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Facilities need funds

Facilities need funds - Local Government March 2017

It’s time to get serious on tourism funding, says Lawrence Yule, President, Local Government New Zealand.

Tourism is booming, bringing with it an estimated GST haul of $2.8 billion for the government – more than 10 percent of the forecast annual total GST take of $26.5 billion.
While there are many positives of increased tourism, especially for regional economic development, the rapid change is also causing some growing pains. For the communities actually on the receiving end of an influx of travellers the burden can be heavy.
As LGNZ and others including Tourism Industry Aotearoa and Federated Farmers have recently highlighted, many popular visitor destinations have a low ratepayer base, making it difficult to fund the infrastructure needed to support tourism.
While central government collects GST on tourist-related goods and services that local and regional councils provide, the options available to those councils for paying for the amenities and services – toilets, carparks, access roads and other essential infrastructure – used by the growing number of tourists are limited.
This summer there has been no shortage of stories about the pressure communities face as a result of rising visitor numbers – reports of issues with freedom camping have been frequent and overcrowding on popular walking tracks has been an issue, among other problems.
We are starting to see more and more commentary on this as well. Federated Farmers raised concerns in January about the lack of central government investment in adequate facilities in rural areas.
LGNZ believes the situation is becoming urgent and the potential risks of not acting could be significant for both local communities and the tourism industry. The time for a serious approach to achieving sustainable, high-quality facilities is upon us.
We cannot let ourselves down by not having appropriate infrastructure around the country.
The recent report into tourism infrastructure needs commissioned by Air New Zealand, Auckland Airport, Christchurch Airport and Tourism Holdings further highlighted that the government now needs to step up and take action on funding solutions.
A key finding of the report, Addressing New Zealand’s most pressing local tourism infrastructure needs, was that the 20 “priority councils” which have experienced significant tourism growth need an immediate investment of around $100 million.
The report also calls for ongoing investment of $100-$150 million a year for the next 10 years to keep up with forecast growth.
This proposal is fully supported by the local government sector.
We also need to consider the challenge of providing amenities and services for visitors on a sustainable basis. Put simply, building new assets creates ongoing operational, maintenance and improvement costs which must still be funded by local ratepayers. These costs must also be considered in the funding process.
There are a number of funding mechanisms and models we could use to improve the way tourism infrastructure is funded.
These include something similar to the Regional Mid-Sized Tourism Facilities Fund already in operation, government contributing from existing central funding or the sharing of a portion of GST, and from industry via levies.
Tourism is growing at a rapid rate and this growth is forecast to continue, so these options and others need a clear and firm decision.

This article was first published in the March 2017 issue of NZ Local Government Magazine.

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