Myths about Labour's water tax busted, but questions remain

Irrigation farm
Winston Peters claimed the tax would lead to $18 cabbages. Photo credit: Getty

A farming lobby group has poured cold water on suggestions cabbages will cost $18 each if Labour wins the election.

Labour wants a tax on commercial use of water, and though the price won't be determined until after the election, a ballpark figure of around 2c per 1000 litres (one cubic metre) has been suggested.

New Zealand First leader Winston Peters claimed that would lead to $18 cabbages, while National MP Andrew Bayly said each bottle of wine would incur a "$75 water charge".

While IrrigationNZ has for weeks been demanding answers from Labour about how the tax would work, it says the scaremongering has to end.

Chief executive Andrew Curtis met with Labour MPs David Parker and Damien O'Connor earlier this week, and said they had a "good chat" on the matter which eased some of the group's fears.

"The impact on fruit, veges, milk and bread will be minimal," Mr Curtis told Fairfax.

A bottle of wine takes around 650 litres of water to make, and not all of that is from aquifiers and streams, meaning the price hike would amount to less than a single cent - not the tripling in price Mr Bayly suggested.

"If the price was one cent per cubic metre, the price effect per bottle of wine would be under one cent. If two cents per cubic metre, under two cents," said Mr Parker.

"The NZ First example of $18 cabbages was amusing. That would imply about one million litres of irrigation per watery cabbage."

Not all water under the bridge

IrrigationNZ still has problems with Labour's proposal, under which funds raised in each area would be earmarked for use in that same area.

"We pointed out to Labour… that regions with more irrigated land actually have more swimmable rivers, while areas with lower proportions of irrigated land have more rivers graded poor for swimming," said Mr Curtis.

"The data doesn't support the idea that irrigation is a main cause of river pollution."

According to IrrigationNZ, 90 percent of rivers in Marlborough are graded as swimmable, and the region will get $2.4 million from a 2c a litre tax; while Northland will only get $700,000, although fewer than half of its rivers meet the standards.

Canterbury, the most-irrigated region in the country, stands to gain the most.

"By far most of the tax would go to Canterbury which would receive $41 million," says Mr Curtis.

"One of the main benefits of the Central Plains water scheme is that by switching many irrigators from groundwater to alpine water this will allow groundwater fed lowland streams to recharge, so we are already anticipating improvements to a number of Canterbury rivers without a tax being introduced."