To: Hon Maggie Barry, Minister of Conservation
Date: 20 March 2017
Proposal for a Border Levy
As you are aware, the NZCA has since early last year been discussing options for the Department to manage and finance the strong growth in tourism. We are conscious of the pressures already on infrastructure and services such as some of the Great Walks and icon sites like Punakaiki. With 10-20% per annum growth in visitor numbers projected through to 2020 these pressures are certain to manifest at other sites as well. We are also conscious that many district councils with a small and aging rating base, such as Thames-Coromandel and those on the West Coast, do not have the capacity to further increase rates to fund infrastructure for peak tourist loads.
The NZCA has identified a range of options to improve recovery of costs via better pricing and monitoring; and increase ‘user pays’ such as via car parking fees. We have strongly encouraged the Department to pursue these avenues of revenue recovery as well as spread the seasonal tourism load. As well we have advised the Department to better manage concessions through a mix of pricing, coverage and compliance. The Department can therefore grow revenues from both cost recovery and improved concession management. These initiatives, which can be implemented now, generally make small, incremental contributions to net earnings and, importantly, will help ensure the Department is operating its current business efficiently. However, we recognise too that the net financial gain, after installing fee collection mechanisms and compliance monitoring, will be modest for many of these options.
Accordingly, and in light of the urgency of getting improvements made, the Authority has reached the view that these steps will not be sufficient to provide the scale of funding necessary to realistically address the growth challenges before the Department, and concurrently fund biodiversity protection and faster progress on other imperatives, such as recategorisation of stewardship land. In reaching this view, the Authority also believes a greater level of user pays by international visitors is both fair and reasonable and, preferable to further raising taxes and rates on New Zealanders.
The practical, cost effective mechanism to achieve this is a carefully targeted border levy on international tourists. Some suggest the levy could be matched from the extra GST earned on the increase in tourism spend as a mechanism to more equitably share the load. The levy would be applied to both Department and local authority projects to enhance infrastructure for tourists and biodiversity restoration and protection.
We see the levy funds being administered by a small independent Advisory Board and Management team to ensure their transparent and efficient use against tightly defined investment criteria. Decision making timeframes would be short to ensure early action and a strong pipeline of funding requests. This entity would also be responsible for ensuring outcomes from the levy investments are communicated to tourist visitors.
The NZCA is aware of the sensitivity and range of views regarding border levies – “another tax” and in addition to the GST collected from visitor spend. Our assessment in this case is these contrary views do not withstand close scrutiny when weighed against the alternative mechanisms for raising revenue and the scale of the resourcing challenges before the Department and local councils. The evidence we have gathered, albeit largely anecdotal, indicates that for many international visitors a border levy would be acceptable as a small extra cost in the context of their overall spend while in New Zealand and the value they derive from the range and quality of visitor experiences provided by the Department.
Members would be pleased to discuss this topic further with you and, in particular, to be apprised of concerns regarding a border levy as described here.