Wednesday Letter: A new beginning

With the thrust of the new coalition government now clear, the Ticker‘s Paul Yandall asks, what could it mean for the country’s tourism industry?

Paul Yandall

What to make of the new coalition government? Firstly, the $1bn annual Regional Development Fund should help boost the industry’s offering as tourism will play a role in any plan for economic growth in the regions.

The devil will be in the details of course but it could be great news for the many regions currently caught between Tourism New Zealand’s worthy strategy of regional dispersal and a lack of concerted development on the ground. New product, cultural tourism, accommodation offerings and regionally-focused promotion could all be given a boost, either directly or indirectly, by the fund.

The planned investment in regional rail could also provide opportunities for the sector, opening up regions for product development. IwiRail-lite anyone?

Given that, it will be interesting to see what priority tourism will be given if the new government views it as just a component of its economic development plans. Could we see an increased drive by EDAs to swallow their associated RTOs? Combined EDA/RTOs might be the most efficient vehicle for the government to use to deploy the new fund.

Secondly, the coalition government’s commitment to the environment is to be welcomed. It is, after all, the industry’s greatest asset. Stronger regulation to clean up waterways and fund freshwater enhancement, increased conservation funding, Auckland airport light rail, and a re-prioritising of the National Land Transport Fund from roads to rail, cycling and walking infrastructure are all initiatives the industry could benefit from.

Plans for a $100m Green Investment Fund to stimulate up to $1bn of new investment in low carbon industries by 2020 is also something the sector should look closely at. Will eco-tourism operators be eligible? Some, surely, should be.

Thirdly, tourism operators and related business will be hoping the coming changes to immigration will not hamper their ability to employ overseas workers. The new government says it wants to ensure work visas reflect genuine skills shortages. If that is the case, then the impact should be minimal. However, Labour wants to cut annual immigration by 20,000-30,000 from the current 72,000. That is a huge chunk and if the government is to succeed in hitting that band then it is unrealistic to believe tourism, and hospitality in particular, won’t be affected.

A related matter is the government’s plan to progressively increase the minimum wage to $20 an hour by 2020. For a sector that is constantly attacked for being low wage and not doing enough to attract and keep talent, this is good news, although the many small businesses that comprise the sector – and some large ones too staffed by low-skilled workers – may not think so. To that, I would ask, if not now, then when?

Lastly, we wait with interest to see which tourism-related election promises have survived the coalition negotiations. From NZ First’s tourist GST return to the regions to Labour’s $25 border tax and Tourism and Conservation Infrastructure Fund, whichever party secures the tourism portfolio will be a strong signal of what’s to come.

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