IrrigationNZ says a proposed nationwide water tax would affect all Kiwis, and there needs to be more discussion about
how this would impact households, farmers and businesses.
“The Tax Working Party has recommended the government consider introducing a water tax on all types of water use
including hydro-generation, household use and commercial water use,” says Nicky Hyslop, IrrigationNZ Chair.
“This would result in higher power and food prices for households and businesses and higher rates bills to pay for the
irrigation of parks and reserves as well as a direct water tax on household and business water use.”
The working party is proposing that the water tax could be used to fund the restoration of waterways.
“While we all want to see cleaner rivers, often the solutions to improving rivers require people to change their
existing practices both on farm and to prevent urban wastewater discharges into rivers. Just allocating money will not
be the most effective solution,” says Mrs Hyslop.
“We need to think about whether a water tax is equitable as water use varies hugely across regions based on rainfall.
For example a Christchurch resident uses an average of 146,700 litres of water per year, while the average for a New
Zealander is 82,800. Someone living in Christchurch would pay nearly twice as much in a water tax as someone living
elsewhere and would also pay more in rates because in a dryer climate the Council will use more water to irrigate their
local parks. Is taxing lower rainfall regions such as Canterbury, Otago, Hawke’s Bay and Marlborough more heavily
through a water tax a fair way to fund river restoration nationwide?”
Mrs Hyslop says there are similar equity issues for farmers and growers.
“Some regions receive a significant amount of rainfall and farmers don’t need to use irrigation. Central Otago receives
less than half the rainfall of Auckland, so farmers and growers rely on irrigation to grow stone fruit, wine and for
pastoral farming to provide feed for animals. Only 7% of farmers use irrigation nationwide – why are those farmers being
targeted to pay a tax which 93% of farmers won’t pay when there are many regions which have very poor waterways but
little use of irrigation?”
Mrs Hyslop says that a water tax on hydro-electric power generation would also add to power bills for households and
businesses and this tax doesn’t make sense at a time when the government wants to encourage the use of renewable energy
to meet climate change targets.
“Currently a number of regions are suffering from very dry conditions and we need to be developing more water storage as
climate change is predicted to bring more frequent droughts in the future,” she adds.
“We disagree with the suggestion in the report that introducing a water tax will encourage greater investment in water
storage. If you look at the most recently approved water storage project – the Waimea Dam – a price increase for the dam
construction nearly resulted in it not being built. Introducing a new tax on water use will add to be long-term costs of
this and similar projects and make them less viable and less likely to be built. We really need more investment in these
projects to ensure we have enough water to supply our growing population and get through more frequent future droughts.”
“We also have concerns that farmers and growers in many regions may face significant water tax costs in excess of
$10,000 a year which will make it more difficult to fund the environmental improvements we all want to see occur to
improve waterways,” she says.
“The report discusses how a water tax will encourage more efficient water use. There are already a number of existing
incentives that encourage efficient water use including electricity costs and regulatory nutrient limit rules which
require farmers to only use water when needed. The biggest improvements in water use efficiency come from modernising
irrigation systems. Farmers and irrigation schemes have already invested $1.7 billion to modernise their systems since
2011, resulting in significant improvements in water efficiency. Introducing a major new tax will reduce the ability to
farmer to replace an older irrigation system with a more water efficient model.”