A deal that hopes to save Queenstown Lakes from itself

Monday, 27 October 2025

Queenstown Lakes and Central Otago are booming on the back of tourism, construction and a post-Covid rebound, but behind the glossy GDP figures lie housing shortages, crumbling infrastructure, clogged roads and a community under pressure.

Local leaders are pinning their hopes on the Otago Central Lakes Regional Deal, a formal negotiation between local and central government now under way.

The deal promises customised funding tools and regulatory flexibility, but no new money. With Queenstown and Central Otago on track to overtake Dunedin in population within 15 years, expectations are high and the stakes even higher.

Economist Benje Patterson says the deal could help address the mismatch between the region’s growth and its ability to fund and deliver core services. But he warns that delays or inaction will have consequences.

“This is absolutely mission-critical. It has been for years, but we’re now getting to the point where these choke points we have are not going to be here and there — they’re going to be absolutely systemic and everywhere.”

The shape of a deal

City and regional deals are a new tool in the Government’s infrastructure and planning toolbox. In Canterbury, the mayoral forum has signalled its intent for a regional deal, with a detailed proposal expected later this year.

But there is no new funding on the table for such deals. Instead, councils must work together to do more with what they have, and try to negotiate tools that will help them raise their own revenue.

Each deal is based on a long-term regional vision, and a decade-long plan to put it into action.

Three councils – Queenstown Lakes, Central Otago and Otago Regional Council – are negotiating with the Government together as the Otago Central Lakes region. A negotiation committee was formed before the October local elections, including representatives from all three councils. A new line-up is now being finalised.

The region’s priority areas have already been agreed. The top one is “capturing value” from growth – in other words, finding ways to ensure growth pays for itself. That includes new revenue tools like a local visitor levy, or the return of royalties from mining or GST.

The deal is being negotiated on behalf of the councils by Conor English, a former chief executive of Federated Farmers and experienced policy adviser, with a background in regional economic development and infrastructure funding.

Growth like nowhere else

The underlying problem is simple: the region is growing faster than it can pay for.

Patterson describes the Queenstown-Wanaka-Cromwell area as a “golden triangle” of growth.

“If current trends continue, by 2039 the combined population of Queenstown Lakes and Central Otago could exceed Dunedin’s,” he said. “That would make it the second most important population block in the South Island after greater Christchurch.”

But population growth is only part of the load. The pressure from international tourism is just as high. Patterson says Queenstown has 47 visitor bed-nights per resident per year, compared with the national average of 2.5.

“If we are to overcome our infrastructure challenges, we have to bridge that gap,” he said. “A regional deal is a potential way forward.”

Tools to fund the future

Patterson says one of the most urgent goals must be a mechanism to help Queenstown raise its own funds to pay for infrastructure used by tourists.

“The visitor levy, which has also at times been called a bed tax, is really about levying a visitor for use of infrastructure,” he said. “It just so happens that their bed is the easiest way to put that levy on them.”

With the Government recently ruling out a local bed tax, other options could include redirecting a share of the GST generated by international visitor spending, or passing on part of the national visitor levy to the region.

“We need to be able to fund the infrastructure. That would be a really easy sort of silver bullet. If that doesn’t happen, then we need to look at other mechanisms.”

A new political landscape

The regional deal committee is being reformed following October’s local elections. Quentin Smith, a returning Queenstown Lakes District councillor and former deputy mayor, says the new committee will need to regroup and confirm its priorities.

“The priorities I think, will remain aligned,” he said. “But the approach that the councils take to prioritisation and negotiation might shift.”

He says there is broad backing for a local visitor levy, which had more than 80% support in a 2019 referendum.

“We’ve got to capture some revenue out of the visitors to our region to help us with our infrastructure.”

But Smith is cautious about what the deal can achieve. Many of the region’s biggest problems are outside the scope of the deal and rely on separate central government funding, such as NZ Transport Agency Waka Kotahi investment in roading and bridges.

“The structure of the regional deal was such that the biggest issues actually couldn’t be solved because they weren’t within scope.”

Cautious hope

Alexa Forbes, who served two terms on the Otago Regional Council and previously on Queenstown Lakes District Council, says the deal might encourage better collaboration between the three councils.

But she is sceptical it will deliver meaningful results without legislative change or funding.

“There’s no money going in, no law change is promised,” she said.

Still, she sees some value in the process: “My hope is that those councils get really good at working together and solving their own problems.”

Forbes has been a vocal advocate for a visitor levy for more than a decade. She says the Government’s refusal to grant that power reflects a broken relationship with local government.

“It’s a dreadful relationship,” she says. “They don’t trust local government to collect their own money and spend their own money, which is problematic.”

If the deal fails, Forbes says, the region will have missed a rare window for progress.

“We’ve just wasted time, which we don’t have.”

A region that can’t afford to stall

If the regional deal falters, Queenstown and Central Otago won’t stop growing. But the risks of unmanaged growth will only deepen. That’s the warning from multiple local leaders, who say the region is fast approaching a breaking point.

“The average house price here costs $1.8 million. That’s completely out of reach for most people, even professionals,” said Patterson.

Smith agrees. “We’ve got infrastructure deficit right across the board – transport, wastewater, water. The deal might help, but it’s not going to solve that.”

Nearly 40% of international visitors to New Zealand include Queenstown Lakes in their itinerary. Patterson says that makes the region too important to let fail.

“We are the shop front for New Zealand to the rest of the world. Our jewel in the tourism crown is an absolute shambles.”

A deal still on the table but time is ticking

After October’s local elections, the Otago Central Lakes regional deal committee is being reshaped. New appointees will need to quickly regroup, build alignment across three councils, and present a united case to central government.

The minister now holding the pen is Simon Watts, Minister of Local Government, who did not respond to questions for this story before deadline.

His support will be critical, but it remains unclear whether the Government sees the deal as a priority, or whether it will make room for legislative changes to enable tools like a visitor levy.

The clock is ticking. Local leaders say the problems are mounting faster than the systems designed to fix them.

“These choke points are going to become systemic,” said Patterson. “If we don’t get ahead of them now, we’ll hit a wall.”