Policy Statement for freshwater, communities now have the tools to actively and collectively solve freshwater problems,” says Nicky Hyslop, IrrigationNZ chair.

A successful example of a communal resolution to a waterway issue using riparian fencing and planting is the Waikakahi stream on Morven Glenavy Ikawai Irrigation scheme. It has been restored over a number of years and is now thriving with aquatic life. See more detail here http://www.mgiirrigation.co.nz/environmental-management/

“This government understands that a water tax will not solve New Zealand’s freshwater problems and recognises that there is considerable public good to be gained from sustainably managed irrigated agriculture,” says Mr Curtis.

“There are proven significant socio-economic benefits to both the regional and national community from the productive use of water and it is right that this infrastructure is supported nationally. A water tax will only lead to higher food prices and no other country in the world has implemented an irrigation tax for this reason,” says Ms Hyslop.

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IrrigationNZ is the national body representing irrigators and the irrigation industry. Its mission is to promote excellence in irrigation throughout New Zealand.

http://smartirrigation.co.nz/what-is-irrigation/howweirrigate/

Note to editors

Below is a discussion document sent to Ministers, Opposition and Minority Parties on why IrrigationNZ is against introducing a water tax in New Zealand.

IrrigationNZ disagrees with the introduction of a water tax on water takes used for irrigation in New Zealand. The reasons for this are in the section below:The problem with imposing a water tax.

IrrigationNZ believes that there are other ways to achieve these objectives and some of these are below in: Suggested solutions to New Zealand’s clean waterways issue.

The problems with imposing a water tax:

• A fair and affordable water tax will be impossible to implement and will be prohibitively expensive to establish.

o A water charge on takes of water for irrigation will be very complex to oversee and there is no clarity on how the tax will be administered.

o The lack of water use data and variances in allocation methodologies as well as existing water supply costs across New Zealand makes implementing an equitable water tax nearly impossible.

o Clarity is needed around whether the tax will be uniform, regional or case specific. There is also no definition on whether the tax will be applied on water use or on allocated water. This is a key point as water allocations are infrequently used due to climatic variations impacting water supply and use. To add to the complexity, there are variances from region to region on how water is allocated and consented.

o Farmers are more likely to intensify their land use as a tax will increase their costs.

o Irrigators are generally highly geared and this tax will worsen their debt ratios.

o To implement a new tax regime would require an overhaul of the existing rating system as the value of water is incorporated into land value. , It is questionable whether the cost of this overhaul is justified.

o There are a range of investments that have been made in water-related infrastructure by a variety of sectors that will be adversely affected by such a tax – this must be considered in its design.

o Because of the complexities and inherent inequities of establishing such a tax, no other country in the world has implemented an irrigation tax.

• Charging irrigators for water takes will not create a wealth transfer. Water does not have the same underlying basis in ownership as other resources such as minerals and petroleum do so it cannot be taxed in the same way.

• All New Zealanders benefit from the use of water either directly or indirectly, but as yet this has not been apportioned value and hence people, businesses, towns and irrigators are not charged for their water use.

o Irrigators already pay a higher rates due to the higher land values of irrigated vs dryland. On average land values are $8k more per hectare for irrigated land.

o The increased productivity of an irrigated property generally pays between 5 and 10 times more tax than the equivalent dryland scenario.

o Irrigators pay for the public good generated by irrigation - there is proven significant socio-economic benefit to both the regional and national community from the productive use of water. The public benefit from irrigation is typically between 3 and 6 times greater than the private. This is why irrigation schemes are implemented as socio-economic development tools in many places all over the world

o Irrigation in New Zealand is not free: irrigators pay for a water permit, pay for annual monitoring of use of the resource, many pay to be part of an irrigation scheme, and irrigators now operate within strict limits.

• A water tax is inequitable and would impose additional costs on irrigators without sound justification. The cost of this tax to irrigators will impact on their cost of production and this will be passed onto the New Zealand public through increased cost of fresh produce.

o It is inequitable to single out irrigators when hydro generators, commercial users and urban users of water will not be charged for large water takes.

o Imposing a water tax will not drive efficiency of water. Irrigators are already responding to new environmental constraints as set out by the Freshwater Management NPS. This is driving efficiencies and changes to sustainable farm practice. The extra financial burden of this tax will detract irrigators from on-going investment in infrastructure modernisation to meet new environmental targets. It should be noted that in many countries infrastructure development and modernisation is subsidised.

o It is unfair for a minority section of New Zealand to be taxed for the ‘clean-up’ of rivers in areas where they have had no impact. Present day water permit holders are commonly not the parties responsible for the degradation of the water body in the first instance.

Some suggested solutions to New Zealand’s clean waterways issue:

Agriculture has been the backbone of this economy through what have been very challenging economic times globally and the New Zealand public has benefited from this. There now needs to be a communal solution for cleaning up New Zealand’s waterways.

IrrigationNZ believes that New Zealand’s fresh water quality can be improved by:

1) more efficient water and nutrient use, which will now be driven through limits set by regional councils as a result of the Freshwater Management NPS (‘improve’)

2) initiating a communal response to cleaning up waterways as directed by regional councils (‘clean up’).

Improve fresh water quality (water efficiency):

This is already underway as a result of new regulation around water use and nutrient limits. Irrigators do not require a tax to incentivise them to use water efficiently, they are already incentivised by wanting to:

• Optimise production – both quantity and quality

• Reduce energy costs – water used for irrigation requires significant electricity or diesel

• Reduce operation and maintenance costs – irrigators manage their irrigation systems to minimise labour and servicing costs

• Mange water quality limits – new rules around nutrient discharges means that irrigators are compelled to manage their water more efficiently

• Transfer water – it is widely recognised that enabling dynamic efficiency (transfer) improves allocative efficiency (best return from water resource)

Community responsibility for cleaning up waterways as led by regional councils:

• The only robust and long term solution to restoring waterways is on a case by case basis engaging local communities to find solutions.

• Legacy waterway issues should be addressed by the catchment community. If the issues are of regional or national significance, the level should be widened to include relevant regional or national stakeholders.

• The issues should be addressed on a case-by-case basis working with the local community who take ownership of the problem. This will result in local investment in the solution and will lead to long term results.

• A successful example of a communal resolution to a waterway issue is the Waikakahi stream on Morven Glenavy Ikawai Irrigation scheme. It has been restored over a number of years and is now thriving with aquatic life. See more detail here http://www.mgiirrigation.co.nz/environmental-management/

• There is a case to be explored for better enabling the development of regional scale irrigation infrastructure. The indirect beneficiaries, those that may receive improved stream flows or nutrient dilution benefits from decreasing the use of ground water for example, should contribute towards these developments. Further detail is below.

‘Public good’ funding of irrigation:

IrrigationNZ believes that the value of irrigation in terms of food production and job creation is not sufficiently recognised in New Zealand. There is considerable public good gained from sustainably managed irrigated agriculture. There are proven significant socio-economic benefits to both the regional and national community from the productive use of water and this is currently not accounted for.

Individuals and enterprises take on risk and make significant investments to develop the water resource which ultimately benefits the community in the catchment. This should be recognised in partial external funding of these projects.

Irrigation should be partly funded by local councils or at a national level to recognise:

• That irrigation infrastructure helps solve legacy environmental issues – most new infrastructure is about releasing new water to resolve past low flow or groundwater over allocations, this has significant benefits for stream flows and associated aquatic life

• Water storage and irrigation schemes provide surety of town water supply and provide drinking water to towns and cities

• The Audited Farm Environment Plans which are a direct result of irrigation are creating the frameworks for managing the environmental impacts of farming

• Irrigation benefits local community through wealth and job creation

• Irrigation supports much of New Zealand’s agricultural exports and therefore has a direct impact on the economy

• All of New Zealand’s horticulture and viticulture, and most of its seed based agriculture, is supported by irrigation allowing the public access to cheap fresh produce grown on-shore

• Water storage and irrigation infrastructure has numerous recreational benefits

ENDS

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