Water levy would bring in $2.37 billion a year
Charging water bottling companies 10 cents per litre for New Zealand water could bring in billions of dollars in revenue for the country
The debate on who owns the water is shaping up to be one of this election’s most political issues.
The Greens recently released a proposal to introduce a 10 cent per litre levy on all water bottling and exports. Local councils would be tasked with using the revenue to clean up waterways, and protect drinking water sources.
The proposal is similar to the levy system in Fiji, where the local government has been taxing water bottling companies 15 Fijian cents per litre since the end of 2010. At the current exchange rate, 15 Fijian cents is the equivalent of 10 cents New Zealand.
Right now, 73 companies hold consents to take up to 23.7 billion litres of New Zealand water between them. Adopting the same approach as our Pacific neighbour and charging 10 cents per litre would bring in nearly $2.37 billion a year in revenue - roughly about 1 percent of the country’s GDP, and comparable to a third of the $8 billion the dairy industry contributes every year.
The country’s largest water permit grants Okuru Enterprises permission to pump 800 million litres of water out of Jackson Bay on the South Island’s West Coast for export every month, or 9.6 billion litres annually. With a 10 cents per litre tax, the West Coast Regional Council-approved consent would rake in a staggering $960 million a year alone.
Companies with water consents also include foreign-owned businesses. As an example, Frucor, the Japanese-registered company behind the H2Go and NZ Natural brands, has a permit to extract more than 74 million litres of water a year. Again, with the 10 cents levy applied, that’s $7.4 million.
Water advocate Jen Branje says while a 10 cents per litre levy would go some way towards fixing our failing water treatment infrastructure, the tax isn’t high enough.
To tackle the pollution plaguing New Zealand’s waterways and restore water treatment infrastructure would likely require a 25 cents per litre charge.
The amount Auckland ratepayers fork out for water is a good example of why we shouldn’t be giving our freshwater away when we are struggling with the quality of our own supply, she says.
“They’re sucking out our artisan water while we pay through the nose.”
Branje suggests if the levy were ever brought in, the revenue would be better off in a trust, to which councils could apply for money, rather than in government coffers.
Former MAF economist Peter Fraser, who now works as a contractor on a number of water schemes, says a bottled water charge would spark a long-overdue national conversation on the topic.
“As an economist, I really see very little difference between water and other natural resources, whether that be oil, gas, gold or something else. And the Government has a perfectly sensible royalty regime on all of those … I can’t see why water would be any different, especially as it’s being used for blatantly commercial purposes.”
Introducing a levy on bottled water would inevitably open water up to Māori ownership interests, and fire debate over whether to introduce the water tax across the board - potentially affecting electricity prices.
Such difficult questions are why the country has avoided discussing the issue, deferring instead to the position no one owns the water, Fraser says.
“We’re purposely trying not to ask the questions, which is where the Government has failed. It’s almost gone to the point of saying ‘If we charge the water bottlers, why don’t we charge the irrigators, and if we charge the irrigators that’s a lot of people who vote for us … so let the companies have it for nothing.’
But while the actual amount of the levy is largely “a secondary issue” given how important it is to have the conversation, there’s no doubt $2.37 billion is a lot of money - however it is spent.
The revenue could nearly pay for the Greens’ recently-announced $1.4 billion benefits policy twice, Fraser says.