As well as laying out its new strategy, Fonterra should make clearer how it got into this trouble, says Federated Farmers national vice-president and dairy farmer Andrew Hoggard.
Labour yesterday announced proposals for a tax on water for large commercial users, including farmers who rely on irrigation water, but in the absence of detail some eye-watering numbers in the billions of dollars have been floated.
Federated Farmers water spokesman Chris Allen says the pledge to consult with those affected if Labour is part of the new government is appreciated, but it still means voters are sailing blind into the election.
"Surely at least they have a starting figure in mind, to open negotiations with water users and to give voters a clue on the quantum of tax they envisage.
"Ten cents a litre has been suggested for exporters of bottled water, which has been contested as a thousand times exaggerated for the royalty that might apply to large commercial users. So what is the figure?" Mr Allen said.
Federated Farmers is strongly opposed to a water royalty when it would essentially be an extra tax on electricity, food and exports.
"If the problem is with bottled water, then let’s just fix that problem."
If we’re going to go wider, then for a tax to work it must be applied to all sectors - not on the selected targets of officials and politicians.
"We have done our numbers - a simple calculation based on publicly available information.
"If it’s 10c per litre, it looks like this:
$1,600 billion for electricity (Manapouri)
$600 billion for food production
$100 billion for fruit, vegetables, wine and bread
$15 billion for Auckland’s water
"Even if these figures are a thousand times exaggerated - and Labour has said a charge for irrigation will be per 1000 litres rather than per litre - then these billions become millions."
Allen says if the principle is to charge large commercial users, that has to apply to Manapouri also because that scheme diverts Southland’s fresh water that after generating electricity goes straight to the sea. It accounts for 60% of consumptive water use.
"And then what do you do for the Waikato people - do you force then to pay for the use of their water but allow the electricity companies and Auckland to get it for free?
"Some 95% of the Waikato’s water is locked up for electricity generation and is only available for other uses at the bottom end of the river."In terms of bottled water, it’s pleasing that Labour has picked up on Federated Farmers’ idea that we require foreign-owned companies which extract water for bottling to pass the ‘net benefit to New Zealand’ test, Allen says.