Budget no boost for tourism

Media Release

Budget no boost for tourism

18 May 2006

The tourism industry is surprised that funding for New Zealand’s international marketing has not been increased in today’s Budget, the Tourism Industry Association New Zealand (TIA) says.

“Dr Cullen announced an $8.5 billion surplus for the Government but virtually nothing for one of the leading industries driving economic development,” TIA Chief Executive Fiona Luhrs said.

“Given the Government’s vision for the economy, we are surprised that Tourism New Zealand’s funding has not been increased over this year. This is a lost opportunity for New Zealand at a time when the economy is slowing.”

The Minister of Tourism, Damien O’Connor, is trumpeting an extra $63.7 million to lift New Zealand’s offshore marketing efforts, Ms Luhrs said.

“But it is important to note that this funding, spread over four years, merely holds Tourism New Zealand’s funding at its existing 2005-06 level. To clarify the Minister’s figures, Tourism New Zealand’s core funding has been boosted in the last few years by fixed term funding increases. Today’s Budget merely cements those funding increases in place for the next four years.” (See attached figures)

She compared today’s Budget with last week’s Australian Federal Budget which saw funding of $320 million for tourism over the next two years. This was in addition to funding for tourism from the Governments of each state.

“Australian Government funding for tourism has increased by 60 percent since 2000, according to the Australian Minister for Tourism. New Zealand Government funding for Tourism New Zealand has risen only 25 percent in the same period. TIA cannot understand why the New Zealand Government is failing to give similar backing to tourism in this

country as the Australian Government is offering its industry.”

Tourism is one of the few industries that provides jobs and economic growth opportunities in every region of New Zealand, Ms Luhrs said. International visitors also contribute in the region of $481 million to Government coffers through GST each year.

“Tourism is the fastest growing industry in the world and the tourism industry is willing to work with the Government to ensure New Zealand is well positioned to attract its share of the global market. However, we need to see more commitment from the Government than this Budget has delivered.”

The New Zealand tourism industry has consistently demonstrated high rates of growth over the last six years but is facing significant challenges. New Zealand’s dream run as one of the world’s hottest destinations is under attack, with India, Vietnam, Cambodia, South America, parts of Africa and Australia becoming fashionable. Visitor growth is slowing and the costs of advertising in offshore markets have increased, she said.

Meanwhile, cheap trans-Tasman airfares are encouraging New Zealanders to travel overseas, affecting domestic tourism.

“Private sector tourism businesses have been stepping up to the challenge of marketing their products internationally but to successfully keep New Zealand’s profile high among potential visitors, we need strong consistent commitment from the Government to promote New Zealand as a visitor destination.

“This is the responsibility of New Zealand Inc., not individual tourism businesses. Strong offshore promotion also has spin-offs for international trade, immigration and foreign affairs.”

TIA Members identified last year that more funding for international marketing was their number one priority in terms of how they wanted the Government to assist the tourism industry, Ms Luhrs said. TIA has been campaigning hard for an increase in Tourism New Zealand’s funding.

Tourism New Zealand’s Government funding

Tourism New Zealand’s total Government funding over the last few years:

97-98: $32.767m

98-99: $55.527m

99-00: $64.439m

00-01: $55.027m

01-02: $56.925m

02-03: $54.702m

03-04: $60.387m

04-05: $60.237m

05-06: $69.004m

(source: Tourism Research Council New Zealand)

Key statistics about tourism:

- Tourism is the world's fastest growing industry

- New Zealand tourism arrivals have doubled in size since 1994 to 2.38 million

- Forecast annual growth is 4.7% on average for at least the next five years

- Tourism is New Zealand's single largest export sector and contributed $7.4 billion dollars to the economy in the year ended March 2004. That is 18.5% of exports

- Domestic tourism contributes $9.8 billion to the economy each year

- Tourism directly and indirectly employs 10 percent of the work force. That is one in 10 jobs in New Zealand.

- Tourism represents 9.4% of gross domestic product and generates around $481 million in GST returns from international visitors each year. Tourism is the only export sector whose international clients pay GST.

ENDS

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