ACC Levy Increases Threaten Tourism Recovery

Tourism operators will face substantial levy increases of between 30% and more than 100% if proposed changes to ACC go ahead, putting significant strain on an industry already trading through difficult times, says Tourism Industry Association Chief Executive Tim Cossar.

In its submission to ACC on its proposed levy increases, TIA has asked for a staged introduction to give tourism businesses more time to manage and adjust to the higher levies.

As an example of the impact the proposed changes will have on the industry, Mr Cossar points to a ski company employing more than 100 staff which will be faced with levy increases in excess of $300,000 annually. He says a snapshot of the industry reveals that sport and physical recreation, amusement and outdoor guiding businesses will face levy increases of around 100%, accommodation, cafes and restaurants more than 80%, and bus transport 63%.

TIA understands the financial difficulties ACC is facing with very high liabilities, but operators need time to adjust to the levy rises, explains Mr Cossar.

“Tourism operators set their prices up to two years in advance. Sudden increases in compliance costs such as those being proposed by ACC are difficult to factor into product pricing.”

Mr Cossar says that the increases to ACC levies will compound the challenges still being faced by many tourism businesses as a result of the global economic downturn.

“We are also concerned about the wider impact of the ACC levy increases. The rise in levies for wage earners, together with a significant jump in the annual motor vehicle levy, will see real levels of disposable income fall. This could impact negatively on New Zealanders’ holiday plans, at a time when domestic tourism is needed to support our industry.”

In its submission, the NZ Hotel Council which represents many of the country’s large hotel chains and privately-owned, independent hotels, says the proposed increases will result in a prolonged downturn in demand.

“Any decrease in disposable income for leisure guests has a direct affect on tourism, and accommodation in particular,” says Executive Officer Sharon Jennings.

Hospitality Association NZ (HANZ) Chief Executive Bruce Robertson says while it understands the need for ACC to balance its books over time, there are other measures it should be looking at, “rather than the draconian increases proposed”.

HANZ is urging ACC to undertake a rigorous cost-cutting approach prior to imposing levy increases.

“In the past 12 months we have had 100 members close their doors and many more are marginal at best and struggling to survive. Given the labour intensive nature of the hospitality industry and the level of these increases, others are likely to fail,” Mr Robertson says.

Bus and Coach Association New Zealand Inc also wants a staged introduction to the levy increases. “The increases will be felt by many businesses, especially those in the tourism sector who will be forced to either absorb costs or pass them on to customers in an already volatile market,” says Chief Executive Officer Raewyn Bleakley.

The Ski Areas Association, which represents 15 commercial ski areas, is asking ACC to consider Experience Rating and contract with each employer to determine levies based on the employers’ direct cost of claims against the scheme.

Chief Executive Miles Davidson contends this provides a fairer assessment of levies. “We are making every effort to reduce costs and maintain prices. A 100% increase in ACC levies imposed by a government agency works against this effort, and will impact severely on our profitability and future growth.”

A full copy of the TIA submission is available on the policy section of the TIA website: http://http://www.tianz.org.nz

ENDS

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