A report for New Zealand's key tourism leaders calls on the Government to introduce a bed tax and a $5 increase in the border levy to fund infrastructure growth.

They want a $130 million annual fund to meet infrastructure problems exacerbated by the surging number of tourist, particularly for regional communities.

The report released today is the result of work commissioned by the chief executives of Air New Zealand, Auckland Airport, Christchurch Airport and Tourism Holdings.

The report proposes that a National Tourism Infrastructure Levy be created comprising of a 2 per cent national bed levy across the accommodation sector and a $5 increase to the border levy which would raise $65 million a year from the industry.

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Matching funds from the government would bring this to $130m per annum to fund local tourism infrastructure needs. It also recommends that the fund have a formal review every five years to ensure the funds are being appropriately applied.

The company leaders say the report is intended to be an input into the government policy process and to provoke a conversation between the tourism industry, local and central government on investment in public tourism infrastructure such as car parks, sanitation and visitor facilities.

Left to right: Adrian Littlewood, Malcolm Johns, John Key, Grant Webster and Christopher Luxon.
Left to right: Adrian Littlewood, Malcolm Johns, John Key, Grant Webster and Christopher Luxon.

Air New Zealand chief executive Christopher Luxon said this work was a great example of industry leaders working together to create a national and targeted tourism infrastructure funding mechanism to ensure the long term sustainable growth of tourism.

"Tourism is New Zealand's largest industry, and growing fast. While growth presents huge opportunities for New Zealand communities the challenges that come with growth need to be well managed and the tourism industry is committed to being part of the solution,'' he said.

Prime minister John Key is also tourism minister and a spokesman said that the government welcomed the report.

"Over the coming weeks and months the government will engage further with the industry and other key stakeholders such as local government before reaching a decision on the best mix of funding tools for the future," the spokesman said.

Malcolm Johns, Christchurch International Airport said rapid tourism growth meant there was a local tourism infrastructure deficit in parts of New Zealand, especially in regions with low numbers of rate paying residents and high visitor numbers.

While growth presents huge opportunities for New Zealand communities the challenges that come with growth need to be well managed and the tourism industry is committed to being part of the solution.

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The report s highlights that the government benefits significantly from the tourism industry, not least from the estimated $2.8 billion in GST that tourists pay every year, and should invest alongside the tourism industry.

The proposal from the tourism industry leaders has been carefully designed to avoid the problems observed overseas, like with the Australian Passenger Movement Charge, where tourism taxes are used for general revenue purposes and disconnected from tourism.

The report also suggests ways that the funds could be allocated.

Grant Webster, Tourism Holdings Ltd CEO says, "By working together, industry and government could establish an independent entity that would bring greater discipline and commercial rigour to investment decisions than any of us could achieve on our own."

A spokeswoman for Auckland Mayor Phil Goff said the issue of a bed levy and $5 increase to the border levy was raised by Key at their first official meeting in Auckland yesterday.

The report had just been released and the Government had not responded. Discussions would continue between the council and Government, she said.

This week, Goff proposed a visitor levy on hotels and other accommodation in Auckland - costing a few dollars a night at a backpackers to $20 or more at the city's top hotels.

The levy would apply to Kiwi and overseas visitors and could raise between $20 million and $30 million a year.

The visitor levy is one of three new ideas put up by Goff to raise extra funding in his first budget. The other ideas are a regional petrol tax requiring government approval and a targeted rate for new large-scale housing developments.

See the full Tourism Infrastructure report here:

- additional reporting from Bernard Orsman.