Tourism infrastructure spending would balance impact of growth

New Zealand Institute of Economic Research senior economist Christina Leung

Increased government spending to address the impact of tourism on the country's infrastructure is a significant area where the regions could benefit from this year's Budget, says a senior economist.

Tourism Minister Paula Bennett last week announced a new $102 million tourism infrastructure fund had been launched alongside $76m in new funding for the DoC estate.

"Tourism is hugely important to New Zealand. It creates jobs and brings in billions of dollars to the economy. That's why it's important that we keep investing so we continue to attract high-value tourists and give them an amazing visitor experience," Mrs Bennett said.

The Tourism Infrastructure Fund would provide $100m over the next four years in partnership with local councils and other community organisations, for projects like new carparks, toilets and freedom camping facilities.

"The fund is about helping communities respond to demand and addressing capacity constraints. It will also facilitate future growth in some of our newer tourism regions as well as the main tourist hubs."

New Zealand Institute of Economic Research senior economist Christina Leung said with plenty of money in the kitty it would be interesting to see if the Government wanted to go for a lolly scramble, or continue on their theme of being prudent with their finances to reduce net debt.

"There's a range of areas of great demand, the Government has announced spending on a few infrastructure things - it will be interesting to see if any more comes out of it."

She said tourism had a huge positive impact on the regions, not withstanding the pressure it put on infrastructure.

"The infrastructure spending platform is conducive to growth but we do not want to see the growth occurring beyond the means. It's about making sure the right environment is in place to allow that growth to come through."

The Government had set a pretty hard target to reduce debt over coming years, so it appeared unlikely it would bring in a wide range of tax cuts, she added.

"It's ultimately not clear what areas should have tax cuts, it would depend on the Government's focus.

"The new prime minister seems to have an increased focus on social investment, so you would expect any spending would address those areas rather than widespread tax cuts."