Unintended environmental and community impacts of water tax

Press Release – Irrigation NZ

A new survey of irrigators has revealed the potential impact of implementing Labours proposal on a water tax, including the news that it is set to lead to more intensive farming.Survey reveals unintended environmental and community impacts of water tax

A new survey of irrigators has revealed the potential impact of implementing Labour’s proposal on a water tax, including the news that it is set to lead to more intensive farming.

Key findings from the survey conducted by IrrigationNZ were:

• 40 per cent of farmers said they would need to increase the number of stock on their farm to pay for the water tax

• 63 per cent of farmers and growers said they would reduce their spending in local communities

• Over 80 per cent of farmers are already carrying environmental improvement work such as fencing off streams or riparian planting – but half of those surveyed said they would have to reduced their spending on this to pay for the water tax

Andrew Curtis, CEO, Irrigation NZ, says: “The survey raises serious concerns about the potential unintended effects of a water tax and whether these outcomes are desirable. Environmental lobby groups who support a water tax blame intensifaction for water quality issues but our survey shows the water tax is set to lead to more intensive farming as well as reduce spending on environmental improvements and spending in rural communities.

“The tax would not just affect farmers but the rural economy, with the potential for job losses in local shops and businesses in many areas of New Zealand.”

Dairy conversions could go up

IrrigationNZ carried out a survey of 124 farmers to gather information on the potential impact of the water tax (at a 2 cents per 1,000 litre charge). Of the 59 arable, sheep, beef or mixed cropping and sheep or beef farmers participating in the survey, 48% said they would consider converting their property to other uses, like dairying, dairy grazing, horticulture and more intensive activities to make their farms viable enough to fund the cost of the tax. Two property owners said they would consider selling up.

One arable farmer explained his reasons for considering converting: “We have continued to hold off converting to dairy, while many around us have done just that. We believe we are doing a good job, but every year our bottom line is diminishing, while we work harder and are more productive. Soon, dairying will be our only viable option.”

Mr Curtis says: “Many people would assume that taxing water would result in less water being used however the results indicate farmers would have less money to spend in investing in more efficient irrigation systems and less to spend on crop monitoring to apply water only when needed.

“Equally, the comments from arable, sheep and beef farmers indicate that many of them would consider moving to more intensive farming such as dairying which would consume more water – not less!”

A group of Maniototo farmers who use irrigation predominantly for sheep and beef farming recently highlighted the impact of the tax in this video. The area is one of New Zealand’s driest and receives only 350-500mls of rain annually. The farmers could face costs of $2.6 million in water taxes and would have the option of selling their farms, reducing their water allocation or converting to dairy farming as a result of the tax.

Environmental improvements already happening

“The results also highlighted that most irrigators are already fencing off waterways and many are carrying out riparian planting work. With that in mind we would question whether a new tax, with its associated administration costs is needed, given this work which is already underway,” he adds.

IrrigationNZ has reiterated its concerns about the water tax in light of the survey results.

“While we understand that many New Zealanders support the concept of a water tax, we question whether they would support some of the outcomes it could create. Labour is talking about raising $650 million to $1 billion from the tax over the next decade. They need to provide the public with an analysis of the impacts of the tax on farms, jobs and the wider economy before people can make an informed decision about whether the tax is a good idea,” says Mr Curtis. “Our survey has thrown up some very concerning issues.”

The survey also raised issues with Labour’s idea of having ready for work unemployed young people access properties, with most of those surveyed having concerns about the health and safety issues liability issues involved.

Survey findings in full

The survey found that costs varied widely if a 2 cents per 1,000 litre tax was introduced:

• 30 per cent of irrigators would pay less than $10,000 per annum

• 19 per cent of irrigators would pay between $10,000 and $20,000 per annum

• 29 per cent of irrigators would pay between $20,000 and $40,000 per annum

• 22 per cent of irrigators would pay $40,000 or more, with the highest individual cited a cost of $175,000 per annum.

Meeting the extra expense

• 40 per cent of farmers said they would need to increase the number of stock on their farm to pay for the water tax

• Of the 59 arable, sheep, beef or mixed cropping and sheep or beef farmers participating in the survey, 48% said they would consider converting their property to other uses, like dairying, dairy grazing, horticulture and more intensive activities to make their farms viable enough to fund the cost of the tax. Two property owners said they would consider selling up.

• 63 per cent of farmers said they would reduce their spending in local communities

• 56 per cent of said they would look at reducing debt payments and 35 per cent of farmers said they would consider increasing debt.

• 27 per cent said they would have to look at either reducing staff hours or laying off staff to meet the tax costs

Environmental Improvements

• 47 per cent had undertaken riparian planting work already

• Over 80 per cent had done one or more of the following – fenced off waterways, undertaken riparian planting, or undertaken some other kind of biodiversity enhancement work

o 74 per cent had already undertaken work to fence off waterways

o 47 per cent had already undertaken riparian planting

o 44 per cent had already undertaken some other form of biodiversity enhancement

• 50 per cent said they would reduce riparian planting, wetland restoration or other biodiversity enhancement work as a result of the tax

• 45 per cent said they would scale back investment in funding more efficient irrigation systems

• 21 per cent said they would reduce back crop monitoring or irrigation scheduling investment.

The survey follows an earlier analysis IrrigationNZ completed on the amount of tax raised by region from the proposed water tax, compared with the swimmability of rivers. The analysis showed that the regions with least swimmable rivers were all located in areas with less than one per cent irrigated land area.
ENDS

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