No “only” in imposing cost

29/08/2011

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.


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