Budget 2020: Grant Bradley - What Tourism's $400m special fund, wage subsidy extension means

Queenstown Mayor Jim Boult marks the domestic tourism restart with a Bungy jump. Photo / Julian Apse

COMMENT:

For tourist operators and the industry nothing the Government could deliver was ever going to be enough.

There are signs of still be more to come further down the track on top of an extended wage subsidy and a special $400 million fund, but some businesses will never make it past this accelerated test of evolution.

The biggest and the fittest may not survive and it's the most adaptable that have the best chance. That means surviving perhaps months of hibernation and changing switching their customer base from international to domestic tourists.

Tourism Industry Aotearoa says the Budget sends the right signals but the sector was hit first and likely will be the last to recover with many casualties along the way.

"The Budget package will not be enough to prevent significant job losses across the industry. In terms of immediate survival, the measures announced today are welcome but further initiatives will be required in the months and years ahead," said TIA chief executive Chris Roberts.

The group representing inbound operators; the Tourism Export Council, is scathing, calling it a sad day for international tourism.

''The package will not help inbound tour operators or businesses that have 80 per cent of their business orientated around international visitors to make it to the finish line (at the end of the year). In fact, the tourism recovery package does not even help businesses to get to the starting line in spring,'' said chief executive Lynda Keene.

New is the $400m 'Tourism Recovery Fund' which is light on detail and will be challenged to find its targets quickly enough to provide meaningful direct life support.

There will be ''protection and assistance'' for some operations deemed so strategic that they can not be allowed to fail.

These could be operators in smaller centres key to those economies. Expect there to be a long list of applicants.

The most immediate benefit for nearly all tourism businesses is the eight week extension to the wage subsidy scheme. The eligibility bar is stepped up to a 50 per cent hit to revenue but in tourism, where many businesses have shrunk to zero income, nearly all will qualify.

The industry - as with many others - wanted an extension out to the full six months and the eight weeks this will take tourism through to early August in what should be the middle of the ski season.

Tourism before Covid-19
• Total spend $40.9 billion – $112 million per day.
• International spend $17.2b – $47 million per day.

By then, will those catering to large Australian market be able to cash in on a transtasman travel bubble?

Besides New Zealand and Australia's success in the health battle against the virus - so far - this Covid horror story has got worse at every turn so it would be a major twist in the plot to see the bubble forming in August rather than later in the year at best.

As part of the $400m there will be a ''transitions programme'' to deliver advice and support for either pivoting a business towards the domestic and Australian market, hibernating a firm, or other options. This will be useful if it can get to work quickly.

And there's welcome grunt added to dishing out the money with Finance Minister Grant Robertson slated to join ministers of Tourism, Māori Development, Conservation, and the Under Secretary of Regional Economic Development.

For what must be further down the track, Tourism Minister Kelvin Davis also announced the establishment of the New Zealand Futures Tourism Taskforce, a public-private taskforce will lead the thinking on the future of tourism in New Zealand. Crucial but for a later date.

And as already announced and eagerly anticipated Tourism NZ will shift its focus from selling this country overseas to selling it to Kiwis with some of its budget of just under $112m. There is a soft rollout underway and the campaign proper will start as soon as it is felt domestic travel has been bedded in safely. TNZ will also take the lead in the transitions programme and its chief executive Stephen England-Hall says his organisation has the information about what Kiwis want and aims to get the programme up and running within days.

• Covid19.govt.nz: The Government's official Covid-19 advisory website

Chris Roberts, chief executive of Tourism Aotearoa. Photo / Jason Oxenham

Roberts says he's encouraged by the Government recognising just how important tourism is and welcomes the $1.1b managed by the Department of Conservation to create 11,000 environment jobs in the regions. This could provide work for some the near 400,000 who were employed directly or indirectly in tourism but who have now lost their jobs.

The prospect of further help down the track is also a good sign, he says.

Before the Covid-19 ravaged the tourism delivered around $47m in foreign exchange to the every day of the year and domestic tourism contributed another $65m daily.

Today's announcements came as level 2 allowed domestic travel - the most welcome step in getting the industry breathing again.

In Queenstown Mayor Jim Boult took the lead in welcoming the return of domestic tourism with a Bungy jump into the Kawarau Gorge this morning.

AJ Hackett Bungy NZ co-founder and managing director Henry van Asch says the move to reopening of the Kawarau Bungy site is a positive step but warns there is a long tough road ahead.

10Things

But in the spirit of not wanting to waste a crisis van Asch speaks for many when he says the pandemic, while catastrophic for New Zealand tourism, provides an opportunity to rethink tourism.

"There's been a feeling that we've had too many visitors to New Zealand for some time, so it's important we make the most of the opportunity to re-create tourism.''

And besides this morning's impressive stunt by Boult there was something else to get excited about. Adult jumps for the time being are less than half the standard price.

This is something that all New Zealand tourist operators will be thinking about - the Goldilocks price point. Not to hot and not too cold.

There have been justifiable complaints that prices aimed at overseas tourists on the trip of a lifetime to New Zealand have been beyond reach for Kiwis.

The foreign tourists aren't coming any more, now's the time to rethink the offer for the domestic visitor market.

With more help from the Government those adaptors that get the proposition right, perhaps with the help of the transitions programme, now have more of a chance of bouncing back to the other side of this.