No “only” in imposing cost

The Green Party is using MAF profitability statistics to claim its irrigation tax proposal is affordable:

“MAF’s typical dairy farm in Canterbury has a net cash income of $2.2 million, so even using Irrigation New Zealand’s own hefty numbers for water use, we find that our irrigation charge is only 4.8 percent of income,” Dr Norman said .

There is no only about adding costs amounting to 4.8% of income to any business.

Every cent added to cost has to be either absorbed which reduces profitability or passed on by way of increased prices for produce.

“Our charge is 1/100th of a cent per litre. When irrigators are complaining of the high fees they would pay, it just goes to show that they are using massive amounts of our public water resource.

They are also providing employment, producing food and earning export income from which everyone benefits. 

“Furthermore, the MAF profitability statistics for 2010/11 show that after paying our suggested charge for irrigation water, Canterbury dairy farmers would still on, average, receive over $500,000 in farm profit before tax.

Perhaps he could tell Labour that farmers do pay tax.

“Businesses that use public water resources to generate private profit should pay.

Farms aren’t the only businesses which use water, every business does in greater or lesser amounts and it’s private profit which provides jobs and pays taxes.

“A charge on irrigation water is an effective price signal to more efficiently allocate a scarce resource and is in line with the OECD recommendation that we put a price on agricultural uses of water.

We already pay for irrigation and not all irrigation is used for dairying.

Central Otago District Mayor Tony Lepper manages the Earnscleugh Irrigation Scheme, which supplies 110 landowners and covers 1100ha and charges landowners about $51 per hectare a year.

“With the addition of other small charges, our income is $65,000 per annum, and with this we run a fantastic co-operative irrigation scheme that is of tremendous benefit to the Central Otago economy,” he said.

“Under the Greens’ new policy and proposed rate of 10c per 1000 litres, we would have to fund an additional $1.76 million a year, from our landowners.

“You do not have to be a genius to work out what this would do to the viability of our local horticulture and farming businesses.”

Wouldn’t it be ironic if the tax the Greens want to impose on irrigation because they don’t like dairying led to more of it because other land-uses became uneconomic?

Clean water is a basic necessity but there are far better ways of maintaining and improving waterways than  imposing a tax on irrigation.

29 Responses to No “only” in imposing cost

  1. Andrei says:

    In the scheme of things NZ waterways are not that dirty anyway – waterborne disease kills how many here? None probably.

    But go to Africa and Asia its a different story – now it is millions whose lives are blighted by dirty water. And not necessarily because of agriculture or industry but because that’s just the way it is.

    Greenism is often a mental deficiency – a myth of a clean green garden of Eden despoiled by greedy humans instead of the reality that life is a struggle and one we all must ultimately loose

  2. JC says:

    The Greens are lying. I couldn’t be bothered drilling down to the Canterbury situation but the MAF Farm Monitoring National Dairy Unit shows a surplus/deficit of $95,000 per farm.

    JC

  3. robertguyton says:

    The Greens are correct. Water is a much contested resource and that market means it attracts a price. Farmers will bluster for as long as possible against paying for the resource they presently get for free. It won’t be long until they have to pay the real cost for water.

  4. homepaddock says:

    Why only farmers then Robert? If we have to pay for water to grow food shouldn’t everyone also pay for water for our gardens and to drink; wash ourselves, clothes, dishes and cars; flush loos . . . ?

  5. Sally says:

    The greens and politicians dish out with regular monotony their propaganda on sustainability – which can mean whatever the speaker, wants it to mean. The key to long term survival in the face of changing environments, if this is what they mean by sustainable is ADAPTABILITY!

  6. gravedodger says:

    Ele, simply because when a Greenie uses water they do so secure in the knowledge it is GOOD, as opposed to anyone else who may just be green, particularly a Farmer, who uses it then it is BAD and pay for it they must.
    Robert believes that so it must be so.

  7. robertguyton says:

    Ele – I didn’t say ‘only the farmers’, what makes you believe I think that? Urban water users do pay for the water they use, though not in a measured way. Water meters will solve that, though those who collect theirs from the sky will be pleased with their investment in a tank.
    As for using water to flush toilets, don’t get me started on that abominable waste of resource!
    Gravy – your mumblings make no sense to anyone. At least Ele’s comments are meaningful.

  8. JC says:

    Having now checked the same model as the Greens I can say the Greens are lying liars:

    http://www.maf.govt.nz/news-resources/publications?title=Farm%20Monitoring%20Report

    The situation of the Canty model farm is minus $4000 and the imposition of the Greens 4.8% would take this loss to $109,000.. and this in a great year for dairying.

    JC

  9. homepaddock says:

    Thanks JC – that’s even worse than I thought it would be.

  10. Tom Hunter says:

    I took a look at this also on Kiwiblog – http://www.kiwiblog.co.nz/2011/08/only_5_of_income.html#comment-870560, which includes the original s/s that form the basis of the monitoring reports.

    I often don’t go to the “surplus” data but prefer to treat the thing as a non-farm investment. The proposed water charges amount to a 20% hit to the profit on that 210 hectare example – and possibly $50,000 less in tax to the government. ROA is down of course, to 3.3%.

  11. JC says:

    Tom,

    I’d like to see Russel and Phil try this argument on the bloke who earns $40,000 where they suggest he can afford a special tax of “only” 5% based on his total earnings.

    That bloke would quickly point out that tax might only be 5% of gross.. but its about a 33% increase on the tax he currently pays.

    JC

  12. homepaddock says:

    This is poorly costed policy which targets a small group for problems caused by a much larger one.

    There is nothing controversial about the goal of clean waterways but this isn’t the way to achieve them.

  13. robertguyton says:

    Where a farm and the farming her degrade the water that passes through for what ever reason, there should be an equivalent cost to that farmer for the reparation of that resource. A price on water use is a sensible mechanism for that. Otherwise, the community and the environment pay the price. Sheet the responsibility for keeping water clean to the user.

  14. Paul Bailey says:

    If the only reason a farm can operate profitably is by using a public resource at no or low cost – ie water, then perhaps that farm should not be operating in the manner it is.

    This should be true for any business, farming or otherwise.

    The Greens are simply asking that the users of a public resource pay a fair price for that resource. If that means we should all have water meters then that is something that also needs to be done.

  15. homepaddock says:

    A price is a good way to ensure efficient use – and we already have that.

    Putting a price on extraction could provide money for clean-ups but won’t have any impact on preventing pollution.

    “Sheet the responsibility for keeping water clean to the user.” Better to sheet the responsibility to those who dirty it – in North Otago we have very strict rules to ensure efficient use of water and to safeguard waterways.

    “The Greens are simply asking that the users of a public resource pay a fair price for that resource.”

    Whether or not it’s a fair price is debatable and if you want to charge one, why just pick on irrigators, why not impose it on all water users?

  16. jabba says:

    and don’t forget Bobby and his mates want farmers to pay a ETS/Carbon tax NOW and a hell of a lot more than the present amount. The Green hate dairy and want it gone .. is that correct Booby?

  17. robertguyton says:

    Paul Balley’s talking sense (it’s refreshing!)

    Jabba – if you genuinely want an answer from someone, using a demeaning name to address them isn’t going to work in your favour. Why so ill-mannered?

  18. jabba says:

    Bobby .. your coments in places like Keeping Stock tell me manners are NOT your strong point .. anwser the question, I know it is difficult for you to do so.

  19. robertguyton says:

    From ‘Booby’ to ‘Bobby’ – I suppose that’s progress – I’ll run with that. I’m a very well-mannered person jabba, unless provoked. I refrain from calling names until I’ve received at least 3 or 4 from a particular punter, then join the merry fray.
    Your question was: “The Green (sic) hate dairy and want it gone?”
    No jabba, the Greens don’t hate dairy and want it gone. The Greens want to see all human activity done in a manner that improves the environment we all share. If dairying added to the resilience of the environment it operates in, supported critical factors like biodiversity, water quality, an general biotic vibrancy, we’d be praising it to the max. Until it does, we’ll be calling it on its faults, which are obvious to all.
    Does that answer your question?
    I am not, btw, a spokesperson for the Green Party. I’m but a keen amateur. Again btw, I didn’t find it difficult to answer your question. What made you think I’d struggle? Just a wee slight there jabba, to keep the tension on? No need.

  20. Andrei says:

    Actually Robert this is what the whole world would look like if we listened to the Greens.

  21. robertguyton says:

    Actually Andrei, you’re blowing smoke, rectally. Your idea of what it is the Greens want would be greatly enhanced were you to actually read what they say, or actually talk with a well-informed Green and actually listen, actually.

  22. Andrei says:

    No Robert – to fix shit like that up takes concrete and steel and to make those you need coal.

    And the concrete and steel needs trucks to move it from where it is made to where it is needed and to make them go you need oil.

    And to turn the concrete and steel into houses and functioning water supplies and sewerage systems you need labour. And the people who do the labour need to be fed and so do the people who dig the coal and run the blast furnaces, As well as the doctors who keep them healthy so they can work and the teachers who taught them trigonometry so when they erect the steel and pour the concrete it conforms to the plans so the water supply they are building actually deliver water to where it is needed and the sewerage systems take the crap away from where it makes people ill. And the bridges they are erecting don’t fall down and the roads go where they are supposed to go and not somewhere else and so forth …..

    And the food for this army of people has to come from farms. And to make them grow enough food to feed all these people takes amongst other things water.

  23. robertguyton says:

    Andrei.
    The steel industry needs coal..and pays to get it.
    It follows, doesn’t it, that if the farming industry needs water to make food, it should pay for it.
    Feel free to point out the faults in my logic.

  24. Andrei says:

    They are paying for their water Robert Guyton – what is being asked for here is for them to pay an additional charge not based upon the value of that water but something entirely else.

    And that extra money adds to the cost of producing dairy products which makes them more expensive which makes them harder to sell which means we sell less and that means there is less money to spend on education, health and the fricken NZSO as well as crap videos of talentless kiwis made by New Zealand on Air.

  25. Paul Bailey says:

    Andrei

    It is also very hard to sell a premium product when it has not been produced in a sustiainable manner. That is unless you are only interested in selling low value commodity products?

    For example even though air miles are a crock of shite european consumers still rate them as an important part of thier buying decisions.

    Think about what your end buyers of products farmed in New Zealand want becuase they are trhe people you have to satisfy.

  26. robertguyton says:

    They are paying for the water they use Andrei?
    Through what avenue?
    The cost of their consent?

  27. jabba says:

    increasing charges on farmers will increase the cost of milk and other dairy products and then the left, including the Green (sic), will want an inquiry on the price of such staple foods like milk .. hold on, that’s happening now BEFORE they get smacked by this increase in water costs and ETS.

  28. Andrei says:

    Paul Bailey just because the moronic chattering class tells you that it is very hard to sell a premium product when it has not been produced in a sustiainable manner don’t make it so.

    In fact the carbon foot print of the moronic chattering class in Europe is far higher than the people whose livelihoods are being ruined by them which just goes to show the level of utter contempt they and their views should be given. When it comes down to it if they like NZ Cheddar they’ll buy it regardless – just like they fly in jumbo jets to the Maldives even though the hypocrites reckon that jumbo jets will cause the Maldives to be drowned

    And if a culture in its death throes wont buy our produce we should be looking to a culture which is not dying to take rather than joining them in their suicide.

  29. Paul Bailey says:

    Andrei

    The problem with your arguement is that the moronic classes are the ones with the money.

    If you want to continue having bulk milk powder to China as your main product line, knock yourself out. It just doesn’t make marketing sense to me to restrict yourself like that.

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