Water Charges – A Political And Policy Can Of Worms

INSIGHTS ABOUT THE NEWS - Public and political pressure for a charge on bottled water exports is continuing to mount, however Ministers are still determined to kick the issue out beyond the election.

A Newshub-Reid Research poll showed remarkable levels of support for a royalty. Asked if exporters should pay a royalty on the water so taxpayers get some benefit, 87% said yes, 9% no and 4% said they didn't know. Support for such a charge was across the political spectrum.

The question is simplistic, but it underlines the strong resentment at water being used as commodity at virtually no cost to the exporter. The poll also shows why so many political parties are keen to tap into that support with Labour, the Greens and NZ First all in favour of some type of royalty/charging system.

Ministers make out the issue is more complex. Bottled water exporters could be singled out, but they say that would be inconsistent with other policies. They also raised the question whether a water export royalty would open a can of worms. Any charge would be a political and legal admission the Crown owns water and this would inevitably lead to a claim from iwi.

It would also raise questions on why only water exporters should pay and should a charge also apply to soft-drink makers, breweries and other manufacturing processes. It would be logical to also apply charges to farming, irrigation, public drinking water supplies and hydro power.

But do the two issues - a royalty on bottling water and general charging for water - have to be argued together? Funds raised from water bottlers could be assigned to a national water fund, which could be used to reduce rates. Iwi might also benefit from a portion of the royalties paid on bottling water.

General charging for water would send a price signal about water use and certainly create more sensible allocation. However, it would also be a painful process and it is hard to see such a move getting as wide public support as for a royalty on water exports.

National is not keen for such a discussion now. It will wait until the Land and Water Forum advisory group reports back in November. Whoever is in power then will have some very difficult decisions to make.

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