Falling short Tourism fund disappoints
The tourist boom comes at a cost for some, reports Amanda Cropp.
The Government’s tourism infrastructure funding is again copping criticism, with the revelation that its first round of grants fell $10million short.
Last month, the Ministry of Business Innovation and Employment announced 13 grants worth $2.6m - mostly for toilet blocks - from an annual fund of $3m.
But in a just released Official Information Act response to the Green Party, the ministry says it has received 40 funding applications valued at $12.7 million in total.
Green Party leader James Shaw, says the fact the regional tourism fund is so heavily oversubscribed proves the Government has to move faster to relieve the financial strain on small communities struggling to cope with visitor growth.
Confirmation of the high demand for assistance comes just days after the release of a tourism infrastructure report which suggests new ways of squeezing more money from tourists without making them squeal.
International consultants McKinsey and Company, were commissioned to prepare the report on funding options by the chief executives of Air New Zealand, Christchurch and Auckland airports, and Tourism Holdings (owner of the country’s largest rental campervan fleet).
The aim is to raise $130m annually, with the tourism industry and the government contributing equally to a fund for roading, water supplies, sewage schemes and other public facilities used by both New Zealanders and overseas visitors.
The report suggests a 2 per cent bed tax, and a $5 increase in the departure levy would amount to less than 1 per cent of the average international visitor spend of about $3,700.
Car parking charges for National Parks and popular scenic spots, and higher fees for flasher huts were among other options to help cover the Government’s $65m share of the new fund, along with a slice of the $2.8b it receives each year in GST from tourism.
Upping private enterprise in National Parks
Shaw wants a $14 to $18 increase in border charges to raise $20 million annually for tourism infrastructure and $46 million for conservation projects.
However, he opposes the McKinsey report suggestion that a ‘‘private consortium’’ design, build, finance, operate and maintain our nine Great Walks with possible investment from the ACC and NZ Super Fund.
The Great Walks lost more than $3m in the last financial year, but Shaw says they should remain under the management of the Department of Conservation (DOC) or hapu and iwi to avoid becoming over-commercialised.
According to the report, DOC covers just five per cent of its costs on average through user pays, compared with about 20 per cent in Australian, US and Canadian national parks.
It recommends raising hut fees, albeit with subsidies for locals, and upgrading accommodation with laundry facilities and free or ultra cheap Wi-Fi to justify price increases.
Tourism advisor Dave Bamford says 15 areas of the DOC estate were under pressure from tourism and in desperate need of financial and management help.Car parking charges were feasible, but might be impractical at remote locations.
‘‘Differential charges for the use of huts seems to be a good thing, so if you are a New Zealander, you pay less.’’
He believes more privately owned lodges in places like Aoraki Mt Cook are worth investigating, but is less enthused about other aspects of the report.
‘‘If they’re advocating for a privatisation of the Great Walks, then that’s a really challenging thing to do and fraught with weaknesses.’’
Taxing beds
Although the industry is still digesting the McKinsey report, support is emerging for a national 2 per cent bed tax.
It would cover all accommodation - hotels and motels, camper van rentals (worth $180m this year), Airbnb, camping grounds, and holiday homes regardless of whether guests were locals or internationals.
Auckland mayor Phil Goff recently floated the idea of a visitor tax to raise up to $30 million to pay for city marketing and major events.
But Christchurch airport chief executive Malcolm Johns, is keen to avoid a plethora of different regional levies which would just confuse visitors who tend to tour much of the country.
‘‘We’re all in the same waka, so to speak, so it’s incumbent on us to ensure those regions that are under a lot of pressure from this growth get the assistance they need.
‘‘You (Auckland) can’t aspire to be the gateway of New Zealand and then somehow expect the rest of New Zealand to fund the pieces that make you the gateway.’’
Hospitality New Zealand accommodation manager Rachael Shadbolt, agrees different regional levies would be problematic and her organisation looks forward to further discussing the proposals with the government.
Airbnb has more than 20,000 listings here and already collects tourist taxes on behalf of governments in some 200 cities and overseas jurisdictions.
Local manager Sam McDonagh says it would work with the government if it choses to introduce a bed levy.
Trade Me runs the largest booking website for holiday houses and communications advisor Logan Mudge, says a tax would be difficult to administer because the majority of owners completed their rental transactions off site.
While supporting the need to boost tourism infrastructure ‘‘we’re yet to be convinced whether a bed tax is the best option.’’
Dishing out the dosh
Tourism Industry Aotearoa (TIA) chief executive Chris Roberts says it is important the money is ringfenced for tourism-related infrastructure and not siphoned off for other purposes.
When it comes to allocating funds, the report proposes a new Crown agency, akin to the Crown Fibre Holdings model, with representatives from tourism, and central and local government.
Local Government New Zealand (LGNZ) chief executive Malcolm Alexander says that mixed membership would alleviate concerns about transparency and fairness
‘‘Having an arm’s length entity with all the players at the table from a governance point of view is probably more likely to get better choices made, particularly when you have got trade offs.’’
At a tourism industry summit last month, Prime Minister and tourism minister John Key said he would consider the McKinsey report along with a TIA report on infrastructure priorities due out early next year.
He conceded that with a million extra visitors expected by 2022, ‘‘doing nothing’’ was not an option.
Now that he will relinquish the tourism portfolio, the industry is hoping his successor agrees.