Debate on Crown Entities, Public Organisations, and State Enterprises — New Zealand Tourism Board

I would like to speak on the Tourism Board. Obviously, this is an enormously important industry for New Zealand. In fact, as a result of that, what we understand is that the Prime Minister, as the Minister of Tourism, is head of tourism in New Zealand. I am not allowed to refer, obviously, to the—[Interruption] Obviously, for New Zealand tourism is massively important: $63 million a day. That is the revenue of this industry. It is on a par with the dairy industry. One in ten New Zealanders is employed in tourism throughout New Zealand. Therefore, it is very important that we take this industry very, very seriously.

This is what John Key, the Minister of Tourism, said just 4 years ago: “While times are getting tough right now, the future for tourism is bright. You are a vital part of the economic engine that drives New Zealand and you will be celebrated and encouraged by my Government.” This is what the State of the Tourism Sector 2012 said in its report: “New Zealand is perceived to have fallen off the global radar as a desirable destination ...”. It is predicting a downturn. So although Mr Key 4 years ago had lots of aspirations for this industry, 4 years later those aspirations are not being realised. I think what happened here is that Mr Key realised that this was a particularly good sector for a “smile and wave” approach, but not really a sector where you actually have to roll up your sleeves, get on to it, and actually give this industry a real boost. So although it was said to be important 4 years ago, today it has actually fallen off the radar. We have some real concerns and some grave concerns about where this industry is heading.

However, Mr Key did come up with a partial solution—a little bit like a partial asset float—to where this industry might get a boost from, and that is from a convention centre in Auckland. The good news is that he has found an ingenious way of funding this particular convention centre. You give a wink and a nod to one of the applicants for this convention centre process. You slightly just push the tender process to one side, you go out to dinner with Skycity, and you say: “Look, if you’re willing to put up some money for this, we’ll guarantee you 20 years of a gambling licence and 500 pokie machines, and you will be able to build this convention centre.” What a great offer. That is a great offer. It is a slightly sleazy offer. It is a bit of a shonky offer, but what a great offer. For Skycity it is a great offer, because it gets $42 million a year from those 500 pokie machines, and it gets a 20-year extension to its gambling licence. In the space of 6 to 7 years it will pay for the convention centre, and it will still have 13 years—times $42 million per year—to go on that extension to its gambling licence. That is a pretty good deal.

💬 Hon David Cunliffe: Plus interest.

Plus interest on that. So there is the big plan for New Zealand tourism. Smile and wave on the one hand, and on the other hand give Skycity the ability to raise $42 million a year with pokie machines from the pockets of people who can least afford them. And do not worry about those other industries and those other sectors that vied for the opportunity to do this. Do not worry about that! No, no, no, we just go out to dinner, have a wink and a nudge, and you will get the deal. I guess that is why the Auditor-General decided to have a bit of a look at this.

💬 Hon Gerry Brownlee: Is that what they got out of you at the sky box for the Rugby World Cup?

Well, I tell you that is exactly why Skycity is looking with a smiling face at what is going on, and it is why the Auditor-General is taking a good look at it. Mr Brownlee might well ask that. What did it get out of that? It got nothing out of it, Mr Brownlee. It got absolutely no return on that particular investment. This party stands up for good process—

I raise a point of order, Mr Chairperson. I understand that it has been custom in this Committee that the Minister responsible for the vote in question comes to the Chamber and takes the chair.

The CHAIRPERSON (Lindsay Tisch): No.

And we advised the Government beforehand of the votes we wished to debate on that basis.

I have heard your point. No, any Minister can sit in the chair. If the Minister whose portfolio it is is in the Chamber, they must take the chair, but any Minister can assume the chair. I am calling Barbara Stewart.

💬 Chris Hipkins: Big chicken.

The CHAIRPERSON (Lindsay Tisch): Order! Who said that? You cannot say that. The member will withdraw and apologise for that comment.

💬 Chris Hipkins: I withdraw and apologise.

I rise to speak on behalf of New Zealand First to the financial review of the New Zealand Tourism Board. We all know that tourism is one of the largest industries in New Zealand. It accounts for almost 9 percent of our GDP and employs the equivalent of almost 180,000 full-time positions for New Zealanders. As we heard previously, the revenue is $63 million per day.

However, despite New Zealand priding itself on the basis of being a wonderful tourist destination, we are actually slipping behind, and it was mentioned in the weekend papers. The New Zealand Herald headline was “NZ’s tourism cash cow is going dry, says report”. So something definitely needs to happen. We know that tourists are not coming here as frequently as they previously did. The figures between April and May show a 1 percent decrease in the number of tourists who are actually visiting New Zealand—not good. The numbers of tourists from Australia, Britain, Germany, and the US have all fallen in the last year. All of these tourists who always saw New Zealand as a wonderful destination are now suddenly not so sure. We are not seen now as a must-see destination, which is where we actually should be.

We cannot use the global financial crisis as a scapegoat for this industry’s poor performance. In reality, the problem is far more complex. Australia, Britain, Germany, and the US—they are all doing well to get through this financial crisis. We know that Germany is the powerhouse of Europe. The Australian economy is growing at one of the fastest rates in the Western World. Tourism in New Zealand is actually lagging due to a lack of advocacy. With the Prime Minister holding the tourism portfolio, who would have thought that this would be the case? It comes down to a lack of advocacy, and it is basically costing New Zealand employers and employees alike.

Remember last year, when the UK decided to increase its departure tax to New Zealand? The tourism Minister, John Key, took great offence at that. He said he would be having stern words with his mate Prime Minister David Cameron over in the UK. What came of these discussions? We know that departure taxes in the UK are still extremely high. The Minister of Tourism has basically failed to get these down to a level that is in our favour. He has failed to make good his word to actually do that. It is little wonder that the number of tourists from the UK is down.

And it is the same again with Australia. Every day in the media we hear about the huge economic boom over the Ditch. We see our young people queuing in the departure lounges, eager to find their brighter futures over the Ditch, and unfortunately my young son is one of them. Yet despite the promising job opportunities in Australia, tourist numbers from that thriving country are also down. Just over a month ago, the Australian Government decided to put up the departure taxes to New Zealand by 17 percent.

💬 Todd McClay: That’s shocking.

It is shocking. The tourism industry had been lobbying John Key and this Government to intervene. It knows that these extra taxes are going to hurt its industry. It knows that these extra taxes are going to hurt both employers and employees, but nothing has happened—absolutely nothing.

And, of course, the other reason that tourists are being put off is the high New Zealand dollar overseas. New Zealand First has been calling on the Government to extend—

The CHAIRPERSON (Lindsay Tisch): I am sorry to interrupt the honourable member. The time has come for the dinner break. This debate is interrupted. I shall resume the Chair at 7.30.

Sitting suspended from 6 p.m. to 7.30 p.m.

What we are saying here in New Zealand First is that the other reason that is putting off our overseas tourists is the high New Zealand dollar. We have been calling on the Government to extend the powers of the Reserve Bank in order to better control our overvalued currency. The IMF estimates that the currency is between 10 and 20 percent overvalued, and every day that it remains overvalued it actually puts unnecessary pressure upon our tourism industry.

If we are going to take a stand and restore New Zealand to its top position as a really top tourist destination, we need strong leadership in this area, we need decent advocacy on the international stage by the Minister of Tourism, and we need sound policies that will actually ensure that our tourists return. We cannot afford to fall off the global radar as a desirable destination, and headlines in the “Business Day” section like “NZ tourism industry suffers”—

We are looking at the New Zealand Tourism Board’s performance and the report of the Commerce Committee on that. It is quite clear when we look back to the heady days after the 2008 election, when the Prime Minister became the Minister of Tourism. He talked of a bold plan for tourism in New Zealand and a clear vision for tourism, and said that we should make the most of our advantages and seize the opportunities they provide. Yet what we see from the State of the Tourism Sector 2012 report and from the Tourism Board’s own statement of intent is an industry that is stagnating. It is an industry that is simply no longer providing the boost to New Zealand’s economy that it once did. But this was, of course, the very reason the Prime Minister told us he wanted to take the portfolio on—that he would be this great leader to drive the tourism industry forward. Instead, all we got were cheesy jokes on The Late Show with David Letterman and a bad video in the back of a car in Napier. That was about the extent of the vision—the bold plan—that the tourism Minister, John Key, was going to bring forward to us.

Then we got a new plan for tourism for New Zealand in this last financial year, which is currently ongoing—the building of a convention centre in Auckland. This was the great blueprint, the great vision, that would provide New Zealand’s tourism boost. There are probably some good arguments for a convention centre in the Auckland area, but a convention centre built on what basis? The Prime Minister responded with a top 10 list, as he did on the Letterman show. So in terms of tourism and its future for New Zealand, I think we could make a top 10 list of reasons why the Skycity pokie deal for the convention centre is, in fact, not the way forward for New Zealand.

Reason No. 1 on our top 10 list is that the Problem Gambling Foundation says that Skycity’s “host responsibility is poor and fuels problem gambling”. The casino had 54 incidents of deserted children last year, 25 cases of fraud, and 14 assaults. So there is reason No. 1 on our top 10 list.

We can go on. Goldman Sachs has estimated that Skycity will earn an extra $28 million a year on the additional pokie machines that are part of the deal, rising to $42 million a year once the convention centre is running. That is the pay-off here. The legislation gets sold off. That is reason No. 2 for us to not like this deal for supposed tourism.

Another one is the question of how many jobs will be created. The Prime Minister was very keen to tell us that there would be 1,000 jobs in the tourism industry—1,000 jobs. He overstated by more than half. That is reason No. 3.

I will go back to the gambling side of things. Casinos return only 2.5 percent of their profits to the community—2.5 percent. So for extra machines going in—supposedly to bolster the tourism industry—the pay-off is more pokie machines, and the pay-off of that is money out of the pockets of people who cannot afford it, with only 2.5 percent going back to the community.

We can go on. Reason No. 5 is that, based on Goldman Sachs’ estimates, there could be a loss of revenue for community organisations from anywhere from $10 million a year upwards. That is the outcome of selling off legislation that is supposedly to benefit tourism in New Zealand but is actually to benefit Skycity. We can go on.

Reason No. 6 for this not being a good idea is the dodgy way this deal was done, and the fact that the Minister of Tourism intervened in a process that was part-way through and said: “Forget all the other bidders. I’ve done the deal over dinner.” So there is reason No. 6 for us.

Reason No. 7 is that the other bids that were on the table from people like Lloyd Morrison—rest his soul—were bids that did not require the selling off of legislation for New Zealand. That is another reason.

Reason No. 8 around this is that Mr John Key, the Minister of Tourism, has told New Zealanders that it is OK to sell off legislation, and that that should be part of the deal of being in Government. It is just plain wrong to have that kind of approach to funding tourism in New Zealand.

This Government knows that this convention deal is a dodgy one. It is one where the Minister of Tourism, the Prime Minister, John Key, has intervened in a process and allowed a non-complying bid to go forward. We now see the situation where we have a dodgy deal that will not do what it says it will do for jobs, and will not do as it says it will do for tourism.

Report noted.

Reserve Bank of New Zealand