Greens' water tax would ironically hit renewable energy - English

The Government and one of its strongest allies - the farming lobby - aren't swallowing the Greens' new water policy.

The party initially wants bottlers to pay 10c a litre, with the tax eventually covering all commercial activity.

"The National Government have frankly been irresponsible because over the course of nine years they've avoided the question, kicking it down the road with the cute phrase 'nobody owns the water'," co-leader James Shaw told The AM Show on Monday.

"But actually, in effect people do own water - you can see that through the consenting process."

He believes the tax could be worth $2 billion a year to local authorities, based on current resource consents.

While the public is vehemently opposed to exporters taking water for next-to-nothing, Prime Minister Bill English isn't convinced they'll back such a wide-ranging tax.

"It's not just farmers - it's people who run gardening centres, there's horticulture, there's the vineyards, anyone who grows anything, as well as a lot of industrial use of water," he told The AM Show.

"It's not something you want to charge into based on the concern of foreign companies bottling water, which is an issue of itself which we want to pay attention to. But to go from there to taxing everybody and sharing all the revenue with no legal basis really, that's a big leap, and I think they need to be a great deal more cautious."

The Greens' plan is to split the proceeds between iwi and councils, and Mr English doubts the party's likely coalition options - Labour and NZ First - will lap that up.

"I doubt that the other parties would have any interest in sharing half the revenue of a tax on all water with iwi, or actually taxing water when we've never really done that before."

Mr English says the policy would ironically put a tax on hydro electricity.

"They're meant to be in favour of renewable energies and want to subsidise it, and this would go and put a whole lot of tax on it."

Federated Farmers says the tax will ultimately end up in the too-hard basket.

"Regional councils, they want the money if there's any charging for water. Iwi, the Government, they'd like to have a crack at it," said board member Chris Allen.

"It would be quite an interesting discussion as to where the money would end up, but I don't think anyone who thinks they're going to get it will end up with it. I think we should just stay away from it."

Mr Shaw says those kinds of issues will be looked at by a commission before the policy was finalised, including discussion with farmers and other impacted industries, like wineries.

"The vast majority of users of water are industries that are exporting wine, agriculture and so on - if they wanted to go offshore they'd have to take the land offshore, and obviously they're not going to do that."

Mr Allen said a flat rate of 10c a litre would hit farmers in Canterbury and Otago harder than elsewhere, because they're more reliant on irrigation.