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The Davis break down: What the minister said at TRENZ

11 May 2018  By Bridget O'Connell

The main floor of the Edgar Centre during TRENZ at Dunedin last week. Image: TIA

The Ticker breaks down tourism minister Kelvin Davis’ views on the big issues in the sector.

What follows includes excerpts from the minister’s official TRENZ speech and responses to questions from journalists following his address and we give our take in bold.

On the government’s vision of a successful tourism system:

Tourism will enrich New Zealand through productive, sustainable and inclusive growth. We need a flow of high-value international visitors throughout the year, from a wide range of markets, who visit more of our regions – because we want to spread the benefits from tourism across New Zealand.

We want the sector and regions to have what they need to make the most of our rising popularity – that is: the right funding mechanisms for infrastructure and services; and a workforce with the right skills, knowledge and attitude to work in tourism.

We want visitors to go away raving about their New Zealand experience, about our tourism sector; and about our environmental, social and economic successes.

Over the last decade, the emphasis has been to welcome as many people as possible – and our infrastructure suffered. We want quality as well as quantity. We can handle both, but we need to do it together.

TT: The usual platitudes here but Davis does attempt to get onside with industry – “we need to do it together” – but that call may be tested in the months ahead as the border tax takes shape.   

On Māori tourism:

There are huge opportunities for Māori and non-Māori tourism businesses to flourish off our unique language, culture and stories.

Māori tourism operators should lead and innovate, and they should be a resource for other operators to partner with. The Government is keen to support this.

TT: Davis has spoken a lot of his support for Māori tourism but we are yet to see any plans although we suspect he has been working closely with Shane Jones over the recent deployment of the $1bn Provincial Growth Fund into a number of Māori tourism initiatives. We expect that to continue but could there also be a significant announcement at Budget for NZ Māori Tourism? They are the experts in this space after all. Davis’ impending appointments to the Tourism New Zealand board will also give industry another clear view of his desire to see Māori culture and people play a more prominent role at the agency.  

On current challenges:

One public concern is the burden on communities and ratepayers to pay for tourism-related infrastructure.

The seasonal and regional travel patterns of our visitors mean that the gains from tourism are not spread evenly across the country.

Overcrowding and the resulting environmental problems are the opposite of how we both see ourselves as a destination, and how we want to be seen and remembered by international visitors. It’s a problem at peak times – but the negative perceptions persist and I don’t want our environmental and tourist reputation damaged.

Some of our policy settings, such as the Freedom Camping Act, were developed at a time when New Zealand was focussed on attracting more visitors, so need to be looked at in light of the high visitor growth we have experienced and our new reality.

The forecast growth in tourism will make the challenges more acute, and we risk a hardening of New Zealander’s attitudes towards tourism.

TT: Davis acknowledges the pressure tourism growth is putting on communities and the effect that is having on public perceptions. He is wary of the risk of negative attitudes entrenching. He also puts the Freedom Camping Act in his sights here although we expect he will revert to the guidance his own freedom camping working group gives on the law. 

On the border tax:

On infrastructure and funding issues Government is looking at options for a levy on international visitors.

There are several issues to figure out: who to include, who to exclude, how to collect, where to collect, how much, who it should go to, and so on.

A targeted levy is not straightforward to implement, but it’s our Government’s view that international visitors should contribute to the infrastructure and services they use, and to help maintain our Conservation Estate. We continue to work through the details and many of you in this room will be part of this conversation.

We are making some initial decisions that now need to be socialised [shared] but it won’t be terribly far off. I am talking more weeks not months, with implementation expected by Budget 2019.

[In terms of feedback from the industry regarding the visitor levy] some people say it’s great but others say it’s terrible. The reality is we are going to have 5.1 million visitors arriving on our shores in five years time and we need to find ways to pay for the infrastructure and everything they use, so we are developing a mandate for that.

TT: Finally, we get a commitment to an election promise made oh so many months ago. As far as pre-announcement announcements go this one was pretty effective, managing to throw the industry and the media into a semi-tizzy but not too far given the lack of details. Davis says the industry will “be part of this conversation” but given the lack of consultation so far, many fear that other stakeholders will really be invited in just to listen and not to meaningfully contribute. Given this government’s form, don’t be surprised if we get an announcement for a border levy working group.

On the future of the $100m Tourism Infrastructure Fund and the Provincial Growth Fund:

The Government is committed to continuing the Tourism Infrastructure Fund of $25m a year for four years, with the second funding round to close next week. I have also directed officials to look at the criteria for the TIF. The purpose is for it to help, not restrict, infrastructure plans.

Our Government is committed to the regions. Tourism represents a major opportunity to create sustainable jobs and economic growth. Tourism is the one industry that traverses urban and provincial New Zealand.

$35m has been invested in tourism-related projects through the Provincial Growth Fund so far and that is just a start.

The funding includes infrastructure projects, attraction development and will promote our unique culture and heritage. And there is plenty of scope for the Government to invest further in tourism through the PGF. Watch this space.

TT: Expect a loosening of the criteria for TIF funding as smaller councils have been vocal about finding the co-funding application difficult. It will be interesting to see if the TIF is still around after four years and how it will work alongside a border levy until then. Indeed, could we soon have three very different funding mechanisms – the border levy, TIF and PGF – all active in the tourism-related space? Our guess is that there may only be the border levy left after four years as the TIF and PGF run out their mandates. 

On freedom camping:

The Government has a leadership role to make sure we manage freedom camping. To do this we are working with the tourism industry and local government to find solutions that work.

We have set up a freedom camping working group that includes industry and local Government representatives but is small enough to be nimble and work quickly. And we need to work quickly. I intend to have some practical actions in place ahead of the next peak season.

The issues around freedom camping are complex and require a well-considered response – what works for one community doesn’t necessarily work for others. Some management strategies will take longer to implement and will require changes to legislation.

I know we all talk about it as “freedom camping” – I see it more as “responsible camping”. I think a name change is in order.

TT: Striking the balance between local authorities desires to have some choice around controlling freedom camping and addressing the issue on a national level to maintain some semblance of consistency will not be easy. Legislative changes will take one to two years so the practical actions Davis refers to are probably centered on enforcement, education and designation here.   

On whether New Zealand is getting too expensive:

It doesn’t seem to be putting people off coming here if we are predicting that in five years time we will have 5.1 million visitors a year.

It is a concern if high prices mean there is a risk of making it hard for New Zealanders to go on holiday. That is why there is emphasis on getting into the regions where it is a lot cheaper than the cities – getting out to the Hokianga, and the Bay of Islands and way up north is a lot cheaper.

TT: Basically, no, it is not getting too expensive. Which is something someone always says as they jack up prices. ITOs especially will bite back on that claim but it is hard to argue with continued growth in visitor numbers.    

On whether DOC is the de facto ministry of tourism, if they need more funding and what this might look like:

One of the problems in New Zealand is that everything is free – you can walk along tracks and parks and go to toilets and use other facilities and its all for free. You have to look at ways to make DOC a bit more self-sustainable.

The minister of finance, the minister of conservation and myself are talking about the issues around whether DOC could introduce charges to become more self-sufficient. We are exploring these options, but I’m not going to go into specifics on that.

I think it is a sensible conversation to have. A lot of our attractions are free and we need a way of making people pay their way if they are going to use them and put pressure on our infrastructure. We have to look at various options.

Internationally, I remember going to Europe and paying two euros to go to the toilet, you just did it, you didn’t think twice about it. I think visitors will come here and they won’t think twice about it, as long as its justified and its about maintaining facilities and improving infrastructure.

TT: It is clear DOC is exploring ways to wring more cash out of its estate but it has already explained the difficulties of implementing charges to access the national parks. But that doesn’t mean there isn’t a lot more it could do on charging visitors for access to attractions or the use of facilities. We expect to see announcements this year or next.

On the DOC estate introducing differential charges for New Zealanders and overseas visitors:

It is premature to go into that sort of detail. The idea is that if you are going to go up a path that is going to be a couple of hundred thousand of dollars for the government to build you have to look at ways we might be able to recoup the cost.

TT: DOC is already going up this path with differential charges for international visitors using huts and campsites on five Great Walks. It is a start and we expect more to come. 

On what local government and industry needs to do to support tourism:

Central government works to support tourism but councils and the sector are also part of the team. Together we must deliver the sustainable and inclusive growth we all want to see.

Local authorities and industry need to plan for visitor growth and manage their destinations – not just market them.

We need broader destination plans, which clearly articulate how a region will develop as a visitor destination, and which has the support of local communities. This will also inform us of how Government funding could be used more effectively.

Collaboration, not competition, between regions is also necessary.

TT: A clear call from the minister for more destination management work and regional collaboration but there’s very little leadership in this space. Davis will have to provide it if he wants action here.

On improving the perception of tourism as a viable career:

Most of you will know that tourism is not seen as a viable career for many young people – due to low wages, irregular or unsocial hours and unclear career pathways.

This is something we need to work on. A professional tourism workforce and quality jobs are crucial for our regions and the long-term sustainability of the sector.

It will be particularly important, given the forecast growth, to ensure businesses have the labour and skills they need to continue to deliver a high-quality visitor experience. The Government will look to support industry initiatives to address these issues in partnership with the sector.

Tourism collaboration is essential for continued success.

TT: Davis puts it back on industry to provide some leadership here but it is only the government that can resource and prioritise tourism education in the country’s high schools. Surely, that’s as important now as it has ever been? Likewise, it is the government that sets minimum standards when it comes to pay and conditions. But his pledge to support industry initiatives to address labour and skills shortages will be welcomed, if they happen, by industry.

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