Parker and Peters split on water tax

The Minister of Trade and the Minister of Foreign Affairs are split over whether a tax on exported water can be imposed without breaching trade agreements.

NZH:  Winston Peters and David Parker at odds over whether export tax breaches trade deals

Foreign Minister Winston Peters and Trade Minister David Parker appear at odds over the legal position of the planned royalty on water exports.

Peters plans to ignore the advice of top officials at the Ministry of Foreign Affairs and Trade and will introduce the royalty which was promised in the Labour-New Zealand First coalition agreement.

He said the view of Mfat deputy secretary and chief TPP negotiator that it breaches New Zealand’s trade deals was “an opinion.”

“We are a sovereign nation and you are seeing a restoration of our sovereignty.”

Peters said it was not a foreign policy matter: “It is to do with our domestic economy and who runs our economy and who has propriety over our resources.”

Vangelis Vitalis, Foreign Affairs deputy secretary for the trade and economic group, said today that such payments would breach existing trade agreement.

But Parker backed Vitalis. He told reporters export taxes were prohibited by all of New Zealand’s trade agreements “so we have got to find a remedy that is consistent with those obligations.”

He said he had always known that discriminatory measures that impose tax only on exports would be in breach of virtually every trade agreement we’ve got.”

Labour had campaigned on a non-distortionary price on water including on exports.

“There is more than one way for us to meet our ambition. If we were to have a distortionary tax on the export of water, that would breach our trade agreements.”

The Labour-NZ First coalition agreement simply said:

Introduce royalty on exports of bottled water.

Some interesting differences here, between an election promise and coalition agreement and what is actually allowed under existing international agreements – making promises without doing basic checks first – and also between Parker and Peters.

34 Comments

  1. David

     /  November 30, 2017

    I have always been a little agnostic about Winston, sure he is a blowhard and its hard to think of a more ineffectual career but they guy is starting to worry me. He seems somewhat consumed by hatred which is not a good disposition to have in his position. I hope he is not unwell.

  2. PartisanZ

     /  November 30, 2017

    Hopefully they’ll address it in some other way, so that water doesn’t become like free oil to these overseas bottling companies? Tax the plastic bottles perhaps? This could probably be a fairly miniscule amount per bottle, like a Robin Hood Tax.

    THMBT … There’s a Hole in My Bucket Tax?

    Not that I hold out much hope. Gareth Morgan’s TOP was the only party willing to approach the subject of water tariffs or a water market thoroughly and evidentially, because treading into that terrain immediately raises the question of who owns the water?

    Gareth’s answer was simple: Maori.

    • Gezza

       /  November 30, 2017

      My position on ownership of water never changes. Whoever invented & makes the water owns it.

      The argument is about who gets to use it, where it gets taken from, what it costs to extract it, who pays the cost of extracting & using it, how, & how much should various users pay for it, & who should they pay.

      • Conspiratoor

         /  November 30, 2017

        “Whoever invented & makes the water owns it”

        Sounds like a plan G. Now do we apply the same rule to coal, rhodium, or indeed anything we pull from God’s green earth. If not why not?

        • Alan Wilkinson

           /  November 30, 2017

          NZ would thereby reinvent property rights, C. An excellent idea. We could at the same time recycle the RMA industry back into the earth as the decomposing manure it is.

        • Gezza

           /  November 30, 2017

          Yes, c, that same fact or reality does apply to all natural resources. (It’s not a rule or a policy, or even a law. Who owns magma, or the earth’s cores?) If you think about it.

          Natural resources are effectively no one’s until they’re discovered. And then those other questions become relevant – all those relating to extraction & usage.

          In specifc terms of humans, issues of sharing resources inevitably arise, especially notably in the case of water where if, for example, one landowner, or country, were to take & use all the water in their rohe from a supply source (eg lakes, rivers & acquifers), depriving others downstream, who need & have historically used it, there’s likely to be conflict.

          • Alan Wilkinson

             /  November 30, 2017

            The simple solution is that you own the water that falls on your property.

            • Gezza

               /  November 30, 2017

              Yes. In simple terms. If you’re talking about filling your tank from rainfall or melting snow. But if your property includes the Nile, or the Jordan, say, and you take ALL the water from that river, preventing any country downstream from getting any when they traditionally did, expect trouble.

            • PartisanZ

               /  November 30, 2017

              What about the water that runs under your property and under your neighbours’ for a radius of say 500m or 1km? And where does that aquifer originate from? Where’s its source and who ‘owns’ that?

              Or water that runs across your property as a stream or river, and crosses 20 other properties before and after yours until it reaches its destination – another tributary or the sea or whatever?

              The idea of this sort of water being ‘private property’ – as opposed to water caught on your roof – is ultimately as ludicrous as the idea of ‘property in the soil’ …

            • Conspiratoor

               /  November 30, 2017

              I think I’ve worked this one through to a logical conclusion …with one downside that only the sharpest minds will detect.

              You get to keep or do whatever with, all the water that ranginui allows to fall on your little piece of paradise. But you may not harvest water from an aquifer or that which flows through your property. In this way we are able to stay well clear of that inviolate law of the universe ‘the tragedy of the commons’

            • PartisanZ

               /  November 30, 2017

              HAAAA!!!! “Inviolate law of the Universe”!? OMG … It’s Righties in Desperation Night …

              “While the original work on the tragedy of the commons concept suggested that all commons were doomed to failure … Work by later economists has found many examples of successful commons, and Elinor Ostrom won the Nobel prize for analysing situations where they operate successfully. For example, Ostrom found that grazing commons in the Swiss Alps have been run successfully for many hundreds of years by the farmers there.

              Allied to this is the “comedy of the commons” concept, where users of the commons are able to develop mechanisms to police their use to maintain, and possibly improve, the state of the commons. This term was coined in an essay by legal scholar, Carol M. Rose, in 1986.

              Other related concepts are the inverse commons, cornucopia of the commons, and triumph of the commons. It is argued that some types of commons, such as open-source software, work better in the cornucopia of the commons; proponents say that, in those cases, “the grass grows taller when it is grazed on”.

              https://en.wikipedia.org/wiki/Commons#Tragedy_of_the_commons

              The survival of the human race will come to depend more and more on contemporary theories and versions of the Commons, mark my words.

            • Blazer

               /  December 1, 2017

              do you own the air above your property as well..Al?

            • Alan Wilkinson

               /  December 1, 2017

              Should do to a reasonable height, B. Do you want some?

    • Alan Wilkinson

       /  November 30, 2017

      As usual, Gareth’s answer is beyond stupid. I own the water in my water tank that fell on my own property and house. Maori had absolutely nothing to do with it.

      • PartisanZ

         /  November 30, 2017

        Damn, I still haven’t learned not to make two points in one post …

        Its like presenting two red flags to a bull or a license to avoid the real subject matter …

        What do you think of a plastic container tax Alan? I mean for the purposes of the water bottling issue, where [rare, clean] water is taken from aquifers and rivers that manifestly are NOT confined to one person’s individual property?

        • Alan Wilkinson

           /  November 30, 2017

          Irrelevant to this problem: discriminatory measures that impose tax only on exports would be in breach of virtually every trade agreement we’ve got

          Whether you tax the bottle or the content is irrelevant if it is applied only to exports.

          • PartisanZ

             /  November 30, 2017

            I’d apply it to all bottled water … domestic and export … so no problem there.

            And progressively expand it to encompass all plastic containers, using the revenue to mitigate the downstream effects of all plastic containers.

            • Gezza

               /  November 30, 2017

              You’d end up very wealthy. It’s a good plan.

            • Gezza

               /  November 30, 2017

              Now you just have to get everyone to agree you can do it & keep the money. 🤔

            • Alan Wilkinson

               /  November 30, 2017

              That would be a reasonable position except that it would fail its original stated purpose as water would then be exported in bulk tax-free and bottled elsewhere.

              My solution is better. If whoever owns the land owns the rain that falls on it then those who extract the water from an aquifer above or below ground would have to obtain a right to do so from sufficient of the potential owners to account for the amount taken. That would create a market in which prices and contracts would be freely and competitively negotiated. The Crown as a major head-water landowner would hold a large but not monopoly share of those saleable rights. Prices would depend on supply and demand in each locality and aquifer.

              Polluting suppliers then have a potential cost, depending on whether water usage from that source is impacted. They would have to pay the rights owners a proportionate fee in compensation.

            • PartisanZ

               /  November 30, 2017

              OMG Alan … What about regulation? You seem to be proposing the creation of a dreaded bureaucracy? Or would this be an uncontrolled ‘free’ market? Perhaps the world’s first experiment in Rothbardian economics?

              Hands off …. and let the corruption begin!

            • Alan Wilkinson

               /  November 30, 2017

              Land owners would need to prove with reasonable evidence their proportionate right as a source to the aquifer in question. Water right holders would have to prove with reasonable evidence the cost to them of polluters to their rights. Other than adjudicating disputes over these claims, what bureaucracy do you see as necessary? There could perhaps be some national limit on the proportion of any water right that could actually be taken.

            • PartisanZ

               /  November 30, 2017

              Prove to who?

              If by that you mean only the other party …. Let the corruption begin!

            • Alan Wilkinson

               /  November 30, 2017

              The proof would need to be accepted (or challenged) by all other water right holders for that resource aquifer. An adjudicating authority or court would be required. I would expect fairly standard guidelines for such estimates would be established via this process.

            • PartisanZ

               /  November 30, 2017

              So even in your ‘privatized commons’ – for rest assured that’s what it is – the need for regulation or governance is patently clear?

              “The same [conflict with ethics as arises with ‘Property in the Soil’] applies to the mineral wealth of the soil (and by implication water too). It is distributed … not uniformly, but in a manner … purely fortuitous. To leave it in the hands of the individual who, as a matter of chance, holds the right to this land, to permit individuals or small groups to obtain control of things vital to society as a whole, is in conflict with the principles of natural ethics.

              That which serves all may not belong to individuals, may not be exploited by individuals to the detriment of all … The treasures of the soil (and water) … must be managed by society for the benefit of all …” – Frank E Warner ‘Future of Man’ (1944)

            • Alan Wilkinson

               /  December 1, 2017

              There is nothing in what I have proposed directly dependent on regulation. It requires a justice system to adjudicate on contract terms and the establishment and maintenance of property rights which is the proper role of government.

              Warner talks rubbish. “Management by society” is the prime recipe for corruption and inefficiency. Management by market competition is the opposite.

            • PartisanZ

               /  December 1, 2017

              So where are the examples of this utopian “management by market competition”?

            • Alan Wilkinson

               /  December 1, 2017

              All of your supermarket goods and produce.

  3. Blazer

     /  December 1, 2017

    you of course also prevent foreigners from owning land as that will negate them ‘owning’ water as per Al’s recommendation.So residents exporting water ,will be taxed on the revenue it creates here in NZ.Asian countries in particular do not allow foreign ownership of their land and natural resources.It is clear that they are not as smart…as us!

  4. Geoffrey

     /  December 1, 2017

    I like Conspiratoor’s approach. But would add the notion that access to flowing water on or under one’s land could be gained by consent. This implies the purchase of a permit, which is necessarily tied to a quantity, thus establishing a need to define a commodity value. When that value has been defined, everything is greatly simplified.
    The value of water is simply determined, as is the case with other commodities, by what the market accepts as being fair and reasonable. I think this is what Alan is heading towards.

    All of the proposals to somehow define water’s value in terms of the container it is delivered in are deceptively attractive when considering say the difference between the manufacturing costs of plastic and glass litre bottles. But they fail when comparing bottles with pipelines and tanker ships for the simple reason that it is not the vessel that is being sold. Sure, the cost to the consumer must reflect the cost of the container but that is all.

    We must establish a value upon which the trading of this commodity can be based. And heavens help us if we ever take the fatal step of vesting ownership in other than the Crown.

    • PartisanZ

       /  December 1, 2017

      And heaven help Maori if we make the ethical mistake of vesting ownership only in the Crown …

      Ownership must be vested in a new Republic of Aotearoa New Zealand that Maori have had full and unfettered input into co-creating IN THEIR OWN WAY … Rangatiratanga …

      What Alan’s getting at is the Western commodification of water.

      What’s next? Air?

      Margaret Thatcher shall have her poll tax by hook or by crook …

      • PartisanZ

         /  December 1, 2017

        What’s more, since our entire ‘modern’ economic experience tells us that all markets require regulation, we know the water market will require a bureaucracy to regulate it. It will require governing …

        If this wasn’t the case we’d still have slavery … and despite supposed governance, we kinda still do …