Prepare for a lolly scramble over new visitor levy money

Friday, 15 June 2018

Tourism and conservation are set to battle it out for their share of up to $80m a year from a proposed levy on international visitors.

OPINION: After years of dilly-dallying over a levy on international visitors, we now have one, but it's thin on detail.

Like who will divvie up the lolly, estimated at somewhere between $57 and $80m a year, and what it will be spent on.

If Tourism Minister Kelvin Davis thinks he has put the lid on debate about the fairest way to fund tourism facilities, he's going to be sorely disappointed.

One thing he can rest easy on is that it won't wreck our image overseas or empty incoming flights.

Paying a levy of $25 to $35 a head is unlikely to deter travellers who are already forking out thousands of dollars for a trip here, and such charges are common in other countries.

* Government pockets $2.6b a year from international tourists.

* Tourism tax may never be perfect, but something must be done to protect the industry

Small towns like Tekapo stand to benefit from money raised by a proposed levy on many international visitors.

* New Zealand tourism on the cheap - the backlash against budget visitors**

New Zealand's spectacular scenery is a top draw card for almost half of all international visitors and clearly explaining that the levy will go towards maintaining that environment will help allay any resistance.

What may hurt far more is the 54 per rise in the cost of work visas.

The real concerns about the visitor levy are around its yield and how it will be shared between tourism and conservation.

The exact split has not been decided, and chances are we will see the conservation lobby pushing for spending on the likes of pest eradication, while local government goes after money for bricks and mortar projects.

WHY WE NEED THE MONEY

International visitor arrivals hit 3.7m last year and are forecast to top 5m by 2024, almost twice the number we welcomed in 2012.

That rapid growth has resulted in congested roads, overcrowding at popular destinations, and overloaded sewage and water systems, all putting pressure on council budgets.

The tourism industry has maintained that visitors already pay their way through GST ($1.47b annually) and other taxes, but that argument hasn't gained much traction with ratepayers forced to put their hands in their pockets to pay for facilities that benefit tourists.

Income from the levy is not a huge windfall when you consider that reports have suggested investment in the order of $150m annually is required to shore up our creaky tourism infrastructure.

Just this week a study of the cost benefits from tourism pointed out that the Government profits to the tune of $2.6b annually, while three local authorities in tourism hot spots ended up well in the red when it came to tourism-related income and spending.

WHO PAYS AND WHO DOESN'T

The concept design for the Eden Project planned for Christchurch might come to fruition if it can snare funding raised by a new visitor levy.

It will be early next year before the levy is applied because of the need to set up an electronic travel authority (ETA) expected to cost about $1m.

Travellers from about 60 countries who don't require visas will use it to pay online, and they'll face a $9 admin fee, increasing the full payment to $44.

However, there will potentially be lots of exemptions.

The proposal is that Australians, about half our inbound visitors, are to be let off because of our commitment to free access under the Trans-Tasman Travel Arrangement, but also because of concerns they're price sensitive wee things who might just choose an Indonesian resort of a Fijian beach instead of Godzone for their next holiday.

Exemptions would also cover people from Pacific Forum nations, diplomats, some business travellers, and children under two.

Those paying the levy along with their application for a multi-entry visa would only pay once, so a Chinese tourist with a five year visa making repeat visits over that period would cough up on their first trip, but not subsequent ones.

Queenstown mayor Jim Boult is still plugging for a bed tax to help pay for improvements to the town.

LINING UP FOR THE MONEY

The Government consultation document issued with the levy announcement is open ended to say the least and interested parties have until mid July to have their say.

It suggests the levy revenue could be spent on basics such as toilets and car parking, on roading, or on a broader range of projects such as business incubators, skills development and new visitor attractions.

The latter is likely to light up the eyes of those promoting an Eden Project for Christchurch's Red Zone, an ambitious plan with a multi million dollar price tag.

Government money for new attractions used to be available through a special fund that was dis-established by the National government which opted to put the money into its $25m a year tourism infrastructure pot.

The Labour Government has maintained that funding, but it has been the subject of continual grumbling from councils because of the strict criteria, and in the last funding round only $14m worth of projects met the guidelines.

An advisory panel with representatives from the tourism industry, local government and the Ministry of Businesss Innovation and Employment makes recommendations to the Minister on the worthiness of applicants, and a similar system is on the cards for money raised by the levy.

BYE BYE BED TAX?

Some Kiwis might balk at the thought of having 2 per cent added to their commercial accommodation bills at home, but they frequently pay them overseas without a second thought.

Although the Government appears set against a bed tax - either national or regional – others are determined to pursue it.

Queenstown Mayor Jim Boult is adamant the needs of his town are so great that not even the largesse of the $1b provincial growth fund will be sufficient.

The Productivity Commission is due to report back next year on options for local government funding and regional bed taxes could be part of the mix.