Christopher Luxon and Tourism Minister Louise Upston speak to the media at the SkyCity Convention Centre.
The Government wants tourism to play a major role in boosting economic growth in the short term, and in doubling export earnings by 2034.
Tourism Minister Louise Upston has made several recent funding announcements to boost tourism from International Visitor Levy money, but these are not additional money for the sector.
This comes as tourism takes centre stage in the Government’s “going for growth” efforts, and as many in the tourism, local government and conservation sectors call for greater investment in areas they say are under-resourced.
But Upston suggested there was no immediate infrastructure need because visitor numbers were only at 86% of pre-pandemic levels.
“I’m not talking about only some visitors and only going to some places. I’m saying, very clearly, we’re open for business, anyone, anytime, anywhere. We have capacity,” she told the Herald.
“With the exception of probably one location, we want growth, we want more visitors.”
Her exception was the Mackenzie district, which includes hotspots Aoraki National Park and Lake Tekapo, with its small ratepayer base.
Queenstown is not in the same category, however, and “hasn’t stopped promoting itself to visitors”, even though local authorities estimate the water infrastructure needs at two and a half times the local population.
Louise Upston took over the Tourism and Hospitality portfolio in January. Photo / Mark Mitchell
Longer term, Upston said there were challenges around what will be needed once tourism numbers have fully recovered, and as the Government looks to continue increasing them.
Those costs will need to be shared, especially for mixed-use infrastructure (used by residents and tourists).
One way to do this - which Upston supports, and the Government is considering - is charging international visitors an access fee for iconic destinations. That money could then be reinvested into those destinations.
She wouldn’t be drawn on whether Kiwis should also pay for access.
Another way is a bed tax, though Upston said this was off the table for the time being, despite Auckland and Queenstown calling for one.
There will be some IVL money for additional investment, rather than for Crown savings, though at this stage she couldn’t say how much or what for.
“In the not-too-distant future, I will be announcing the Tourism Growth Roadmap, and that will make it clear what the investment is for the year going forward, and what my plans are beyond that.”
There may be additional Government funding, she indicated, at a time when the Government continues to exercise fiscal restraint.
Aoraki Mt Cook is part of the Mackenzie district, which has a small base of ratepayers and high numbers of visitors. Photo / George Heard
No additional funding yet - but lots of Crown savings
The IVL rose from $35 to $100 in October last year, providing an estimated $149m-a-year in additional revenue. It must, by law, be spent on tourism or conservation.
Budget 2024 banked $261.9m of this over four years as a funding switch: swapping additional IVL revenue for Crown funding, which improves the Crown finances while maintaining overall investment.
An overwhelming majority (84%) of stakeholders object to using the IVL in this way, according to IVL consultation last year. Instead, they want IVL money to add to overall spending.
Asked if the IVL-funded initiatives she’s announced so far were funding switches rather than additional spending, Upston said: “That’s correct.”
Altogether they save the Crown $60.45 million. They include:
A $500,000 Tourism NZ campaign to attract tourists from Australia.
A $3 million campaign to bring tourists to regional New Zealand over autumn and winter.
$30m to support conservation tourism.
$2.45m for regional events outside peak times.
$9m in contestable funding for the upkeep of the Great Rides network.
$3m to secure more business events for New Zealand.
$13.5m for Tourism NZ to market the country to China, Australia, the United States, India, Germany and South Korea.
But Upston said the IVL can be used in this way if IVL Ministers (Upston, Conservation Minister Tama Potaka, and Finance Minister Nicola Willis) decide it’s a priority, which they did.
International arrival numbers are at 86% of pre-pandemic levels. Photo /123RF
It’s unclear if the $60.45m is additional savings for the Crown or part of the $261.9m banked in Budget 2024.
If the latter, there remains an estimated $78m a year in additional IVL revenue that could be used to increase overall spending in conservation or tourism.
Tourism and conservation advocates have been waiting for over half a year for a decision on how this might be spent, while the IVL pot has swelled with tens of millions of dollars from the higher rate.
Investment priorities, according to Tourism Industry Aotearoa and Local Government NZ, include water and transport infrastructure, while environment and recreational groups point to the needs of the Department of Conservation (DoC).
This kind of user charge aligns with a 2023 tourism briefing, from the Ministry of Business, Innovation and Employment (MBIE), which said the question of who pays was “an economic problem rather than a fiscal one”.
But Upston indicated the fiscal reserves for tourism weren’t empty.
Asked if the message to the sector was no more Government money, she said: “That’s not the message. Things will be clearer when the Tourism Growth Roadmap comes out, and we confirm our IVL investments.”
Prime Minister Christopher Luxon and Tourism Minister Louise Upston at Weta Workshop Unleashed. Photo / Dean Purcell
More tourists, more Kiwi workers, higher wages please
Tourism is a central role in Prime Minister Christopher Luxon’s focus on economic growth, though many contributing factors are beyond direct Government control including global economic headwinds (such as ongoing tariff uncertainty), and the value of the New Zealand dollar.
Appointed in January, Upston spent her first weeks as the new minister meeting with key stakeholders.
“What really impressed me was actually how unified the sector was, and the view very clearly was, job number one, to get back to the numbers of visitors from 2019.”
In December 2019, 528,000 international visitors arrived in New Zealand. This fell to 365,000 in December 2022, before rising to 470,000 in December 2024.
International visitors spent $12.2 billion in New Zealand in 2024, including $3.2b in the December quarter alone. Adjusted for inflation, this is 86% of 2019 levels.
Upston wouldn’t put a number on how many more tourists there was capacity for, nor how many she wanted by 2034 to help double export earnings.
Tourism Minister Louise Upston supports charging international visitors to certain hotspots, which the Government is currently considering. Milford Sound is one of the proposed places for an access charge. Photo / Supplied
Her announcements so far are not surprising. It’s long been part of New Zealand’s tourism strategy to boost numbers in the off-season and to the regions.
Nor is another of her aims surprising: to lift wages and lift productivity in what MBIE describes as a low-wage, weak-productivity sector.
“That doesn’t happen overnight,” Upston said.
“When I talk about the long-term goals, I’m looking at workforce issues, I’m looking at the structure of how we operate and promote, how we drive quality - all of those things are important.”
Upston said a key goal, after boosting tourism numbers, is to have more New Zealanders working in tourism and hospitality, rather than migrants.
Why are Kiwis not especially keen to work in the sector?
“I just don’t think the sector’s promoted it well enough, for one reason.”
She said the low-wage descriptor was unwarranted, but conceded that Government policy allowing businesses to pay migrant workers the minimum wage - rather than the median wage - was affecting tourism wages.
“That’s a change in an immigration setting across the board. It’s not aimed at one sector.”
How to lift wages, then?
“We need to grow tourism businesses. We need to grow the value from the tourism visitors we have. We need to look at other areas in the ‘going for growth’ sectors applying to tourism, whether it’s innovation, whether it’s developing talent, whether it’s lifting productivity.
“I’m really positive about how the sectors come together, and how we can work on growth and supply and infrastructure challenges in the future.”
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Derek Cheng is a senior journalist who started at the Herald in 2004. He has worked several stints in the Press Gallery team and is a former deputy political editor.
