$158 million on tourism

April 16th, 2013 at 4:00 pm by David Farrar

has announced:

“Today I am announcing that, as part of this package, we will be investing an additional $158 million over four years into ,” says uriMr Key.

“Achieving growth in tourism earnings requires targeted new investment to position New Zealand as a high value destination in markets with real potential for growth.”

In the year ended March 2012 tourism generated $9.6 billion of revenue and was 15.4 per cent of export earnings. It was 3.3 per cent of GDP and employed 6.2 per cent of the workforce.

“Later this week when I attend New Zealand’s premier tourism conference, TRENZ, I will announce details of where this $158 million will be invested,” says Mr Key.

Tourism is a great export earner, and helps reduce the current account deficit.

Current Vote Tourism is:

  • Departmental Costs $7.6m
  • Tourism Strategy $1.2m
  • Tourism Marketing $83.8m
  • National Cycleway $12.1m

A $158m increase over four years is an average of an extra $40m a year which is basically a 50% increase in the marketing budget.

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31 Responses to “$158 million on tourism”

  1. berend (1,709 comments) says:

    Government should not own an ISP, but it definitely should do tourism.

    Eh what?

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  2. David Farrar (1,898 comments) says:

    Berend – yes absolutely. You seem to be one of those who thinks that either the Govt must do everything or nothing and there is no in-between option.

    The Govt should do stuff only when the private sector can’t. Tourism marketing is one of those areas because there is no economic incentive for individual tourism operators to promote NZ as a whole because their share of the spend is relatively small.

    When people come to NZ they spend money on air-fares, rental cars, hotels, food, tourist adventures etc. Now one individual hotel in Auckland is no going to fund a tourism campaign in the US, because their share of any return is so small.

    As a taxpayer the issue is pretty simple. Do we end up with more income from tax revenue on tourists than if we didn’t spend any money on tourism marketing in the first place?

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  3. KiwiGreg (3,255 comments) says:

    Oh good that would mean there’s probably some hard evidence that there is a national benefit from the spend.

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  4. berend (1,709 comments) says:

    Tourism operators cannot band together to promote NZ? Like say Zespri?

    So the government should now take our money and advertise NZ as software offshore destination because no single company blablablablah..

    DPF: As a taxpayer the issue is pretty simple. Do we end up with more income from tax revenue on tourists than if we didn’t spend any money on tourism marketing in the first place?

    That’s the blue liberal for the readers. Does everyone notice that tax payers don’t have a say? The government simply decides what it decides, then takes the money.

    And if there’s an oops, the sums didn’t work out, too bad.

    Labour party’s new line: as an electricity payer the issue is pretty simple. Do we end up with more paying less electricity from SOE than from private companies? The answer is self-evident: private companies have to make a profit, so their prices are always going to be higher!!!

    PS: it sorely disappoints me DPF that you completely leave out any discussion of opportunity cost. Which you know about no doubt.

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  5. Colville (2,269 comments) says:

    Of the $9.6 Bil spent here do we get to keep the GST ($1,250,000,000) or do the tourists claim it back somehow?

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  6. bhudson (4,740 comments) says:

    And if there’s an oops, the sums didn’t work out, too bad.

    And if the tourism operators don’t immediately form into a cohesive, efficient and effective body, making the same or better investments to grow the market then those that benefit indirectly from tourism (but are not fundamentally part of the tourism industry) suffer because the operators couldn’t organise themselves to do the job efficiently. [That inlcudes the taxpayers, incidentally.]

    Or in other words, it must be a perfect world you reside in where everyone and every business is as rational and efficient as the classical liberal texts posit they are.

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  7. freemark (580 comments) says:

    Seems pretty simple to me Berend, which part of $158M helps make $9.6B are you struggling with?
    IMO we should be be selling tickets on entry to non residents..National Park Entry, Free Camping License, ACC cover certificate.

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  8. Alan Johnstone (1,087 comments) says:

    “Of the $9.6 Bil spent here do we get to keep the GST ($1,250,000,000) or do the tourists claim it back somehow?”

    The vast bulk is retained, it can only be reclaimed if the goods are exported; most of it is spent on goods and services (transport, hotel, meals etc) that never cross the border

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  9. All_on_Red (1,583 comments) says:

    Berend
    ” Do we end up with more paying less electricity from SOE than from private companies?”
    No, you must have missed this. Take your Private bad/Public good blinkers off.
    “Labour had plenty of time to ease the burden of electricity costs for households and businesses during the nine years it was in government from 1999 to 2008. But instead of putting in place measures to achieve that, it presided over a nearly 70 per cent rise in prices and happily raked in more than $3 billion in dividends from the state-owned power companies.”

    Labour abused the monopoly position to screw NZers.

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  10. berend (1,709 comments) says:

    bhudson, you are claiming that in every case where you think business are not rational or not as rationally organised as they should, the government should interfere?

    If not in every case, then which cases?

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  11. berend (1,709 comments) says:

    All_on_Red: But instead of putting in place measures to achieve that, it presided over a nearly 70 per cent rise in prices and happily raked in more than $3 billion in dividends from the state-owned power companies.”

    I was waiting for that one. All these extra tourists in NZ, they take up beds in motels for example. Quite probably enough that there is an upward effect on prices. Which means NZers pay more when they travel in their own country.

    Who knows, they may even pay 70% more!

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  12. Colville (2,269 comments) says:

    freemark, we should certianly be charging a shitload for entry into the Nat Parks. Just cover the costs of cleaning up the rubbish the feckers leave behind.!

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  13. Alan Johnstone (1,087 comments) says:

    It’s worth pointing out that with the strong Dollar, NZ is an eyewateringly expensive destination for tourists today.

    Auckland is one of the worlds most expensive cities for entertainment.

    As an example, ten years ago Brits would come here and have a great time, remarking on the good value for money. In relative terms, everything has doubled in price.

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  14. Colville (2,269 comments) says:

    Alan Johnstone..that is what I was thinking but I thought I would ask.

    Its a fucking no brainer. If they spend $150 mil and we get a 3% bump in spend its paid for… and that is without even thinking about the extra jobs, paye, company tax and all the support services that look after the companies that directly supply the tourists.

    Berend. You are a ‘tard.

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  15. berend (1,709 comments) says:

    freemark: which part of $158M helps make $9.6B are you struggling with

    Maybe you should watch the address of Sir Paul Callaghan who explains that tourism makes us poorer: http://blog.enspiral.com/2012/03/24/sir-paul-callaghans-legacy/

    That John Key now puts money in tourism simply indicates the utter lack of ideas of National.

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  16. RRM (9,924 comments) says:

    Jesus Christ Berend, why was I not consulted before the city council repainted the white lines on the pedestrian crossing down Courtenay Place? Honestly the largesse of these government types knows no bounds…

    The tourism marketing spend quoted above is about $20 per annum per man, woman and child in NZ; the overseas revenue from tourism quoted above is about $2,400 per annum per man woman and child in NZ. I don’t think there’s much danger of the sums “not working out”… :-)

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  17. YesWeDid (1,048 comments) says:

    So more money for tourism but less for DOC?

    It’s the standard business approach, find ways to make a product cheaper, to save money, and at the same time spend more on marketing to tell everyone it’s actually a lot better.

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  18. berend (1,709 comments) says:

    freemark: which part of $158M helps make $9.6B are you struggling with

    One final thing: we already had the $9.6B without this EXTRA $158M.

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  19. berend (1,709 comments) says:

    RRM: I don’t think there’s much danger of the sums “not working out”…

    We already got $9.6 billion WITHOUT the extra money.

    This gimmick from John Key is so he can later claim victory and that he is responsible for getting $9.6 billion.

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  20. freemark (580 comments) says:

    I’m assuming from Berend’s lack of critical thinking, and parroting of certain concepts, that he/she is a Lefty troll?
    Rephrase that, I’m certain.
    Fuckwit

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  21. RRM (9,924 comments) says:

    And what’s the worst that can happen?

    This extra spending might generate ZERO extra overseas tourism revenue. In which case, the economy still gets from Tourism ~ 12,000% of what tax dollars we put into the tourism marketing.

    It seems like a fairly harmless punt to take, for the possibility that it MIGHT grow overseas revenue by billions…?

    Alternatively Key could give every man, woman and child in NZ a tax cut of $20 per year.

    Meanwhile, what’s the only other alternative to Key’s economic plan for the country?

    I’ll give you a hint:

    “# OWN OUR ASSETS”…???

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  22. tristanb (1,127 comments) says:

    There goes all the money made on legalising gay marriage!

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  23. The Scorned (719 comments) says:

    freemack: Seems pretty simple to me Berend, which part of $158M helps make $9.6B are you struggling with?

    Its the old “broken window fallacy” again…the failure to consider the taxpayer and what they are now not able to spend their own money on now its been stolen from them and spent on “more worthy social needs”…in this case tourism. Berend is right…there’s no reason the private sector can’t do this better and even cheaper than the state..who’s role this is NOT Mr Farrar!

    Sure we see 9.6 billion come in..to the STATE….not directly back to the people who were robbed to supply the pump priming initial investment in the first place. Its econ- fail 101 people…

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  24. freemark (580 comments) says:

    “Sure we see 9.6 billion come in..to the STATE….not directly back to the people who were robbed to supply the pump priming initial investment in the first place. Its econ- fail 101 people…”
    Dumb fuck, this is why we need Charter Schools..
    I’m not sure thev STATE has many tourism holdings.. the money comes in to private enterprise, about 25% I guess goes to the STATE via GST, paye etc. Many of us agree that the private sector can do it better.. if they didn’t have to pay all that money to the STATE, they probably would… FFS

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  25. hj (7,026 comments) says:

    Places like Bali should give NZ a warning.

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  26. KiwiGreg (3,255 comments) says:

    It’s not $158m. It’s a much larger number; the damage done to the economy in extracting the money from people who would never spend their own money in this way.

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  27. wiseowl (895 comments) says:

    There are many businesses in this country that are individual operaters that bring in overseas dollars but do not get a subsidy.
    Remember that word SUBSIDY !

    God if it applied to farming look out.Farmers mean nothing to this country!

    But tourism.Shit, lets subsidise to hell!!

    Get into tourism, get a subsidy .Oh sorry benefit from Government INVESTMENT.

    ARRRRRGH

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  28. Miritu (30 comments) says:

    Berend & Scorned are right and it seems many are not familiar with the economic ‘Parable of the broken window’ which explains this common fallacy. It was introduced by Frédéric Bastiat in 1850 and well explained in Henry Hazlitt’s 1946 book ‘Economics in One Lesson’ which sold a million copies. It dedicates a whole chapter to the broken window fallacy.
    Henry Hazlitthttp://en.wikipedia.org/wiki/Henry_Hazlitt
    http://en.wikipedia.org/wiki/Parable_of_the_broken_window

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  29. Bingo99 (88 comments) says:

    I think Berend is bang on with this one. We had $9.6bn in revenue before the extra $158m. Given the itsy bitsy cuts National is making to public expenditure, it does seem odd to turn around and plonk a $158m subsidy on a sector than can and should shoulder more of the responsibility for its own success, and contributes nothing to our dire need for productivity growth.

    This won’t make us richer. Disappointing move by National, no doubt shimmied along due to key’s role in Tourism. Not smart.

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  30. gump (1,649 comments) says:

    I’m concerned that the government seems to be engaging in “picking winners” again.

    I’d quite like some investment in my industry from the Government. But i know that I won’t get it.

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  31. somewhatthoughtful (465 comments) says:

    I’m just waiting for $158 million to be announced to fund early stage startups. I’m sure it’s just around the corner….

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