Councils say new tourism fund not enough

Local Government NZ has renewed calls for a levy on tourists when they arrive in the country. Photo: Lynn Grieveson

The Government’s new tourism infrastructure fund of $100 million over the next four years fails as an answer to the rising costs of tourism and very few councils will be eligible to apply, say local authorities. They have renewed their calls instead for a levy on tourists when they arrive plus a share of GST, Lynn Grieveson reports.

The new fund, part of last month’s Budget, will provide up to $25 million a year for the development of tourism-related infrastructure such as carparks, freedom camping sites, sewerage, water works and transport projects for areas needing help coping with high visitor numbers – especially those that have a small ratepayer base.

Local Government NZ President Lawrence Yule said, at the very least, the fund needs tweaking – but that, long term, councils should be able to capture a share of the visitor spending in their region.

“There’s been a lot of talk about the tourism fund and $100m has been announced, and while we are grateful for that, we still haven’t captured effectively the issue of why we should not get a share of either the GST or a share of the visitor revenue to help fund this stuff," Yule said.

“At the moment what the government is doing is handing out money from its funds, but it’s not directly linked to the income that is coming in from visitors" he said.

Yule said the eligibility guidelines of the new fund, including that revenue from tourism in region had to be under $1 billion and that Local Government Funding Agency limits had to have been reached, meant very few councils would qualify for assistance.

“We are just trying to find out. We are not sure, but we are trying to work with MBIE at the moment. They have a list of who they think (will be eligible), but it appears that there’s a relatively small number of councils that will qualify," he said.

“We are working through eligible councils and the gaps and, as an example, we have been told that Queenstown doesn’t qualify, for instance, so I think there is a bit of refinement that has got to occur yet on that,” Yule said.

“We are still looking to promote long-term sustainable funding as opposed to just handing out $100m. We are grateful for $100m, but our view had always been that we need to find a system that makes this fair and equitable and that the tourist pays. We haven’t got there yet. And the visitor should pay a lead role in funding that."

Special zone for Queenstown levy?

LGNZ CEO Malcolm Alexander said there were two ways to trial a tourist levy.

“Either you could make it local - and one of the reasons we are attracted to a special economic zone trial model is you could test that within a boundary or a particular area. So the Queenstown Lakes District council, you could trial a levy there.

An easier collection route, in my particular view, is to collect it at the border and you could exempt New Zealanders by making it apply to non-New Zealand passport holders.

“We don’t want to be too dogmatic now on the best collection model, but the point is that if anyone says it is not do-able or New Zealanders will pay, then that is actually incorrect.”

LGNZ’s renewed call for councils be allowed to hang on to a slice of the GST generated in their regions was immediately shot down by Finance Minister Steven Joyce, who told Newsroom it would not be considered.

“No, we won’t be doing that,” Joyce said.

“One of the great principles of NZ taxation is people know their taxes go through parliament and they know what to do if they don’t agree with parliament. And rates go through councils and they know what to do with councils if they don’t like where their rates are going. That’s an important separation and helps with accountability.”