2. Bottled water export tax stalled

Implementing a royalty on bottled water exports is far from child's play, the Government is finding out. Photo: Lynn Grieveson.

A coalition commitment to introduce a royalty on bottled water exports appears to have stalled, with the Government still trying to find a workaround that won’t breach its free trade deals. Sam Sachdeva reports.

However, Acting Prime Minister Winston Peters says he is confident a solution to implement a royalty on bottled water will be found before the end of the year.

The issue of pricing bottled water was a hot topic during the election campaign, and flared up earlier this month after the Government granted Chinese-owned company Creswell NZ permission to expand its Whakatane water bottling plant.

Labour had initially planned to introduce a broad water pricing regime, but was forced to scrap the idea during post-election negotiations.

Instead, its coalition agreement with New Zealand First included a commitment to “introduce a royalty on exports of bottled water”.

However, the plans hit a snag barely a month later, when MFAT’s deputy secretary for trade and economic issues Vangelis Vitalis said such a move would violate existing free trade deals.

More than six months on, little progress appears to have been made.

Environment Minister David Parker told Newsroom the Government had not “got a lot closer to an outcome” on an export royalty since MFAT’s concerns were raised, and was instead focusing on how to tackle carbon emissions.

“The government makes agreements as you go into coalitions as to what it is that you prioritise, and we prioritised emissions pricing over water pricing in the coalition agreement and both the Greens and New Zealand First agreed to that.”

However, Parker said the Government still wanted to tackle the issue.

“I think New Zealanders think it’s unfair that people who bottle water and send it offshore without any return to the public, they don’t think that’s fair - I agree with them, I think that’s also true of other water bottling as well. We’re working through that.”

One option open to the Government is an export levy to recover regulatory costs only, which would be compliant with WTO rules.

However, it’s understood that would generate minimal income, raising the question of whether it would be worth the effort.

'We want to untie our hands'

Peters told Newsroom there was “serious work” being put into the issue of a royalty, but acknowledged there had not been much progress to date.

“Let me tell you, we’ve had so many other things on that it’s not been the priority we’d have all liked, but it certainly is now.”

The decision-making process for Cresswell NZ’s bottling operations was out of the Government’s hands, but it was planning to tackle the wider issue, he said.

“Our hands are tied by the past, but we intend to untie our hands if we possibly can.”

Asked whether the Government still planned to introduce an export royalty on bottled water this term, Peters said: “I think I can confidently say, this year.”

'Another policy backdown'

National environment spokesman Scott Simpson said it appeared Parker and the Government were finding it difficult to turn their pre-election talk into policy.

“Here’s a minister who talked really big in opposition and this is starting to look like another policy back down.”

Simpson said National remained opposed to an export royalty, as it would be “almost impossible to implement” technically and unlikely to raise a significant amount of money if it went ahead.

Water New Zealand chief executive John Pfahlert said the industry body had not discussed the issue of a bottled water royalty with government officials since the election.

Pfahlert said the organisation’s preference remained for the Government to tackle the issue of water royalties and pricing in a wider sense.

“You shouldn’t pick on water bottlers just because it’s popular or it’s political - if you’re going to have a conversation about whether water should be priced, you should have a broader conversation.”

However, it would not oppose any royalty on bottled water exports if that was what the Government pursued.