Labour's farming taxes would balloon farming costs, DairyNZ

Labour and Green Party taxes would cost farmers tens of thousands more in operating costs, according to dairy industry body estimates.

DairyNZ calculates the environmental tax “trifecta” proposed by the two parties will add an average of $18,000 per year for each dairy farm and more than $63,000 per year for farmers drawing water for irrigation.

Chief executive Tim Mackle says the tax would severely reduce dairy farm profitability and possibly require additional borrowing for some farmers to meet expenditure.

“It would impact the success of our rural economy, and put at stake the livelihood of our rural communities.

“Our economists calculate the proposed carbon tax would add an average of $6850 to each farm’s costs, the nitrogen pollution tax would add $11,232 per farm – and then there’s Labour’s proposed water use tax which would add a further $45,000 average for farms irrigating,” Dr Mackle says.

Labour announced three new taxes earlier in September including a net zero carbon emissions scheme, a water tax and is reportedly considering including farms in a potential land and capital gains tax, although it is short on details.

The Greens have also promised to dump the emissions trading scheme and replace it with the “Kiwi Climate Fund,” which taxes methane and nitrous oxide emissions from agricultural sources.

Dr Mackle says that, of New Zealand’s 12,000 dairy herds, 2000 use irrigation, so any new tax measures will have a large impact across the industry.

“Targeting farmers this severely and swiftly does little to incentivise mitigation and ignores the hard work farmers have been voluntarily doing themselves to lessen emissions.

“Dairy farmers have been operating in a climate of uncertainty with no indication of when they would be faced with a charge for agricultural emissions. Despite this, we have put the Dairy Action for Climate Change plan in place so that all farmers now know what they can be doing right now to reduce their carbon emissions.”

Finance Minister Steven Joyce yesterday dismissed the Labour’s tax proposals, saying they “insulted the intelligence of New Zealanders.”

“You can’t genuinely say you’re encouraging rural New Zealand when you propose a water tax, bring farming into the ETS, capital gains taxes and leave open a land tax,” he told Labour’s Grant Robertson in a debate in Auckland.

Farming communities are frustrated at being a “punching bag for urban politicians” and will be staging a protest in the Waikato town of Morrinsville next week.

Te Aroha farmer and Waikato Federated Farmers president Andrew McGiven says policies that increase taxes on farming businesses will not only put their financial viability at risk but also cost jobs and take money out of regional towns and cities that “do well when farmers do well.”

DairyNZ’s Dr Mackle says overall the dairy farming community is committed to improving and that “climate change is too complicated” for each sector to attempt to address on its own.

“Rather than strongly taxing dairy, we want strong government direction to get all sectors – rural and urban – to work together through an economy-wide plan to reduce New Zealand’s greenhouse gas emissions over the longer term.”