16 Sep 2017

Water tax negligible for most dairy farms - industry figures

12:40 pm on 16 September 2017

Five out of six dairy farms will be largely unaffected by Labour's proposed water tax, according to figures supplied by an industry group.

FOR WATER TAX story first - Generic Central Otago

Photo: RNZ / Rebekah Parsons-King

The rural sector has been highly critical of the policy to levy water for commercial use at one or two cents per 1000 litres.

National Party finance spokesman Steven Joyce claimed last month the tax would hit dairy farmers with a bill of $50,000 or $100,000 year, while National leader Bill English repeated the $50,000 figure earlier this week.

Modelling by RNZ and Auckland University's Public Policy Institute put the likely cost to the average-sized dairy farm at about $13,800 a year - or half that if the tax ended up only being one cent rather than two cents.

Dairy New Zealand disputed the figures, saying it would cost affected farmers - those who irrigate - about $45,000 each on average each year.

However, the calculations it provided to RNZ showed that out of a total of 12,000 dairy farms, only about 2000 - or one in six - were irrigated.

Irrigation accounted for 97 percent of all water used on dairy farms, DairyNZ said - meaning the irrigated farms accounted for nearly all water use.

Using those figures, the remaining three percent of water used would cost each of the 10,000 other dairy farms a few hundred dollars in water tax each year.

Labour's Party water spokesman David Parker said the figures showed there was no truth to the criticism the royalty would be a drain on the whole rural sector.

"It's a minority of dairy farmers who will pay the water royalty because it's a minority of farmers [using] irrigation in large quantities of the public water resource for private profit."

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