National's money-go-round to save 'every tourism job' will take five years

Friday, 9 October 2020

New Zealand had about 20,000 tourism businesses pre-Covid and about 126 key ones received more than $270m in grants and loans to save them from possible closure.

ANALYSIS: National’s tourism spokesman Todd McClay has admitted his bold target of saving “every tourism job” could well take five years.

Nor is it clear exactly how much extra help the tourism industry might receive if National wins the election, and its initiatives for the Covid-stricken sector rely heavily on “recycling” existing tourism funding.

The ambitious jobs’ goal was echoed by National leader Judith Collins when the pair announced the party’s tourism policy, but McClay concedes that getting back to 400,000 jobs directly and indirectly related to tourism will take some time.

National MP Todd McClay, party spokesman for tourism and economic development, will not entertain the idea of bed taxes to pay for tourism infrastructure such as water supplies and roading.

“When I say every job, the commitment is over five years to get visitor numbers and spending back to where they were [pre-Covid-19].

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“There are a significant number of jobs that have been lost and will continue to be lost as the weeks and months go ahead.”

Treasury forecast that tourism job losses this year would peak at 92,000.

The International Antarctic Centre in Christchurch is among more than 100 recipients of strategic asset funding.

Tourism Industry Aotearoa’s more pessimistic prediction was that up to 200,000 jobs could go, and it estimates about 40,000 have been lost since the borders closed in March, with another wave expected as a result of the wage subsidy ending.

So how will National claw back those jobs?

Its tourism recovery package includes $105 million in new money, but is mostly a case of rearranging the deck chairs, switching funds already budgeted by the current Government into different areas.

More cash for tourism businesses

National’s most immediate financial support for struggling tourism businesses would be through its Tourism 2025 Fund which would help cover fixed costs such as leases.

Public toilets were the big winners when it came to tourism infrastructure funding distributed under the current Government. National is planning to set up an infrastructure bank that will lend money for tourism-related projects.

McClay said he personally would like to see $60m to $80m made available, and businesses would have to show they were still viable and had been adversely affected by the drop in visitors.

The 2025 Fund would use unallocated money from the $35 a head international visitor levy, the tourism infrastructure fund, and the strategic asset protection programme (Stapp).

The latter has proved highly controversial with $67m in grants and $203m in loans shared between 130 businesses chosen by the Tourism Ministers Recovery Group.

A further 178 Stapp applicants missed out and many did not apply thinking they were ineligible.

McClay said the 2025 Fund could assist some of those businesses, but it may be some time before it’s known how much unused Stapp money is available for redistribution.

Before the borders closed the international visitor levy had raised more than $56m to be split between tourism and conservation projects, and $8.2m is uncommitted.

The $100m tourism infrastructure fund was set up in 2017 to relieve the burden on councils trying to pay for tourism facilities out of limited rate payer funds, and there is $13.8m left.

Most of the money has been spent on toilets, rubbish bins, car parks, landscaping, and efforts to encourage responsible freedom camping.

Both the tourism and hospitality industries have been hit hard by Covid-19.

A review last year suggested it was time to refocus on bigger budget items, but no decisions have been made on its future.

Paying tourism infrastructure bills

McClay said National’s infrastructure bank would lend money to councils for projects directly related to tourism, such as waste water and drinking water supplies. “I’m not talking about walkways and events centres.”

McClay is also adamant that bed taxes – long sought by Queenstown and eyed up by other tourism hotspots – are off the table.

The bank will consolidate several existing entities including loans made by the Provincial Growth Fund, and Crown Infrastructure Partners which manages the Government's investment in ultra-fast broadband.

But McCLay could not say how much money the bank would devote to tourism.

“We have purposely not worked out the amount of money because the bank is not established yet.

“It’s not that we have no idea, it’s that the decisions have not been made, it's better to talk to the councils about what their requirement is.”

McClay said it was unfair to suggest National’s tourism policy was not fully costed.

“There are funds available that have not been committed that we will move around. They’re already budgeted for so it’s not new money, therefore it’s costed.”

Accelerating tourism

In terms of “new” money, National’s tourism accelerator fund will dedicate $100m over four years to help businesses “invest and innovate,” and they will have to contribute 30 per cent of the cost of their innovation.

Labour’s $400m tourism rescue package included a $17m transitions programme for operators adapting to a purely local tourism market, and $10m to improve their online presence.

McClay said the accelerator fund was not about adjusting to a domestic market, and more about businesses preparing for a different kind of visitor when borders opened.

“It’s not prescriptive in that it means one thing or the other, it will be for the companies themselves to have a look at how they want to change their businesses as a result of the reduction in visitors.”

An independent panel, chosen after consultation with industry, would assess applicants, in contrast to Stapp assessments which were done by Ministry of Business Innovation and Employment officials.

“And it won't be a small group of ministers making the decision for where this money should be spent,” McClay said.

National will also contribute $5m to the annual Tourism Industry Aotearoa trade show TRENZ which was cancelled this year as a result of Covid-19.