Liam Dann: Complaint about costs shows tables have turned

Photo / Glenn Jeffrey

So visiting rugby writer Peter Bills says New Zealand is a rip-off.

He's got a point. If you're a traveller there are certainly better bargains to be had in countries like Greece, Spain and Portugal.

Even the United States and Britain are looking comparatively cheap these days.

But we wouldn't want to follow their example.

New Zealand has been a low-cost tourist destination in the past but it has never aspired to be one.

So, at first glance, Bills' comments should inspire some national pride.

Not since the 1960s have we heard a Brit complain so explicitly about how costly this country is. Usually they just try and tell us we're boring.

There are some obvious macro-economic reasons for this shift in balance which, to be fair, Bills does acknowledge in his article.

Ten years ago the British pound bought three Kiwi dollars. American visitors could buy a Kiwi dollar for just US38c. New Zealand was a first-world destination with prices bordering on the third world.

After Peter Jackson's nine-hour promotional trilogy charmed the world, the tourist industry boomed, overtaking dairy as our biggest earner of foreign exchange.

In the year ended August 2000, New Zealand had 1.73 million overseas visitor arrivals. In the year to March 2010, we had 2.5 million.

Even after two years of global economic meltdown that's nearly 800,000 more visitors all coping with the higher prices.

The fact that a business in Wellington can still get away with charging $28 for a couple of glasses of sav is a sign that our economy is pretty buoyant. Unfortunately, we can't afford to feel smug.

Tourism is a fickle business. While tourist numbers haven't fallen off the cliff some thought they would, numbers from the US and UK are down. Australia - one of the most buoyant economies in the world - is propping up the statistics.

So Bills' concerns for tourism shouldn't be completely dismissed. We shouldn't go low-budget, but neither do we have room to gouge on price. We need to be aware of what's on offer elsewhere, and for how much.

But perhaps of bigger concern in New Zealand is the how we're in danger of ripping ourselves off.

Yesterday's Consumer Price Index data showed that even as we near the bottom of the economic trough caused by the financial crisis, inflation is still running at close to 2 per cent a year.

With GST rises and emission trading costs about to kick in, we can be sure that figure is going to rise. And it's not likely to be matched by rises in income any time soon.

If we think we're actually getting any richer then we're kidding ourselves. Inflation destroys wealth.

If we continue to coast on the tails of the Chinese and Australian economies we will find ourselves feeling very poor very quickly as the cost of energy, food and property spirals up again.

We need to work hard now more than ever to ensure that the economy is more productive and leverage the relatively strong position we have.

The formula hasn't changed. We need to export more, particularly high-value goods. We need to create an economy where business thrives. If we do that we won't have to worry about slashing prices to accommodate bargain-hunting tourists.

And they'll be all right anyway. They can do what Kiwis in Europe have been doing for years - grab a bottle and a bun from the supermarket and have a picnic.

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