No one owns water, apart from corporations who sell it …

Written By: - Date published: 12:43 pm, May 22nd, 2017 - 27 comments
Categories: business, Conservation, Environment, exports, farming, water - Tags:

Water is an issue that has been hurting this Government.  From its expansion of dairying and the destruction of so many of our waterways, to the use of the fast forward fund to provide extra irrigation for Canterbury farmers, to the financial support supplied by water exporting companies such as Oravida to the National Party, to the strange support offered to the Ruataniwha Dam, to water quality problems in Havlock North as well as other areas, and to the refusal to countenance Maori’s very reasonable claim that water is a Taonga under article 2 of the Treaty of Waitangi, to the sleight of hand about what “swimable” means, a lot has been happening.

And there have been some doozie examples of indifferent decision making.  Allowing a water exporting company to extract water from a Unesco World Heritage site and lay a pipeline through DOC area which is a sanctuary for New Zealand’s rarest kiwi and potentially forcing their removal takes a lot of chutzpah.

I suspect the water pricing issue is starting to really show up in the Government’s polling.  The Government thinks that the issue is too hard to solve.  Clearly this is in deference to the views of its farmer supporters who refuse to accept they should pay for water even though there are very strong policy and environmental reasons why this should occur.

But the Herald this morning has provided analysis suggesting that the Government’s approach and pro business attitude means that foreign corporations are paying peanuts for our water and then making huge profits.

From the Herald:

Water bottling companies are paying an average 500 times less than ratepayers for each litre of water they’re allowed to use.

A Herald investigation into water fees set by every regional council around the country found bottlers were charged an average $0.003 – or one third of a cent – per cubic metre of water.

Comparatively, in Auckland, Watercare charges $1.40 per cubic metre (1000 litres) for water piped to houses, while the rest of the country paid an average $1.60 per cubic metre.

“Water companies are getting the same water but paying bugger all for it,” said water campaigner Jen Branje from the Bung the Bore group.
“Why are ratepayers paying for something that corporates are getting almost for free? It’s an unfair equation.”

The approach of Councils is clearly in line with the Government view on water.

The Herald requested consent details from each regional council following nationwide protests in March.

It asked how much water it had allocated to bottling companies, and what annual fees they paid.

The results showed in total, 23 billion litres per year had been allocated for bottling. Not all consents were active or fully in-use.

Water bottlers paid an average $200 per year in fees to council for duties such as consent monitoring or administration.

Because water is considered a public good in New Zealand, councils cannot charge for the water itself, although many of their fees were calculated from volume amounts.

And the amounts are significant:

The amount of water allocated also varied widely- some users were granted 7 million litres per year, while others such as Okuru Enterprises on the West Coast were granted upwards of 900 million litres annually.

Public information showed the average bottling company in New Zealand had a turnover of $1.5 million per year – excluding beverage giants Coca Cola Amatil and Frucor – which both have turnover of around $500 million a year.

Last year, 27 million litres of water were exported to countries including the United States, Germany, Japan and Australia. Water exports are valued at 80c per litre, with a total export value for 2016 of $21.5 million, according to Statistics New Zealand.

The case for charging for the use of water, at least for corporations that make a profit for it, just became stronger.

The Green Party are opposed:

Right now companies can use huge amounts of our water for next to nothing, and make money out of it.

That’s not fair – water is precious, and many of our rivers and aquifers are being polluted and are under stress.

Bill English has tried to dampen public outrage by getting an advisory group to look at it. But he won’t commit to doing anything despite knowing we need to act now.

The Green Party says that if they’re taking it, and they’re profiting from it, they should pay for it!

And they are running a petition which if you want to sign is here.

27 comments on “No one owns water, apart from corporations who sell it …”

  1. Nick 1

    Petition signed. Cheers Greens

  2. McFlock 2

    “sleight of hand”. Not “sleigh” 🙂

    But I also quite liked the Greens intentional pun / freudian slip: “Bill English has tried to dampen public outrage ” (my emphasis)…

    Language trivialities aside, damned right water is a pushbutton issue. And will only get worse for the nats. Serves the bastards right, too.

    [Oops now fixed – MS]

  3. Ad 3

    Here’s the shareholders of Okuru Enterprises:

    http://bestbusinessnz.com/company/493056/okuru-enterprises-limited

    I think government should support this kind of local business.
    If they are paying for it I don’t care if it’s Coca Cola either.

    All in favour of corporations and farmers paying a commercial rate for their water.

    BUT.
    Make sure you think about what happens next.
    If regional council are allowed to set a commercial rate for water – i.e. make more $$ in the price than simply paying for the cost of capital and operations and depreciation, then you have given Council license to print money – just as much as the corporations.

    If regional councils are selling water at a commercial rate, then they are metering it. Businesses would then rightly point out that if they are paying for it, then so should every citizen. That would mean water meters in every town, alongside every letterbox.
    That’s quite a big political step.

    Don’t even mention nationwide fluoridation.

    If regional or local councils were selling water – even with a little fee – they would be liable for the quality of the product. We have had that rehearsed in Havelock North recently. That effective liability would mean harder and stronger enforcement of the National Water Standards. These I understand now come under the Ministry of Health (correct me, do). That’s a consumer lightning rod few politicians and even fewer Council staff would want to hold.

    I haven’t heard any party mention the equivalent of an Electricity Commission for water. There, the electricity price is set – in significant measure – by the cost of capital. It is a fully regulated industry. Same for airports, where aircraft landing charges are limited to the provable cost of capital from the airports. Really, really hard to contest.

    Who sets the price?
    Should there be regional variation?
    Who controls quality?
    Who is the beneficiary of that price?
    Should there be domestic v commercial price variation, and why?

    I want to hear the whole policy framework from those who really want this.

    At the moment the National government doesn’t have to answer any of these questions – which is of course to their advantage.

    • Draco T Bastard 3.1

      If regional council are allowed to set a commercial rate for water – i.e. make more $$ in the price than simply paying for the cost of capital and operations and depreciation, then you have given Council license to print money – just as much as the corporations.

      Councils, just like central government, should be printing money.

      That would mean water meters in every town, alongside every letterbox.

      They should be there anyway as we actually do need to know how much is being used and where. They can also help find leaks.

      Who sets the price?

      The market.

      Of course, the local council should determine, through the scientific method, just how much water is available.

      Should there be regional variation?

      Nope, there should only price.

      Who controls quality?

      That would depend upon if quality control is needed wouldn’t it?

      Should there be domestic v commercial price variation, and why?

      No but people should be guaranteed access to water while the corporations aren’t.

      • Ad 3.1.1

        Councils are never going to “print money”, so forget that as a possibility. Not even helpful.

        Re metering: plenty of Councils have been thrown out for proposing it. It’s a major democratic problem. Not everyone accepts that “user pays” is appropriate for what is an essential human right.

        The market should not set the price for something that no-one can live without.
        And before anyone says “rainwater tanks”, 90% of New Zealand lives in cities, and they are not practical for them other than for an elite few who choose them, live with the quality risks, and can afford the capital to buy and upkeep them.

        Why should there not be price variation? Why should a West Coaster or their business pay the same where it is abundant, compared to the Hawkes Bay or Canterbury Plains where it is scarce? It’s reasonable to respond to catchment capacity, as Regional Councils already do.

        Quality control is a requirement through the national water standards. Which are legally binding upon all suppliers and regulators of potable water.

        As for “people should be guaranteed access to water while corporations aren’t” … well, most Councils now have water corporations, who sell and process water for both domestic and commercial use. No one regulates them.

        • dukeofurl 3.1.1.1

          Well the regulation is that the water supply isnt able to make a profit.

        • Draco T Bastard 3.1.1.2

          Re metering: plenty of Councils have been thrown out for proposing it. It’s a major democratic problem. Not everyone accepts that “user pays” is appropriate for what is an essential human right.

          Poor education and limited logic. Metering is essential even without user pays.

          Quality control is a requirement through the national water standards. Which are legally binding upon all suppliers and regulators of potable water.

          But not all water supplied needs to be potable but does still need to be charged for.

          As for “people should be guaranteed access to water while corporations aren’t” … well, most Councils now have water corporations, who sell and process water for both domestic and commercial use. No one regulates them.

          Then those ‘corporations’ need to be changed to public services which is really what they are.

          • Ad 3.1.1.2.1

            – compulsory nationwide metering to all NZ catchments and users is very impractical outside urban areas. It’s not impossible. It would take a decade, and need water-specific legislation. Compare rollout of telephones, electricity, and broadband. About a decade each.

            – all water supplied from public sources is subject to regulation for quality. You will have major consumer guarantee problems and health problems if raw water sold for industrial use is sold for other purposes. Would need explicit liability and insurance clauses.

            – further legislation would be required to banish public water companies. Recall what happened to council-owned retail electricity companies? They werent bought in house.

            For all of the above, there are massive policy holes. Its a lovely little petition, but needs actual thinking.

  4. greywarshark 4

    Watch the gummint try to pour cold water on that.

  5. Draco T Bastard 5

    Here’s the authors Twitter story on how hard it was to get the info from the councils.

  6. Molly 6

    “Businesses would then rightly point out that if they are paying for it, then so should every citizen. “
    And that is when it should be pointed out to them that they are not actually a living organism that requires clean water to live. They can change their business model or strategy and make money elsewhere.

    • greywarshark 6.1

      Molly
      The trouble is that sometime in the 1990s I think the laws were changed to give companies and corporations the same rights as citizens. Which wiped any special privileges we might have as living individuals right away. The lawyers that write here may like to confirm that and demonstrate with an example what it means and how we are disadvantaged by this.

  7. dukeofurl 7

    “Comparatively, in Auckland, Watercare charges $1.40 per cubic metre (1000 litres) for water piped to houses, while the rest of the country paid an average $1.60 per cubic metre.”

    Watercare charges for both the treated water supply and its disposal as sewage treatment , including all the dams , plants, pipes to do so.

    This comparison has to be one of the stupidest things to ever come out of the Herald.

    There is plenty to be said for having a higher price for those bottling water from their own bore.
    But comparing the amount for treated supply and disposal with that for a bore drilled by the bottler on their own land ( most cases) is absurd.

    Would you compare restaurant prices with the price of raw ingredients at a supermarket ?

    • dukeofurl 7.1

      The charge by Watercare for sewage treatment is in addition, so the effective charge per m3 , as read by meter, is $ 3.37 m3

    • re 7.2

      dol is touching on a very good point. The comparison in the OP is a great emotive button pusher, but doesn’t stand much scrutiny.

      The huge fraction of municipal water supply are fixed costs for bulk water treatment and distribution direct to homes. A typical city supplies between 200 – 400 litre/person/day all treated to a high drinking water standard, yet only a tiny fraction (<1%) is actually directly consumed by humans. The ratio of fixed capital costs to the marginal cost of delivering each litre of water is enormous.

      Bottled water has a completely different economic model. If taken from a clean aquifer source the treatment and supply capital costs are very low, while the transport and distribution costs are directly related to marginal cost of each litre sold. Of which almost all is actually directly consumed as drinking water. In this case the marginal costs of supply completely dominate the picture.

      Or put it this way, how would you feel if your local council started charging you bottled water prices for each of the 300 litres of water each person in your household uses per day?

    • RedLogix 7.3

      dol is touching on a very good point. The comparison in the OP is a great emotive button pusher, but doesn’t stand much scrutiny.

      The huge fraction of municipal water supply are fixed costs for bulk water treatment and distribution direct to homes. A typical city supplies between 200 – 400 litre/person/day all treated to a high drinking water standard, yet only a tiny fraction (<1%) is actually directly consumed by humans. The ratio of fixed capital costs to the marginal cost of delivering each litre of water is enormous.

      Bottled water has a completely different economic model. If taken from a clean aquifer source the treatment and supply capital costs are very low, while the transport and distribution costs are directly related to marginal cost of each litre sold. Of which almost all is actually directly consumed as drinking water. In this case the marginal costs of supply completely dominate the picture.

      Or put it this way, how would you feel if your local council started charging you bottled water prices for each of the 300 litres of water each person in your household uses per day?

  8. Ethica 8

    This is such an important issue. Our best and deepest water is literarily being syphoned off by overseas corporates and we get nothing except the contaminated left over shallow water. There are huge water factories spouting up all over the country. This must become an election issue. The water industry should be nationalised.

  9. Mat Simpson 9

    All signed Mickey.

    The water issue has the potential to damage this government.

    This grab of a natural resource for free and the profit being made from its sale while joe the public has to pay twice , once for supply and again to purchase it bottled is a perfect example of why the current government should fall at the next election.

    Third term governments always have sleeper issues that provoke strong feelings like how much water you can have while you are in the shower and the ” ditch the bitch ” protest by truckies at the increase in road user charges in Labour’s last months in government.
    https://www.nbr.co.nz/article/clark-defends-rise-road-user-charges-32799

    The water issue though is inherently unfair and the impact on the environment and supply into the future must be addressed.

    But there will be no action before September 23rd with a glib response to be seen to be doing something while doing absolutely nothing.

  10. Ian 10

    If you think that selling bottled water is such a money spinner why don’t you all put your money where your mouth is. Then you could give your profits to the poor and first home buyers.
    You would then solve the housing crisis and the poverty dilemma with a wave of your magic wand.

    • One Anonymous Bloke 10.1

      Nah, I’ll leave the primary extraction industries to lazy bitter dullards like you and get on with something worthwhile and productive instead thanks,

      • Ian 10.1.1

        So how do you contribute to the New Zealand economy nameless one ?

        • One Anonymous Bloke 10.1.1.1

          You think your handle is any more anonymous than mine? Logic fail.

          I contribute to the economy via private enterprise, and I value my privacy.

  11. greg 11

    no one has manged to answer why the fuck are we giving a public resource away for nothing is this government so corrupt or they just total morons for goodness sake royalties should be paid and plunder should be tightly regulated does Saudi Arabia give away its oil no fucken way.
    >

  12. JC 12

    “If the Minister of Conservation grants a concession to electricity company, Westpower, to build a Hydro scheme on the Waitaha River – as she says she intends to do – Mogan George will become an emanciated trickle for much of the year, Opponents say this would be an environmental tragedy and a cultural loss, and tantamount to building a wind farm on the summit of Aoraki/Mt Cook”

    https://www.nzgeo.com/stories/a-tale-of-two-currents/

    WTF! Still this goes on!, (And On) No decision yet…..

  13. Jeremy 13

    I think some info might be missing.

    Are the bottling companies buying water after it has gone through distribution and treatment infrastructure, or they sourcing the water directly from source?

    If it’s the latter, as I would suspect, it would explain much of the discrepancy.

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