The Redwood forest in Rotorua. Photo / File
Tourism is not dead and could be the glimmer of hope for Rotorua in a post-Covid-19 world.
That was the message from officials and some councillors at a bumper Rotorua Lakes Council meeting on Thursday.
The meeting updated councillors on the shovel-ready projects submitted as part of the Crown Infrastructure Partners (CIP) application, which asked for nearly $210 million to the government for seven projects.
They included upgrades to the Rotorua wastewater treatment plant, the aquatic centre, Whakarewarewa forest, the airport, the lakefront and Rotoehu/Ngamotu reticulation.
Councillor Reynold Macpherson queried the inclusion of some of the proposed projects however, as they were reliant in part on tourism, saying the airport, forest and lakefront projects were "virtually redundant because of the collapse in international demand for tourism" because of Covid-19.
Council strategy manager Jean-Paul Gaston said a lack of international tourism did not mean the end of tourism in Rotorua.
"Some businesses rely heavily or almost exclusively on international visitors. They will be devastated, but 59 per cent of the expenditure from visitors in Rotorua, based on last year's figures, came from domestic visitors," Gaston said.
That included $499 million of more than $845m in tourist expenditure in Rotorua last year, and two-thirds of those visitors came from Auckland, Waikato and the Bay of Plenty, he said.
"Our immediate-drive visitors are an important platform for which we need to build our recovery.
"Rotorua will continue to be an important domestic visitation location. We need to build on that to support the recovery of our tourism sector."
Gaston said tourism had likely taken a "far worse" hit than other business sectors, and was likely to be affected for longer.
"If we are to recover, and if we are to recover and build back better, the tourism sector is still critical to our future.
He said there could also be opportunities when New Zealand opened its borders to Australia as Australian visitors had spent about $72 m in Rotorua last year.
Of the $30-$47m mountain biking pumped into the city, up to 65 per cent was from domestic tourism.
Councillor Sandra Kai Fong said the CIP application was an opportunity for "free money" and the city could "get fit or get fat".
"We can either sit on the couch and do nothing, or we use this opportunity to get fit and be ready for when things take off again.
"We can't look into a crystal ball and say that tourism is actually dead, we don't know that."
Rotorua mayor Steve Chadwick said she saw an opportunity for money that would otherwise have been spent by New Zealanders overseas to "come back" to domestic tourism.
"It's an enormous yield and we need to be very well positioned."
Deputy mayor Dave Donaldson disagreed that "because tourism [has] flatlined we should mothball those projects".
"I'm not in a position of saying to the 11,000 in our community - 23 per cent of our workforce - who work in tourism and hospitality and events, that they're dead to us."
The motion to receive the report was carried, with Macpherson abstaining.
The council also decided to endorse "pro-local" procurement practices already taken by the council to "significantly" increase weighting applied to local contractors, as well as to develop policy in that vein.
Rotorua Lakes Council has signalled rates rises are likely, but staff are looking to "aggressively reduce costs" to minimise it.
Discussion on the matter came at the council meeting on Thursday, in which the council adopted eight guiding strategies to develop the 2020-21 Annual Plan.
They were: "responding to circumstances but maintaining direction; provide for cushioning the blow; a prudent approach to rating; directly investing in recovery; prudent use of debt funding; planning to adapt and managing risk; responding to emerging adverse impacts and economic recovery planning".
Leading the presentation, council strategy manager Jean-Paul Gaston said rates deferments for the current quarter could be carried forward into consideration for the next financial year.
"That has a financial implication for the council and it's important to recognise those postponements may affect the council's revenue going forward."
Gaston said the intention with rate setting was how the council could achieve a "minimum required rates increase while looking after [the] council's funding".
Annual plan workshops had discussed an 8.2 per cent increase to rates he said, 70 per cent of which was driven by "core or essential services" including rising costs of the wastewater treatment plant, water and refuse collection.
Council revenue from fees and charges had dropped, and rates deferments also impacted the ability of the council to deliver those core services.
Philanthropic assistance was also expected to drop, he said.
"Those were the three aspects that really put some pressure on our ability to hold a rates increase at a minimal level.
"If you think about that 8.2 [per cent rise] and you simply think about the impacts of reduced revenue and a sum of funding to assist with recovery, we would likely have a rates increase of significantly higher than 8 per cent.
"Managers are looking at how they can aggressively reduce costs … to minimise that rate increase."
The annual plan, including rating proposals, will be subject to public consultation before being presented to the council for adoption at the end of June.
Gaston said the council could also consider temporary debt to lessen the rates increase, but that had some risks.
During the 2008 global financial crisis rates rises had been held "artificially low", resulting in debt increases in operational expenditure for a "number of years".
"So [it's] really important that we're very clear about the reasoning why we might consider using temporary debt and how we would then recover back to properly funding operational costs in subsequent years."
Mayor Steve Chadwick said the loss of revenue was devastating for the council and the council needed to invest in the recovery and the four well-beings.
"If people say freeze rates, and I was a ratepayer, I'd say 'kei te pai, that's a good thing,' but for the loss of revenue that we will get and our inability to invest in the right aspects of these eight strategies, that would be even more devastating on our community."
Councillor Merepeka Raukawa-Tait said she supported the strategies but was getting "somewhat hoha" about what was, in her view, the " constant woe-is-us" rhetoric about the council's revenue.
"We have businesses in our community that have lost their businesses, that will never recover again … we have families that have gone out of work, they have no jobs … there are social issues that will develop in our community … over the next 12 months that we haven't even anticipated.
"I would just like us to be a little bit more understanding in the language we use about our losses because actually there's loss in the community as well.
"It has to be about sacrifice-sharing as well. It's not all about us."
The council voted to adopt the strategies, with councillor Reynold Macpherson abstaining.
• Covid19.govt.nz: The Government's official Covid-19 advisory website
Jefferies and family will enjoy a leg of lamb with summer sides.