Economics Burton’s Bucolic Brouhaha

The monthly data on overseas visitor numbers and guest nights which flow from Statistics New Zealand and his own ministry give Tourism Minister Mark Burton regular material for enthusiasm about developments in his portfolio.

Early in March, for example, he greeted Statistics New Zealand’s latest report on international visitor arrivals as “further evidence that New Zealand’s tourism industry is still thriving”. The report showed an eight percent increase in January 2003 visitor numbers compared with January last year. The Minister also referred to Tourism Research Council projections indicating that international visitor arrivals will increase by six percent year to 2008; visitor yield is projected to grow by almost double that rate, or 72 percent in the same period. By 2008, this would translate into $9.7 billion being added to the economy.

A week or so later, Burton was “delighted” by the results of his ministry’s latest International Visitor Survey showing international visitors spent record $6.14 billion last calendar year, 17.3 percent increase over the previous year. “This is excellent news indeed,” he enthused. “In the space of single year, guests from around the world injected an additional $904 million into New Zealand’s economy.”

Since 1997, international visitor expenditure has doubled from $3.03 billion to $6.14 billion. The Minister hailed this as “a tremendous ongoing performance” which “reflects the critical role and the major contribution tourism makes to the New Zealand economy”. New Zealand is attracting more visitors and the visitors are staying longer and spending more.

But are strains now being heaped on the country’s economic infrastructure? The Ministry of Tourism is undertaking three-year research project into the impacts to find out. The project will identify and assess the implications for the country of hosting an additional 33 million international and domestic visitor nights year by 2008.

Burton declared he was “strongly supportive of such study”. And so he bloody well should, if he and/or his officials don’t know what the impacts of tourism are.

Obviously, lack of infrastructure or resource constraints should not be allowed to constrain the tourism sector’s potential. Nor should the sector’s growth be allowed to generate undesirable social or environmental outcomes.

Identifying infrastructural shortcomings is just part of the problem, however. The Government also must sort out who should pay for improvements and how. Local authorities have floated the idea of bed tax, among other possibilities – case of snoozer pays.

When it comes to the rural roads on which tourists travel, farmers complain they are footing the bill – or most of it – and enough’s enough.

Federated Farmers presented its submission to Parliament’s Transport and Industrial Relations Committee on the Land Transport Management Bill about the same time Burton was announcing the study into the tourism infrastructure. The Bill failed to get to grips with the critical underfunding of the country’s roads, the submission said. It also emphasised the unfairness of farmers and other landowners picking up the tab for roads used mainly for forestry and tourism.

The federation recognises tourism as growth industry and major source of revenue for New Zealand. Their submission showed international arrivals have increased by more than 300 percent since 1985 and local tourism has increased significantly as New Zealanders flock to relax in ski fields, the DoC estate, rivers, mountains, lakes and the sea, and increasingly own holiday homes in rural areas. These trends are heaping pressure on local roads but farmers, as the owners of the majority of property in rural New Zealand, are called on under the country’s rating system to meet the extra costs associated with this tourist traffic.

The Queenstown Lakes District, for example, once was farming region but has become top tourist spot. About 50 percent of the Queenstown-Lakes District Council’s rate take is used to fund roads, although landowners are small minority of road users. On the other hand, increasing numbers of tourists use the district’s roads – an estimated 90 percent of road traffic to Mt Aspiring National Park are tourists – but they do not meet the full cost of that use. The council would have some scope to charge for the demands of tourists through bed tax, but it has limited ability to charge locally based tourist operators and can’t charge tourist operators based outside their districts or day tourists for using the district’s roads.

The farmers’ case simply put is that quiet rural roads once used only by locals have become busy highways for people from outside the district or from overseas. As such, they should no longer be paid for by local property owners. Working out how to charge the people who now use the roads is the challenge.

Bob Edlin is Management’s regular economics writer.

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