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Shane Te Pou: Water the Government’s biggest fault line

The country’s most valuable asset is being taken off shore, and degraded back home, writes Shane Te Pou. So why hasn’t anything been done? 

Rumblings from Wellington suggest that water policy is the biggest fault line for the so-far, so-stable coalition government, both within and between Labour, New Zealand First and the Greens.

The parties need to find a way to stop those rumblings becoming deep fissures.

All three made water a strong part of their pitches to the electorate last year, prompted by two related themes: bottled water exports, and the state of our waterways.

The pollution of New Zealand rivers, a dirty secret for a number of years, became a national source of shame. Many rivers and lakes are un-swimmable and even un-wadeable.

And media raised the alarm that millions of litres of pure New Zealand water, that was being sold at, say, $2 a bottle, was essentially being given away to often foreign-owned bottlers for free. 

How could foreign firms simply take this valuable resource for nothing, when it was fetching a higher price per litre in retail markets than New Zealand milk?

Maybe it didn’t matter in the past. But the public became acutely aware that fresh water wasn’t unlimited, and we had less than we wanted.  

The National government had been saying for years that no one owns water, even as the 'first-come, first-served' method of allocating water-use rights had left many rivers and streams over-allocated. 

The bottlers did us a favour. With the profits they could make simply by pumping it straight into a bottle ready for shelves, they made it easy to understand what our water - increasingly New Zealand’s most precious natural resource - is really worth.

Business and commercial interests have been using water for free since time immemorial in New Zealand. It’s easy to think, when you see a river rushing through a hydro-electric power station or an irrigation rig sprinkling millions of litres of water on a high country farm that their extraction is 'normal'.

Imagine how much that water would cost in $2 bottles.

Irrigation accounts for about half of all fresh water use (around four times as much as personal use in homes). About 1000 litres of water is needed to produce a litre of cow’s milk (retail price: about $1.69), along with the associated run-off and environmental waste. 

So the country’s most valuable asset is being taken off shore, and degraded back home. Why hasn’t anything been done? 

The elephant in the room is potential Māori rights in water. 

Māori, including the Iwi Leaders Group, have been patiently working with the government on fresh water allocation and standards through the long-running Land and Water Forum.

They have listened, sceptically, to the government’s theory that no one owns water and so Māori cannot expect to claim a share through the Treaty process. That’s fine when no one is making money.

Minister-for-everything David Parker’s position is that instead of 'no one', actually 'everyone' owns water. But for Labour 'everyone' inevitably means 'the government'. 

But if the Government starts charging a royalty on bottled water exports, then the jig is up. You can only charge a royalty for using resources you own: in the Government’s case, currently, petroleum, and gold, and any minerals found on Crown land.

The Crown never explicitly took ownership of water in legislation, iwi argue, so Māori customary rights still apply and iwi should be compensated.

Kelvin Davis, the Minister of Crown-Māori Relations and technically Parker’s superior in cabinet, thinks his Environment Minister has neglected consultation with iwi on this point. It’s a sore point for a party that’s only recently recovered from the scars of another customary rights dispute, over the foreshore and seabed.

Winston Peters says water is a “God-given gift”. He sees charging for water as being not only suspiciously neo-liberal, but, because iwi would demand a share, also separatist.

Surprisingly, the Greens campaigned on the most market-oriented solution, which would have involved pricing all commercial uses of water while respecting Māori interests. 

The Government’s confidence and supply agreements preclude any wider royalty scheme before the 2020 election, as a concession to New Zealand First. The only charging will be a royalty charge on exports of bottled water: playing to the media, not to the environment. 

That’s a mistake though. 

There is no point pretending that our fresh water is unlimited. We need to use what we have better. We need to ensure that it’s looked after.

Tradable property rights will help us do that.

Our current water rights system is not just 'first-come, first-served'. It’s also 'use it or lose it'. If someone else has a much better (more efficient, profitable and environmentally friendly) use for a water allocation than the current consent holder, there is no incentive for the consent holder to give up his use rights.

If they had tradable rights, instead of 'use it or lose it' rights, farmers would have every incentive to sell those rights to individuals or organisations that could use the water more productively and with less environmental impact.

They would also be incentivised to look after the water they used better.

It’s an open secret most regional and local authorities choose not to prosecute polluters. It’s a cost for their stretched bureaucratic budgets that they don’t see any benefit from. Owners of tradable  rights in water may take legal action privately – whether a prosecution or a claim for damages – to discourage polluters. 

There will be arguments over who receives property rights in water initially. Iwi will be in line. But so will long-time users in agriculture. Their interests should be recognised.

Many organisations and individuals have used water to build the country we have today. But just like our waterways, we need to keep moving forward and not stagnate.

And the Government needs to avoid earthquakes.

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