Thursday, November 30, 2023

Sector slaps down fert tax proposal

Neal Wallace
Agriculture minister looking for interim funding source as HWEN stalls
Dairy NZ chair Jim van der Poel accepts the minister was testing the waters, but said the idea was roundly rejected by the sector when it was discussed with them.
Reading Time: 3 minutes

The primary sector quickly rejected a proposal to introduce a fertiliser tax in lieu of a charge on greenhouse gas emissions.

With the He Waka Eke Noa (HWEN) agreement to price agricultural greenhouse gas emissions unlikely to be law before the general election, Agriculture Minister Damien O’Connor broached the idea of an interim tax on fertiliser to fund research and development.

Dairy NZ chair Jim van der Poel accepts the minister was testing the waters, but said the idea was roundly rejected by the sector when it was discussed with them.

“A fertiliser tax, from agriculture’s perspective, goes against everything we have tried to do,” Van der Poel said.

O’Connor has dampened down but not ruled out a fertiliser tax in the future.

In question time at Parliament this week he was asked by ACT’s Mark Cameron if he would rule out a tax on urea.

“There has been no considerate [sic], comprehensive consideration of this by government or by ministers at all,” O’Connor replied.

“I’ve had brief discussions with sector leaders; they’ve indicated that they don’t want to proceed with that.

“The question I have is whether I should then bother to put that proposal up to my colleagues.

“I probably think not, but I’m not going to rule anything in or out here and now.”

Van der Poel said progress on HWEN has stalled since before Christmas, with little subsequent discussion between officials and sector leaders.

“We’re just waiting and waiting.”

Farmers Weekly reported last week that time is running out to introduce HWEN and Van der Poel agreed, saying the focus now needs to be on finding an interim solution before the January 1 2025 deadline or the sector will be placed in the Emissions Trading Scheme.

“We’re still open to working with government to get the right answers rather than having something imposed.”

O’Connor told Parliament that a levy on nitrous oxide emissions from nitrogen fertiliser use was something he has looked at, noting it was included in the HWEN partnership’s proposal and the government’s consultation document.

He asked some industry leaders if such a levy could raise revenue to pay for greenhouse gases mitigation research and the adoption of new technology.

“The industry leaders have come back to me and said they don’t like that.”

O’Connor said attention is now on finding a way to adopt HWEN, with the proviso primary sector groups do not want to pay until there is clarity with sequestration options.

The National Party’s agriculture spokesperson, Todd McClay, said HWEN is broken, farmers have lost faith and O’Connor needs to provide certainty by ruling out any other new taxes.

“He has driven a truck through the trust he has been trying to build with HWEN and now come up with his own plan when he has run out of time,” McClay said.

McClay said discussions with farmers reveals they have lost faith with HWEN.

While the sector must meet its emission obligations, McClay said, a National-led government would revisit HWEN with the sector groups, adopt the best parts and renegotiate the rest.

There would be several provisos. Targets would be re-assessed based on science and any commitment would not be at the expense of NZ’s competitiveness, the sector’s viability or shift production to less carbon efficient countries.

Climate Change Minister James Shaw said: “We are all committed to emissions being priced and we know there is an expectation from the public for the sector to pay for its emissions. 

“There have been calls from the sector to delay pricing, so we are talking to the sector about what the options are. Nothing has been ruled out and there is still the ETS backstop available to us. We also know that farmers need certainty and there are a variety of views within the sector.”

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