Pressure builds for tourist tax
The country's so full in summer, Tourism New Zealand no longer markets that season overseas. With almost five million international visitors predicted to arrive each year by 2023 do we need a border tax to cope? David Williams reports.
Talk about walking the walk. As the tourism industry grapples with trying to shift visitors away from hotspots, and attracting them at quieter times of the year, the industry’s annual trade exhibition, Trenz, opens in Dunedin, in May – our quietest month.
“This was a conscious decision to expose the 400-odd international buyers that have come in to a different part of New Zealand,” Tourism Industry Aotearoa chief executive Chris Roberts says.
The problem’s acute. He says the typical international visitor comes to New Zealand in summer and visits Auckland, Rotorua and Queenstown. The statistics tell the story – almost a quarter of the 3.7 million visitors who have graced our shores over the last 12 months arrived in December and January. And 43 percent of the $10.6 billion expenditure by international tourists was spent in Auckland and Otago.
It’s a problem acknowledged by Government and industry. That’s why Tourism New Zealand hasn’t marketed summer for two years, and has taken to marketing specific regions in an attempt to push people away from a very well-worn track.
Roberts: “It’s not easy to change those travel patterns but the industry is trying hard.”
Where there is a parting of ways is on the need for a tourism levy.
Labour and the Green Party had a border charge of $25 and $20, respectively, in their election manifestos. It’s under active consideration, with Conservation Minister Eugenie Sage working with Tourism Minister Kelvin Davis, but neither will say when an announcement will be made. (Newsroom has been told an announcement might be made later this month or next month.)
Roberts won’t be drawn on whether he thinks a border charge is inevitable; if ministers have signalled their intentions to him. “They’ve signalled to us they want to consult on the issue of funding,” he says. “We need to determine what the gap is. What needs can’t be provided by existing funds – the provincial growth fund and tourism infrastructure funds. What are those funds not providing for, and if there is a gap, how do we address that gap before we leap to designing a tourism tax.”
There’s an infrastructure problem, Roberts says, but it’s only partly down to tourism. Increased tourism has exposed decades of under-investment, he says. And the Government’s now coming to the party. There’s the $25 million-a-year tourism infrastructure fund for councils, last year’s $76 million boost to the Department of Conservation (DOC) for new and upgraded tourism infrastructure and Shane Jones’ $1 billion regional development fund.
“Especially with the size of that fund, the $1 billion a year, there does appear to be adequate sources of funding already without immediately leaping to the need for another tax.”
Tourists already pay tax, Roberts declares. They pay about $400 each in GST per visit and the $22 border clearance levy for air travellers introduced three years ago. “They’re already being taxed quite heavily.”
(Three years ago, the NZ Institute of Economic Research warned the $22 border levy, paired with a $26 charge for cruise ship passengers, would discourage visitors, leading to 34,050 fewer tourists coming a year, leading to a decrease in spending by $55 million. In fact, in the two years since January 2016, almost 560,000 more international tourists have visited and estimated spending went up $865 million, to $10.6 billion.)
Roberts took the same “don’t tax tourists” line two years ago, to The Opportunities Party leader Gareth Morgan. An August 2016 Morgan Foundation blog post said the taxpayer spends $168 million on protecting species through DOC and another $142 million on things like tracks and huts. And while 41 percent of visitors come to New Zealand primarily for nature, and 85 percent of visitors walk or trek while they’re here, DOC’s spend is just two percent of tourism income.
Roberts told Morgan huge increases in the GST take from tourists is a “bonus delivered by a high-performing industry that the Government should be reinvesting”. Simply divert 10 percent of GST collected from tourists and DOC would have $100 million a year, Roberts told Morgan, with more money as tourist numbers go up.
Morgan retorted: “Those funds are already allocated. Should we see investment in infrastructure, health or education decrease instead?”
If there are infrastructure issues now, imagine what it’ll be like if visitor arrivals hit 4.9 million a year by 2023, as forecast.
“The government’s under pressure, so the visitor should make a contribution.” – Warren Parker
The New Zealand Conservation Authority, which has a legislative duty to advise its minister, wants a border levy.
In March last year, authority chairman Warren Parker wrote to then Conservation Minister Maggie Barry, calling on her to implement such a charge, because increasing fees, such as hut charges and car parking fees, wouldn’t raise enough money. Some of the money would be funnelled to councils that are struggling to cope with a tourism influx.
However, Treasury was lukewarm on the idea and the National Party rejected it, in favour of slugging overseas tourists with a fee-hike for the Great Walks and other huts. That would have raised about $4 million.
Parker, who has pushed the idea of a border levy with his current minister, scoffs: “Four million dollars would have done nothing, right? These are huge problems.” (Last year, Local Government New Zealand said councils estimated $1.4 billion needed to be spent on much-needed tourism infrastructure.)
The country needs to think more strategically, Parker says. Why would we just let in more and more people, he asks, without thinking about their net contribution to the economy? Other countries charge for access to conservation areas, he says, and New Zealand’s national parks are perceived by some as being a bit of a bargain.
As climate change fuels more intense weather events, DOC is paying more to maintain, repair and re-direct damaged walking tracks, Parker says. Using existing budgets to pay for tourist infrastructure might mean some core conservation functions aren’t performed – think about such things as protecting endangered animals and plants, and looking after some of our wild landscapes.
Parker, a former chief executive of Crown research institute Scion, argues there should be some sort of positive conservation gain from tourists enjoying our conservation areas. Local councils aren’t the only ones struggling for money. He suggests money taken for concessions granted to tourism businesses should be spent on local conservation projects.
More international tourists are coming, Parker says, which means the country will need more and better infrastructure. “How do we fund that? The government’s under pressure, so the visitor should make a contribution.”