New Zealand desperately needs international tourism back to fund govt expenses

Friday, February 11, 2022

Prior to March 2020, international tourism was New Zealand’s largest foreign exchange earner, and with the year ending 2019, the 3.8 million international visitors added $17 billion into its economy. That was 20.1 per cent of all New Zealand’s foreign earnings. The industry’s value to the economy was bigger than agriculture and similar to the financial services industry, growing at a considerable pace for many years and projected to grow further. Then in March 2020, COVID hit. New Zealand’s borders were and remain closed to international tourists.

For the tourism industry and individual tourism businesses, COVID has been economically devastating. Yet others see COVID’s arrival as a positive opportunity to re-set an industry – socially and environmentally. However, no matter your point of view, at present, there is no plan for the strategic return of less, the same or more international tourists, albeit borders are slated to be opened later this year. Tourism is down, but not out, and on so many levels – socially, environmentally, and economically, New Zealand needs international tourism back ASAP. Failing to plan for its re-introduction is planning to fail.

We continually hear the phrase that tourism needs a ‘re-set’, and as part of that, the government is proposing a shift away from the same number of tourists we are used to welcoming, to focusing on high-value international tourists. However, there does not appear to be a strategic plan for this. While we agree with aspects of a re-set, we do not believe the suggested (potentially fewer) high-value tourist approach is a sustainable or achievable goal. It is highly unlikely to match the economic and social contribution that our 2019 international tourists made.

While we disagree with the proposed focus, we also see no urgency to bring back international tourism to the economic levels we need. While the rest of the world opens up, we are lagging behind. We are not suggesting opening up recklessly, but we can’t find any strategic plan for the urgent re-engagement of international tourism that will allow us to compete with the rest of the world and get back the economic gains such tourism brings. Just opening borders will not be enough, especially if the domestic spender travels internationally, resulting in a further loss to the economy. Therefore, we present a targeted goal for international tourism that we acknowledge may shock many.

Our recovery target is to urgently market New Zealand to the world and welcome 3.8 million international visitors by December 2023.

As we said, at present, the government (who are major benefactors of international tourism) propose a future international tourism industry to consist of high-value (possibly fewer) international tourists, which is laudable, but we cannot find any public details of how such a plan would work. We go as far as to suggest that this approach is betting on an unknown, rather than the known of our past international tourist make-up. We challenge this approach further with several questions: What is high-value? Who is high-value? How could we stop low-value tourists (whomever they are) from coming here? Will potential international tourists have to show us their bank account to determine their high-value status before we allow them to travel here? Is visiting friends and family subject to similar restrictions? Who will decide who is high-value?

Our recovery target is simplistic and regains the benefits while reducing the downsides that were appearing. It is far from an immediate return to business as usual; it will take time to get international tourism back, but we have much ground to make up, and we must move now.

In 2019, New Zealand welcomed 3.8 million international tourists who spent $17 billion while they were here. However, we acknowledge there were growing and arguably real concerns in New Zealand about ‘over-tourism’ and its impact on local communities and the environment. While acknowledging the highlighted negatives, as a country, we heard less and did not complain about the benefits of international tourism – the $17 billion and the social contributions of jobs, more coffee shops, eateries, activities, etc., available to all New Zealanders. Nor did we complain about the $1.77 billion in GST paid by international tourist spending to the government (8% of all total government GST income) who used that for distribution into social services, etc. Then there were the 365,800 people employed (direct and indirectly) in the tourism industry who contributed to the government income via PAYE.

The issue that should worry every New Zealander now is how to fund, in some way or other, this financial gap for the government to maintain services. If we don’t want to fund it ourselves, and this is a very big funding hole to fill, New Zealand urgently needs international tourists back to the 2019 level as soon as possible.

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