Finance Minister Nicola Willis wants international tourists to pay more for the privilege of visiting New Zealand, which would help fill the country’s massive infrastructure deficit.
During a post-Budget visit to Queenstown yesterday, she revealed her support for raising the $35 International Visitor Levy (IVL) - paid by foreigners except those from Australia and the Pacific - and was “open-minded” about charging foreigners to enter National Parks.
The country’s infrastructure shortfall - estimated to be as high as $1 trillion for the next 30 years - was a topic of discussion following her speech to a business audience about Budget 2024, which included her main talking points about tax relief targeting the median household, slimming down the public service, and pouring extra money into health, education, and law and order.
Queenstown can heave with more visitors than locals during the summer months and struggles with the infrastructure demands of such high numbers with a relatively low number of ratepayers.
One of the ways to alleviate that is funding from the IVL. It currently generates about $80 million a year, which is split between conservation and tourism.
Raising it from $35 to as high as $100 is currently being consulted on, and while any final decision would need to go through Cabinet, Willis personally supported lifting it, though she wouldn’t say what she thinks it should be.
“There is a balance we need to strike. We need to make sure we don’t make this such an expensive destination that people stop wanting to come.”
It seems almost certain to increase, given Tourism Minister Matt Doocey also having expressed support for raising it.
Willis said Department of Conservation funding shortfalls could also be made up by charging international visitors an access fee for National Parks, a common practice overseas.
“I think you’d find many tourists who come to New Zealand have a life-changing experience in a National Park and are more than happy to pay a little bit more to enter that park and have it kept in pristine condition,” she told the Herald after speaking to a Queenstown audience.
“There may be other opportunities [outside the IVL] for DOC to raise revenue from international tourists in future. I’m certainly open-minded about that.”
Foreigners already pay more for staying at DOC huts on the Great Walks, while an entry fee for visiting Milford Sound has already been mooted, with Cabinet expected to receive the final proposals from the Milford Opportunities Project at the end of this month.
Willis defended some of the cuts that make up the 240-odd initiatives culled or squeezed in the Budget, including some of the funding for insulating homes, research into terrorism and violent extremism, and a Corrections programme making the bail and parole process more efficient - which has been improving court delays.
Those programmes weren’t cut, but are continuing in “a slightly different form”.
The Government had also rejected one savings proposal from police because “we didn’t think it was viable” and it would impact the frontline - but she did not elaborate further.
And while the books were tight and the money allocated for new spending - $2.4b a year in the coming years, much lower than what was previously allocated - Willis said there was still enough of a buffer in the books to withstand something like a natural disaster.
“According to the Treasury, we still have a prudent level of debt and their assessment of that is we could still withstand a natural disaster,” she said.
“Of course, I wouldn’t want that hardship for New Zealanders and their families. I wouldn’t want anyone to have to go through what Hawke’s Bay and Tairāwhiti and Auckland did in recent years.
“But that is why in part, we need to get the books back in balance and start paying down debt so that we do have buffers available for the inevitable natural disasters that will occur in our island nation.”
Under Labour, Willis said government agencies used to “rock up with your hat and say ‘this is how much I’d like’. Our approach with any new activity that you think will drive value - tell us what you’ll stop doing.”
And if it can’t be done within existing baselines, they’d have to demonstrate the case for new funding and “we will put the ruler over it a lot more carefully before we say ‘yes’.”
This was a deliberately high bar, she said, given new programme ideas are sometimes not road-tested and involve a certain amount of crystal-ball gazing,
“We want less of that, actually, when New Zealanders give us their hard-earned taxpayer dollars. We owe them more than a crystal ball. We actually owe them some data and some evidence and some clarity that we’re putting their dollars to the best use.”
Willis has been weathering criticism about the failure to fund the National Party’s $280 million campaign promise in the Budget to fund 13 new cancer drugs.
An open letter from cancer groups called on the Government to deliver on its promise, while Labour leader Chris Hipkins said it has described making the promise in the first place as “reckless” and “irresponsible”, and the failure to deliver “cruel”.
Asked if the cancer drugs could have been part of Budget 2024 in any way, Willis suggested there wasn’t enough available funding after allocating $1.8b to Pharmac so it could continue to support its list of medicines.
“That additional $1.8 billion wasn’t sufficient to purchase additional medicines. The second issue is making sure that we can fund those medicines sustainably and efficiently into the future.
“We didn’t want to repeat the mistake that the last Government made, which was a short-term funding of medicines that then ran out and left a hole for the future.”
Labour has said its ongoing funding for Pharmac was in its pre-election fiscal plan, released well ahead of the election, while deciding what to fund - or not to fund - is a matter of priorities.
Willis still had no firm timeline on when those cancer drugs would be available.
“We will keep our promise. We’re working on it with urgency.”
A higher IVL wouldn’t necessarily help Queenstown pay for infrastructure unless the funding from it could be used locally.
A bed tax, however, would put dollars directly into local infrastructure, and locals supported one in a 2019 referendum.
But that would require central government legislative support, and Willis told the audience it was not on the Coalition Government’s radar, despite Prime Minister Christopher Luxon’s support for empowering localism.
“Let’s see how we can maximise the value of the IVL before we move on to having another mechanism like a bed tax,” Willis said.
“We just don’t have a mandate for a bed tax at this time.”
She noted other ways to generate revenue for local authorities, including the National-Act commitment to consider sharing a portion of GST collected on new residential builds with councils.
The Government was also contributing to the $250m roading upgrade for Queenstown, which includes the choke point at the BP roundabout where SH6 and SH6A meet, though cost blow-outs have meant that some of the bus lanes in the initial plan have been cut.
Derek Cheng is a senior journalist who started at the Herald in 2004. He has worked several stints in the press gallery and is a former deputy political editor.
Expectations tempered around return to surplus in 2027/28.