Budget 2015: Bigger expense for travellers

Travellers arriving in New Zealand will face a $16 per head levy from January next year and a departure charge of $6 is being considered to strengthen the border. Photo / Brett Phibbs

Travel Levy breaches long-standing agreement, says air representative

Airlines and tourism businesses are surprised and disappointed at a border levy that will push up the cost of a return flight out of New Zealand by around $22.

Travellers arriving in New Zealand will face a $16 per head levy from January next year and a departure charge of $6 is being considered to strengthen the border. With existing charges it would add $36 to the cost of a round trip. It is estimated the new levy will collect $100 million a year.

Travellers the Herald spoke to yesterday had mixed views with many saying it wasn't a bad thing as it helped border security. Others, especially those who travel frequently or have children, were against the levy.

While the Government says the move is designed to boost pest protection and keep out drugs, an airline group say the new charges would breach a long-standing agreement. Board of Airline Representatives chief executive John Beckett said his members were disappointed the Government could contemplate the moves.

"That would be in breach of the understanding that was reached in 2003 - which is simple and logical," he said.

Airlines already met the full costs of aviation safety and in return the Government met the costs of Customs. Under the deal the Government was to bear the costs of agricultural screening, which is deemed to be for the benefit of the primary industries.

"Airlines are also disappointed that the Government itself would harm the tourism industry, especially at a time like this when it needs the foreign exchange from its second largest earner of it."

Air New Zealand said additional costs could make New Zealand less competitive as a destination.

The tourism industry was blindsided by the move.

Prime Minister John Key, who is also Tourism Minister, spoke to the industry's summit in Rotorua on Wednesday and the Tourism Export Council's chief executive Lesley Immink said there were no hints of the levy.

"Clear surprise is the first reaction that there was no discussion with either the inbound or outbound tourism agencies in New Zealand and the implications for the traveller," she said.

Her organisation would prefer proceeds of any levy to be directed for spending on the Department of Conservation estate.

"International visitors would feel like they are contributing to helping the New Zealand environment and it could be a win-win for the Government, tourism and the environment. Another border tax for the sake of customs management is not as easy a sell for anyone," she said.

Tourism Industry Association chief executive Chris Roberts said the Government had long supported the association's objections to the British and Australian versions of a travel tax, but has now followed suit with the Budget announcement.

"International visitors spend $10.3 billion a year in the New Zealand economy, including $700m a year in GST collected by the Government. They are already making a substantial contribution and there is no justification for this new tax," Mr Roberts said.

However, one travel agent said it was not concerned about the new charges, as long as money collected was applied directly to improving services for passengers.

"If, however, this is going to be a new fee off-loaded onto the traveller which we don't see eventuate into any real benefits for our customers, then we wouldn't be in favour," said Flight Centre managing director Chris Greive.

Primary Industries Minister Nathan Guy and Customs Minister Nicky Wagner say the exact amounts would be subject to public consultation, starting next month.

Primary Industries and Customs spend around $100 million a year on border clearance for passengers and crew.

Arriving air passenger volumes have grown by more than 18 per cent from 4.4 million in 2009 to 5.2 million in 2014, and are expected to continue growing at around 3.5 per cent a year.

The levy, when combined with existing charges, would be lower than Australia's A$55 ($58) passenger charge and Britain's 71 ($142) long-haul passenger charge.