Key stakeholders expected the near-threefold increase in the foreign tourist levy last year to feed into cash-starved tourism and conservation efforts, but the vast majority is beefing up the Government’s own books.
Budget documents reveal the Government is banking up to $139 million a year from International Visitor Levy (IVL) revenue, paid by about 60% of international visitors, which was lifted a year ago from $35 to $100.
IVL ministers (Minister of Finance Nicola Willis, Minister for Tourism and Hospitality Louise Upston and Minister of Conservation Tama Potaka) decided in Budget 2025 to allocate $55m a year from the IVL pot to new spending in conservation and $35m to new spending in tourism.
This is from an estimated annual IVL pot of $229m, though this may have been revised down to $190m a year due to fewer-than-expected numbers.
This means at least $100m a year, and up to $139m a year, is flowing back to the Crown in the form of a funding switch: swapping IVL money for Crown spending.
This essentially substitutes cash from foreign tourists for Crown funding, while overall spending stands still.
It provides the same fiscal headroom as if the Government had banked the IVL revenue straight into the Crown account – and it’s legal as long as the returned Crown funding comes from the tourism or conservation portfolios.
The extent of the funding switch is revealed in a Treasury report from December. The higher IVL rate was expected at the time to swell the IVL pot by an additional $149m a year.
Willis told Treasury she wanted only $30m of it – or 20% – to go to new spending, $15m each for conservation and tourism.
Adding what was previously prescribed from the old IVL pot, this brings total IVL funding for new spending in conservation to $55m a year and in tourism to $35m a year. These amounts were confirmed in Budget 2025.
Advocacy groups in those sectors, however, overwhelmingly rejected using IVL money in this way. Targeted consultation on increasing the IVL rate last year revealed a huge majority (84%) in favour of using the IVL “in addition to Crown funding and not as a replacement”.
The Department of Conservation (DoC) is short an estimated $1.65 billion a year for what it needs to meet its biodiversity objectives. Cost pressures from international visitors on conservation land are estimated at at least $96m a year, while on tourism infrastructure, it’s at least $150m a year.
Responding to the extent of the Government’s funding switch, Local Government New Zealand said it was “disappointing”, Forest and Bird called it “deeply concerning” and the World Wide Fund for Nature in New Zealand (WWF-NZ) described it as “troubling”.
Tourism stakeholder responses were more moderate, with general support for the Government’s Tourism Growth Roadmap (which has $35m in IVL funding behind it).
But Tourism Industry Aotearoa added: “Our view is that the IVL shouldn’t be used to substitute core funding but should deliver incremental gain.”
The Herald has reported extensively on the ministerial shenanigans last year over whether to lift the IVL and how to spend it.
This included Willis investigating a law change under urgency for Budget 2024, which would have enabled the money to be spent on whatever the Government fancied.
She eventually settled on a funding switch, which has the same effect by replacing Crown funding in the conservation and tourism portfolios with money from the IVL.
A Treasury report to Willis in December referred to this as “backing out”.
After slicing up $55m for conservation and $35 for tourism, the rest of the IVL pot will be switched for Crown funding in conservation (via the Services for Conservation Multi-Category Appropriation) and tourism (via the Marketing of New Zealand as a Visitor Destination Appropriation).
“This will generate positive fiscal headroom by ‘backing out’ an equivalent amount of existing Crown funding,” the report said.
A 50:50 split in IVL spending for tourism and conservation is maintained because $20m had already replaced Crown funding for Tourism New Zealand. This means the total IVL spend in tourism is $55m a year, the same as for conservation, but only $35m of it represents new spending.
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.
Potaka, the Conservation Minister, has several other plans to raise money for DoC, including a trial charging for car parking at tourism hotspots, access charges to iconic sites for foreign visitors and selling off low-value parts of the conservation estate.
Upston has made a similar point in saying there are more ways to fund tourism infrastructure than through the IVL.
But this has done little to assuage concerns from conservation and local government advocates.
“Kiwis have the right to expect that the IVL pot is proportionally divided and used for the biodiversity work needed to actually halt and reverse nature loss in New Zealand,“ WWF-NZ chief executive Dr Kayla Kingdon-Bebb said.
Richard Capie, Forest and Bird group manager for conservation advocacy and policy, said more funding was “desperately needed” to protect “more than $133 billion in natural assets”.
“Instead, this analysis highlights the Government’s lack of investment in New Zealand’s environment. It’s deeply concerning, given the importance of the environment to our economy and society,” Capie said.
Local Government New Zealand president Sam Broughton said the Government shouldn’t be keeping most of the extra IVL revenue, while tourists place “a massive burden on the basic infrastructure that communities are currently self-funding through rates”.
Regional Tourism New Zealand chair Andrew Wilson was not critical, however.
“We have seen positive signals from the Government in terms of longer-term funding from the IVL to support the supply side of tourism. That includes addressing the infrastructure needs required to support increased tourism demand,” Wilson said.
“We anticipate that allocation of the IVL towards the supply side will be considered annually and will continue to evolve as visitor numbers increase.”
This appears to be a departure from his predecessor, David Perks, who told the Herald earlier this year that investment from the IVL should be “over and above” what the Government is already spending.
Tourism Industry Aotearoa chief executive Rebecca Ingram supported the IVL being used in the short-term to market New Zealand to overseas visitors.
“We are particularly supportive of the workstreams in the Government’s Tourism Growth Roadmap, and are keen for these to enable a long-term and strategic investment strategy for the IVL,” Ingram said.
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.