KiwiSaver cut, Best Start means-tested, $6.6b for business. Nicola Willis’ Budget aims for growth but she warns of slow wages and high unemployment. Video / Mark Mitchell
The International Visitor Levy (IVL) is paid by about 60% of foreign visitors, creating a money pot of about $190 million a year - more if the Government achieves the tourism growth it wants.
By law, it has to be spent on tourism or conservation, but the Government has used it to improve the Crown account by swapping IVL money for Crown funding in those portfolios.
Eight months after the IVL rate rose from $35 to $100, Budget 2025 revealed how some of the money from the higher rate will boost overall funding for tourism and conservation.
A bigger stream of money from a higher tax on foreign visitors is providing $20 million a year for the cash-strapped Department of Conservation(DoC) - but the Government is using a much larger amount to help inch closer to surplus.
The Government is still doing this, but has softened the amount by returning $8m a year in savings back to DoC in Budget 2025 from a previous "funding switch”. This is a move that replaces Crown funding with revenue from the higher IVL rate, leaving overall investment standing still.
It complies with the law (the IVL must be spent on conservation or tourism) as long as the Crown funding being switched is from the conservation or tourism sectors.
Tourism, conservation, and local government stakeholders overwhelmingly object to this, however, saying the IVL should be used to swell the amount of total spending.
About 60% of foreign arrivals pay a $100 International Visitor Levy, with Australians and some Pacific Islanders exempt. By law, the money from the levy has to be spent on tourism and conservation. Photo / 123rf
Environmentalists also describe the amount of money for biodiversity protection in Budget 2025 as woefully inadequate.
DoC is short an estimated $1.65 billion a year for what it needs to meet its biodiversity objectives. The $20m boost from the IVL is only 1.2% of that, and only about 16% of the additional IVL revenue from the higher rate.
All up, a total of $67m of IVL money is boosting DoC’s coffers in 2025/26:
$4m for Milford Road improvements;
$8m a year for four years returned from a previous funding switch;
$20m a year from additional IVL revenue;
a continuation of the $35m annual top-up from before the IVL rate was raised.
“Conservation will be better off because of the increased IVL allocation of Budget 2025,” Conservation Minister Tama Potaka said in a statement.
The higher IVL rate is expected to see the total revenue pot grow from $62.5m to $190m this year. This means roughly a third of it is boosting DoC’s funding.
Another third appears to be banked as “savings” for the Crown (last year’s Budget saved $70.6m a year from the funding switch, minus the $8m returned to DoC in this year’s Budget).
Budget 2025 is allocating $4m for improvements to the Milford Road corridor leading to Milford Sound. Photo / Mike Scott
No extra boost for tourism - yet
The final third might all go to boosting tourism-related funding; Potaka told the Herald the 50:50 split for conservation and tourism will be maintained for spending the IVL pot, instead of indications last year it might all go to DoC.
Those in the tourism sector can at least rely on $35m from the IVL pot; Budget 2025 confirmed a continuation of this annual top-up for each tourism and DoC respectively.
Tourism Minister Louise Upston wouldn’t say whether the sector can expect a further increase from what’s left in the IVL pot.
“I will release my Tourism Growth Roadmap in the coming weeks. Alongside this, I will provide more detail on the technical decisions related to the Budget,” she said in a statement.
Meanwhile local government and tourism groups have been crying out for more investment, especially for roading and water infrastructure, as the Government pushes for more tourists.
Upston said recently the investments for the year will be revealed in the Tourism Growth Roadmap. She added there are more ways to fund infrastructure than with IVL money.
‘No BS’ Budget = No Biodiversity Spend
DoC made several cuts in Budget 2025 to balance its books, including axing Predator Free 2050 Limited (and folding the work directly into DoC, saving $3.6m), and closing the Nature Heritage Fund (saving $1.3m) for buying and acquiring land for public conservation.
DoC is also restructuring (saving $5m), with hundreds of jobs to be disestablished and fewer ones created, shedding 68 roles in all.
This comes amid a biodiversity crisis: 94% of our reptile species, 82% of bird species, 80% of bat species, 76% of freshwater fish species, and 46% of plant species either face extinction or are at risk of being threatened with extinction.
“There’s a lot of species loss from predators,” Potaka told the Herald recently.
“I think the estimate was 60,000 a day, 25 million a year, native birds killed. Imagine if you had another 25 million birds every year in New Zealand.”
“New Zealand already has the highest species extinction rate in the world, and we’re just watching it happen like a slow-motion car crash,” World Wide Fund for Nature chief executive Dr Kayla Kingdon-Bebb said.
She called it the No BS (No Biodiversity Spend) Budget.
“It is utterly astounding that, in the midst of a climate and biodiversity emergency, this Government is ploughing over $200 million into underwriting new gas fields, scrapping funds that protect our declining native species and ecosystems, and significantly defunding the Predator Free 2050 initiative.
“It just makes no economic sense that we’re continually neglecting our greatest asset, and wilfully making decisions that are going to cost us more in the long-run.”
Potaka said protecting biodiversity wasn’t just the Government’s responsibility.
“It’s actually across a number of societal players whether that’s iwi or hapu and marae, regional and territorial authorities. Ultimately it’s the business of all New Zealanders.
“If every person had five traps they looked after in this country, there would be a lot of traps in place.”
The Government is also re-balancing the economy towards growth, saying there’s been too much emphasis on bureaucracy and environmental protections.
Forest and Bird general manager for advocacy Richard Capie said this points to a “massive disconnect”.
“They’re putting out an implementation plan for feedback, saying how important our biodiversity is to our economy and our society and our future. But that’s happening in a vacuum from wider government policy,” he said.
“That’s the big elephant in the room. How does coal-mining kiwi habitat on the Denniston Plateau fit with a plan to protect our biodiversity?”
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.
