Tourism is NZ’s largest export earner yet is still not taken seriously enough.
New Zealand’s largest company, Fonterra recently posted its first ever annual loss. $196 million! The anger from the public was not surprising. Over 100 years of strong economic performance is quickly overlooked when you have a poor record of environmental stewardship. Whether you like Fonterra or not, they just want to be awesome for the benefit of kiwis.
The purpose of Fonterra’s formation, and of previous co-operative mergers, has always been to shift the sector away from being an inwardly cannibalistic price taker to a globally competitive price maker. Ergo, more exports dollars, higher incomes and greater prosperity for all!
For those who don’t know, Fonterra is a dairy co-operative formed 17 years ago. It was the inevitable conclusion to over 100 years of industry growth and factory consolidation (abandoned dairy factories like that in the cover photo are a common sight around Taranaki). To maximise its potential, Fonterra had to receive legal dispensation under the Commerce Act. It’s effectively a monopoly buyer of milk within NZ. So for a small, open economy, that promotes free trade and a pristine environment this was a massive decision!
So then I got to thinking… the idea of a co-operative structure receiving special legal dispensation in exchange for better economic performance could be applied to the tourism industry. According to MBIE, tourism has overtaken dairy as the largest export earner at $14.5bn p.a.
- How do we know if tourism is performing to its full potential? There may be another $20 billion on the table that we aren’t chasing.
- Who is the equivalent body, with the authority and clout to increase our performance? Agriculture have always had MAF (now MPI) and a strong lobby in Federated Farmers. Tourism seems to land in the lap of local government who are not resourced or legislated to manage it (most things that are too complicated for central government seem to end up with local government, but that is another story.)
- Why is tourism infrastructure spending so focused on who pays? Huge public investments in road, rail and bridge strengthening over the past 100 years now underpins a very efficient collection and processing model for the agricultural industry. Arguably, Fonterra’s balance sheet has also benefited from ratepayers carrying the environmental externalities of intensive land use. Why is it so hard to build some toilets?
A ‘bed-tax’ will improve livability and the visitor experience in Queenstown and boost economic returns. It is no different from Fonterra receiving dispensation from the Commerce Act!
But here is the rub; The Aspiring region (Queenstown, Wanaka and Central Otago) is in the business of selling world class visitor experiences. World Class!!! We are kicking a**! That is a totally different industry to agriculture, of which our governance, infrastructure and planning laws seem to have been built around.
The calls for a ‘bed-tax’ here in the Aspiring region are aimed at improving livability and the visitor experience. Excessive house prices, congested roads, worker shortages are yet another indicator that the system tourism is forced to do business within is broken. So how is the concept of the tourism sector asking for help any different to Fonterra receiving dispensation from the Commerce Act?
Of greater concern though is the lack of progress amidst a simmering anger towards tourists. Tourists are being blamed for all of these difficulties and, like Fonterra, tourism is now at risk of losing its social license. Many locals here in Queenstown have had enough and are calling for the ‘No Vacancy’ sign to be put up. Wtf?! Have we forgotten who is paying our bills? That’s like a dairy farmer saying ‘The cows are making a mess of my tractor – get rid of the bloody lot!’
The message here is this:
Let’s shift the story of tourism to a more positive and future focused one. One about what improvements we need to the current system to unleash our full potential and lift our prosperity to levels we cannot imagine.
The tourism sector just wants a fair chance to be awesome too!
Final thought: Imagine if the Aspiring region was administered and governed by a system aimed at maximising tourism revenues. What would our life be like then? Stay tuned, and I will tell you next week.
If you’re curious about this article or want to discuss it further, leave a comment or get in touch with Vaughn.
More than a shared office space, The Coop is a place to bounce around ideas, challenges and solutions with bright sparks beyond engineering and finance.
Councils are being urged to get infrastructure projects over the line and ready for construction. Some thoughts on writing a good business case.
Measures to combat the spread of COVID-19 will result in financial hardship for many. Can we deliver economic empathy to ratepayers through smart depreciation?
We’re all familiar with the role of local government, but have you ever given much thought to its ultimate purpose?