News that companies are extracting millions of litres of water for bottling and export has got the Green Party demanding a moratorium, Labour a new water tax and New Zealand First a prohibition on export. The debate needs some facts and context.
New Zealand has 500 trillion litres of water flowing through our lakes, rivers and aquifers. Each year we extract 10 trillion litres, or 2 per cent. The water shortages we have are in quite defined areas and for only some of the year. NZ has no overall shortage.
The 10 trillion litres of water we extract each year is made up of six trillion for irrigation, two trillion for municipal supplies and two trillion for industry. Three billion litres used for the bottled water industry may sound a lot but it is less than 1 per cent used by industry and 0.004 per cent of the annual resource. The suggestion by some that Mr and Mrs Average Kiwi won't be able to bathe because of bottled water exports is ridiculous.
Regional councils manage about 20,500 water permits of which 41 are solely for water bottling and a further 30 for a mix of uses, including bottled water. But only 23 of the permits are being used for now, reflecting the fact this is a niche industry. More than a dozen water-bottlers have gone broke. It is a myth that this is an easy industry in which to make lots of money.
The issue of charging for water is quite complex. No one currently pays to take water from a natural water body such as a river, lake or aquifer. The only cost is a fee for the cost of assessing and granting a water permit. Councils charge for domestic water supplies, either through rates or by volume, and that charge covers the filtering, pump stations, piping and treatment of water delivered to homes and businesses.
The notion of charging bottlers for the water they extract is superficially attractive but raises fairness issues.
Take E'stel, a Nelson water-bottling and export company set up by three West Coasters made redundant by Solid Energy. They have put everything they have on the line with the business, built new premises, employed 10 people and acquired a water permit for 18 million litres of water a year from a deep, under-used aquifer. Like most users, they take only a fraction of their allowance and last year used only about one million litres. They are good corporate citizens and provide free bottled water for local sports events.
The suggestion by some that Mr and Mrs Average Kiwi won't be able to bathe because of bottled water exports is ridiculous.
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It is very difficult to justify charging E'stel for the water it extracts from the aquifer and not other businesses using the same resource. Near it is an international soft-drink company and a brewery, both of which extract greater volumes. It would be odd to charge the bottled water company but not the one making beer or soft drink, given that water is a healthier choice.
The only fair charging option would be to charge everyone. I heard one opposition MP call for a uniform charge for all commercial water users of 10c a litre. Kiwis need to appreciate that our major export earners such as horticulture and dairying are water intensive. A litre of milk takes about 250 litres of water to produce so that would be an extra cost of $25 a litre - a cost which would push the price of milk through the roof for consumers and destroy our largest export industry.
The Government is open to modest charges for water users, for the cost of managing water resources. We are proposing as part of our current freshwater reforms to allow councils to charge water users a per-litre levy for the costs of the water quality, monitoring water takes and ensuring compliance, rather than on rates paid by everyone. However, the charge would be for cost recovery only and would not price the natural resource.
Water bottling companies should have to face the same rules and responsibilities for the water they use as other commercial users. There is no case for water bottling companies to face extra costs or bans over and above others. It makes as much sense as targeting bikes over traffic congestion while ignoring cars, buses and trucks.
New Zealanders have nothing to fear from a bottled water export industry. People have called for more diversified exports. If international consumers are prepared to pay for bottled water rather than a product such as milk, beer or fruit juice, which take much more water to produce, we should seize the chance.