Labour's farming taxes would balloon farming costs, DairyNZ

DairyNZ's Tim Mackle predicts high costs from Labour's taxes

RELATED AUDIO: Farmer Andrew McGiven says more taxes will only leave farmers less to spend on environmental solutions (Sep 12)

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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.”


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52 Comments & Questions

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Here's the facts in Taranaki. 540,000 cows and 75% riperian strips. Significant year by year improvement of water quality reported by the Regional Council (look this up). Huge sums being spent by Farmers and Councils. Tighter and tighter rules being introduced. Zero tolerance to polluters, instant fines, prosecutions and abatement notices for all offenders. DNA testing on sources of pollution carried out. A fantasy story being produced to justify unfair attack on all rural dwellers.

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Neil this is great to hear. And I have reason to doubt your figures. Why can't this experience be repeated down here in Canterbury?

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The geography is quite different for a start.

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I went tripping around Taranaki with my Mum a few months ago (from way up North). We noticed all the well-grown riparian strips through cockies' places - it was a talking point! You fullas down there are a number of years ahead of the game.

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Good.

The more we tax these clowns, the better it will be for the environment.

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For equity and fairness, how about we tax all the urban clowns pumping human sh*t straight into the Waitemata, Manukau and other harbours around the country as well?

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The ETS costs for dairy farmers with a 90% subsidy at a $20/NZU amounts to about 1.5 cents/Kg Milk Solids. Alternatively, a dairy farmer could plant about one hectare of forest for every 100 cows they have to cover this cost.

I drove to Milford Sound recently and noticed that hundreds of hectares of regenerating native forest on Te Anau Downs, on the most important tourist route in country, had been kill sprayed in preparation for clearance. And you wonder why farmers have a PR problem?

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Are you sure that wasn't wilding pine which is a pest that DOC (and farmers) is spending lots to get rid of.

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No it was manuka and kanuka forest with some beech.

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No, you were looking at the wilding pines project

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The ETS costs households & business the equivalent of paying 28.54% GST based on the current CPI.

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That's a 90.3% increase in GST. I think you better explain your maths.

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You mean food could get dearer than it is now? Any dearer and nobody will be able to afford to buy it.

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That's an argument against the performance of your Government Ivan. It claims low inflation. Two years ago they even claimed inflation was slightly negative!

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Didn't all these prices start going up under your govt, while aunty Helen was in charge?

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Economic growth was always ahead of inflation.

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Inflation figures are not produced by political parties just in case you didn't know

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No but their policies are responsible for them

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You mean like Rogernomics? They were good weren't they.

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Rogernomics was more like your mates Ivan.

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Oh so they're all my mates now are they.

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Whose mates? I thought they were your mates. Must have been somebody elses mates.

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Roger Douglas' policies are the ones you support Ivan - not me.

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That can't be right, as I was working for GMs assembling cars at that time in history. Roger Douglas brought in Rogernomics, and then we all lost our jobs. So you don't really know what your talking about, do you Sam.

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The National government government has followed a very narrow short term political and economic policy of over expansion of unsustainable dairy farming. It is obvious that tree planting and purification methods are not coping and once freshwater rivers are now far too polluted for fish and swimming and dangerous contaminated to threaten urban water supply safety. Rural roads are being smashed in by the heavy milk supply truck rigs and the intense long hour low pay natural of dairy farming results in inferior lifestyle for families and kids. I have consistently opposed dairy conversions for the last decade and having grown up in SC and attended South School and T.B.H.S (1970-74) mainly in the third stream with such prominent Clark opponents and dairy boosters as David Hawkey, Mark Oldfield and David Nelson ( son of the Cattle Valley, SC eccentric) and other farmers such as McAughtrie, Hodder, Hudson, White. 6-3 included other future powerful rural figures such as Kevin Gloag (SC finance) Victor Leslie off a town supply dairy farm which 7-2 spent an afternoon on as a a Geography field trip, including the Hunter brothers, Alan and Tony, now Dentists and Professors of Dentistry at the bottom of Remuera Road - much of thats year 2nd stream becoming b Auckland dentist, inc Garry Healy and Raymond King. Oldfield as I have often pointed out has no real university qualifications and was really accredited with UE on the basis that he was a nice guy and would probably have achieved the standard on the basis if he had done Arts rather than straight Science subjects, and that his ability and SC marks were similar to your truly, who was automatically accredited. I would dispute that as I was exhausted at the time of SC and only revised for SC History and Maths, being fairly certain I would pass easily enough in 5 subjects SC English and Geography being an IQ test.

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The point of this rant completely escapes me. Sorry.

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The point is that under the English Joyce government the economy became more and more dependent on dairy farming and the Chinese market, neither probably sustainable at western lifestyle wages. The English policy has restricted the development of urban tourism with the reintroduction of draconian licensing restrictions and maintained tight city planning restriction on high rise motel and apartment development. The National government is driven by politics and social medicine not anything scientific or statistical..

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Labour basically wants Animal Taxes, Water Taxes and Land Taxes.

Could they be any worse for free enterprise farming? Perhaps we should just go directly to the communist collective farms phase right now? What's wrong with the water in Morrinsville?

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With all the figures being bandied around I would like to see the unit basis for them all. After all, remember the scaremongering after Labour first announced its water tax and horrendous costs were talked about ($18 cabbages etc) which were all wrong.

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Still no info from Dairy NZ or anyone else.

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Up until a means is put into place that requires farmers to bear the real cost of the damage they do (to varying degrees, for zero-to-lots) to the environment around them, they are effectively being subsidised by everyone else in NZ who will have to bear the cost of cleaning up their mess. That means is likely to take the form of tax or water usage fees. Farmers who cannot be profitable while also paying the real cost of inputs (via that tax) are not viable. As with any business, they should either improve their practice to achieve profitability, or change their business/employment.

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Why do you lump all farmers together as "they". Some farmers do a good job looking after the environment, others do a bad job. Surely the bad farmers should be penalized, not all of them

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Sure, some do. I trust those who are will be the smarter, more pro-active ones who do things efficiently enough not to be negatively affected by a fair value being assigned to inputs required for their business to function.

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Maybe the good farmers should do a better job with Federated Farmers who currently seem much more inclined to represent the bad farmers.

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To be clear, if your business isn't able to make a profit while paying a fair and realistic price for all your inputs (and taking into account the cost of cleaning up and 'socialised outputs'), then it's not viable. That's not communism, that's a market economy without the market distortion (typical of communism) of effective social subsidies to farmers that we've seen throughout National's 9 years.

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Auckland ratepayers haven't been paying a fair price for their inputs (and their outputs) for years - hence Phil Goff's commentary on the ecoli load in Auckland's waterways.

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I fully agree that urban water users should similarly be paying for their water user (of course, they already are, with their rates, but not a volume charge). I certainly think that any charge should be fairly applied across all NZers, not just farmers. It's just that farmers use 80%ish of the fresh water used in our country...

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And about 90% of the effluent discharged to waterways comes from the urban sector.
The average effluent discharge to water of a human is 40 times that of a cow.
The cleanup of Auckland is going to be extremely expensive.

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Urban environments have different solutions, and most urban dweller pay a LOT in rates to cover those far more intensive solutions.

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I am not buying that Dave. Urban dwellers are paying only a fraction of the rates needed to clean up their mess
I pay $20,000 / annum in rates. I receive no water, no sewage reticulation, no rubbish collection, no footpath, a gravel road, no lighting.
And I provide ecosystem services to the city by way of flood mitigation( my farm is flooded to protect urban houses).
Don' t tell me who is paying the price.

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Whats happened here is conversion farmers have helped themselves to free water, courtesy of Regional Councils who have been stacked with their mates.

A number of these conversionists have sold up, and taken the profit, but some are still there and should pay the price of unsustainable development. How can you have sympathy for these conversionists whos business value has increased more than 100%? The short term super profit should help them pay appropriate taxes.

Regional Councils are now waking up to the fact they have over resourced, after the rodent Councillors have all disappeared down the rabbit hole.

Industry should always been driven by a sustainable approach, and its time for a haircut for those that abuse this.

I do have sympathy for those who have bought converted dairy farms, and they should be given a breather before increased costs hit them.

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Dairy NZ are just using scaremongering tactics to the public to not vote Labour, all the dairy farmers I know are doing very well,thank you very much.

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The labour tax proposed regime will affect everybody...no doubt about that.
Problem is what they will do with the money will generate even more cost which will be ongoing and be a disaster for all.
They don't have a clue and why should we risk letting them experiment at our cost.

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What are you talking about? What are you suggesting they will do with the money that will pose the experimental extra costs and disaster you're talking about?

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That's your mates he's talking about.

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In reply to Gary
In an earlier post commenting on an earlier topic you stated that dairy farmers are doing very well and were so profitable despite the low prices for products you said that you sold your dairy farm.to.one of the wealthiest dairy farmers in NZ. This being the case it is difficult to understand why you sold your dairy farm since you claim dairy farmimg is so profitable .
The comments you make don't ring true as I have been involved in the dairy industry for over thirty years and I have enough of people using the farmers as a convenient whipping post taking their own prejudices and frustrations out on existing farmers.
Profitability is in many cases a very poor return on capital and labour involved .
After 30 years the way the dairy industry is being forced to go is uneconomic unless it is on a large scale or debt load is very low.
I have recently left the industry because so see little future in the family farm .
I wonder if it was not all a bed of roses and if that is why Gary also sold his own dairy farm.
Please do not misrepresent the industry if this is the situation.

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I never said I sold a dairy farm, in fact,I never sold a dairy to him.i have never ever owned a dairy farm.

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So lets have some average net profit figures before tax, depreciation and drawings please so we can truly judge the impact on dairy farms. I note Dairy NZ only talks about costs. The impact of these totally depend on profits.

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I also think that regional councils deserve some blame for our current environmental woes - they've got lots of regulations they can and should enforce, and do not (it would appear). They must be held to account if they're not fulfilling their responsibilities - after all, that's more or less why they exist.

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Sorry to Gary if you were not the person signed in under the same name in the previous post making comments about selling his dairy farm to a very wealthy dairy farmer.
Your attitude and comments are very similar to the other Gary's and equally unbalanced and uninformed about most dairy farmers situations .
I doubt that any imformation supplied will change your attitude to dairy farmers as every farmers situation is different financially as is the area size of farm and climate where they individually farm.
I would not presume to know most dairy farmers situations and the constraints that they have on there farms just as I could not and would not think that every person in a particular occupation is in a similar financial position to each other.
This is why uninformed generalisations across an industry or type of job are just generalisations and may have little reflection on reality.

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It was me,but it wasn't a dairy farm I sold him,it was a different property I sold him,no never been a dairy farmer.

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Scaremongering article. All limited resources such as water must be priced to control demand. Same with being charged for the profit you derive by polluting our country. People who vote purely for personal gains need to look in the mirror. Just because you've gotten away with from a slack National government does not make it sustainable.

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