Timaru Herald - Concern, uncertainty for service businesses over Labour's water levy

Uncertainty as to the impact of the Labour Party's proposed water levy has some South Canterbury businesses worried and the chamber of commerce warning its cost could flow into the millions of dollars.

There are fears any additional expense on farmers will also hit service businesses, with some in the sector comparing the potential cost to the impact of the dairy downturn.

Labour Party water spokesman David Parker said any comparison to the dairy downturn was completely wrong, and concerns about the impact of the water levy were 'unjustified'.

Parker has said royalties would be somewhere in the realm of 1 to 2 cents per 1000 litres for irrigated water, and 1 to 2c per litre for water taken for bottling.

Before any levy was put in place, Labour has said it would enter discussions with stakeholders within the first 100 days if elected.

Many in the farming industry have been vocal in their opposition to the levy, and in South Canterbury, businesses that service the rural sector are also feeling nervous.

Johnson Gluyas Tractors managing director Chris Johnson said the levy had led to a lot of uncertainty in the rural community heading into the election.

"Until they see what the Government comes up with, absolutely, there's uncertainty and definitely frustration out there."

The company lost out on $750,000 of income during the dairy downturn, he said.

If the water levy also had a big impact, he believed the business would have to downsize, or shut up shop completely.

"What people don't understand is that we still have to pay wages, when we're running at a loss.

"So you've gotta borrow more money."

There was a lack of detail around what could happen if a water levy was introduced, he said.

"But farmers are not giving us good vibes.

"I was talking to a farmer, and he said 'if they put the taxes up and it's coming off profits, then that's fair enough. But if they put a charge on the farm, we've got no control over that'."

South Canterbury Chamber of Commerce chief executive Wendy Smith said the chamber believed it was important to differentiate between the importance of water quality in New Zealand and the "proposed tool" from Labour.

"The implementation of a water levy is a complex issue and could have unintended consequences. There appears to be a lack of clarity around the implementation and administration of the levy and how it will be used.

"The levy could potentially take place millions of dollars out of the local economy, a risk many businesses are concerned about and place these funds with the regional councils. This may also have the impact of a direct reduction of farmers investment in fencing and riparian planting something that needs to be maintained and encouraged."

Timaru engineer David Burton, of AJ Engineering, was worried about the impact of the water levy on his pay cheque.

He was concerned it could have a similar effect as the dairy downturn.

"Before dairy prices fell, we were working 10 hours days, flat out. When the downturn hit, we were doing 8 hour days, we were just about sweeping the floors in the workshop.

"It was insane, the drop in workload."

South Canterbury Toyota owner Craig McDermid said it was a "very concerning time", and he was worried about the impact of farmers tightening their purse strings.

"It's very hard to predict what the outcome will be," he said.

Parker said the levy would represent about a 1 per cent change in revenue for dairy farmers, which was "negligible" compared to the impact of falling dairy prices.

"Their concerns are unjustified."

He said he "absolutely rejected" the claims of uncertainty.

Labour had explained the levy "time and time again", but some people "choose not to understand", he said.

"It's politics."

All revenue from the levy would be returned to the region it was gathered from, he said.

"The vast majority of New Zealanders want to see their waterways cleaner, and I think the vast majority of people in South Canterbury want to see their waterways cleaner."

Labour Rangitata candidate Jo Luxton said she understood people's uncertainty, but the reason there was uncertainty was that Labour wanted to sit down with stakeholders and work out a "fair and equitable" outcome.

"I want people to stop and take a breath, and stop putting the cart before the horse, and just think practically. Labour would not come into Government with the intention of sending businesses bankrupt."