A good start, but water charge plan flawed - Newsroom

Labour’s water charge plan isn’t perfect, say commentators, but it’s an important step down the road to equitable use of a public asset. Newsroom's Dave Hansford reports.

Last week, Labour announced it would start charging “large” water users for each drop. It joined a long queue: practically every other party has already called for levies on industrial water use, with the exception of National, which is awaiting a report from a technical advisory group on this and other water issues.

Labour’s plan is a pencil sketch for now: Irrigation NZ CEO Andrew Curtis complained that all his industry had to go on was “a one-page press release”. Water spokesman David Parker has proposed a charge of 2 cents for each 1000 litres farmers use, scotching doomsday prophecies from the agriculture and horticulture sectors of a $600 billion hit, and $18 cabbages. He says the annual bill would be under $500 million a year. In which case, the net probably hasn’t been cast wide enough, but we can’t be sure, because Labour has yet to say how “large” a water user has to be before they will incur the tax.

A herd of elephants in the briefing room is also obscuring critical equity problems: it’s been pointed out that very large commercial water users, as long as they’re hooked up to a municipal scheme, appear to be exempt. But Labour, like everyone else, has heard the rumble of public exasperation with what is, on the face of it, a rort.

The terms of its resource consents allow Oravida to take up to 400,000 litres of water a day from the Otakiri Aquifer near Whakatane. It’s paid just over $1500 for those consents, which are good until renewal in 2026. The company sends around 146 million litres of water to China each year, where it sells for NZ$1.60 a litre, which means that, for an annual monitoring cost of around $500, the company makes a return of $233 million a year.

It’s just one example of the apparent inequity that sparked a petition to Parliament in March calling for a moratorium on water exports, and it reflects, more broadly, the vexed question of how to allocate natural resources fairly. Many see resource rents as the answer. In a nutshell, a resource rental is what’s left over from a sale after production costs and reasonable returns have been deducted.

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