Annual Review Debate — Tourism

Thank you, Mr Chair. It’s a pleasure to start off today’s debate and question the Minister of Tourism on behalf of the Economic Development, Science and Innovation Committee. As the deputy chairperson I have the pleasure of coming back to the Chamber and reporting to the committee about what we heard during our process.

Can I start by acknowledging every single business and every single participant in the tourism sector. We know that COVID has been tough for you. We know that the border restriction has been tough for your business and for your industry, and we want to acknowledge that, but at the same time we just thank you for your contribution to helping us keep New Zealand safe and for the sacrifices that you’ve all made to make sure that we had the best healthcare response so that now we can focus on our economic recovery.

I just want to note the progress we’ve made already and just look back on the time when we had our annual review with the Tourism Board, to even today where we are now open to all the visa waiver countries and especially Australia—a few weeks back now. Already we’re seeing that increase in volume not only through our airport but also in our tourism destinations, remembering this week that the Prime Minister had listed places like Wairarapa that have seen a really noticeable increase in their tourism numbers. So it’s great to be able to see and welcome back tourists.

During the review this year, we heard from the Tourism Board of New Zealand and we questioned them on many aspects of how they kept New Zealand’s brand alive overseas. We heard that even though we may have had closed borders, the New Zealand Tourism Board and Tourism New Zealand, which is the organisation they oversee, have worked really hard to make sure that New Zealand as a destination for tourism still stays at the forefront of our major tourism market. I was especially pleased to hear about the fact that they were still continuing training with our offshore partners, and they told us they had trained 15,000 travel sellers in China alone and that they had organised different kinds of online seminars to make sure that our partners overseas were still able to promote New Zealand as a tourism destination. We were really glad to hear that at the end of it 64,000 travel agents had been briefed by our tourism agency and they were still able to connect with us and upskill their knowledge on New Zealand as a tourism destination. We were also really pleased to hear about the fact that the “Do Something New, New Zealand” campaign had achieved great success in New Zealand and that our domestic tourism had reached unprecedented volumes during the 2020-21 year.

I thought it was really nice to hear that people chose not to just sit on their hands but actually tried to remedy the situation to the best of our possibilities. And just this week, having opened to international tourists, we know that we have achieved our full potential in domestic tourism, and now I think is the time for us to open back up to the world again, and we are able to do that to the safest possible standard.

I’d like to hear from the Minister of Tourism about the investment he and the Government have made to the tourism sector, to Tourism New Zealand, and how that money has been used to keep our international branding alive and to keep us attractive as a tourism destination to overseas tourists, and how we’ve been able to keep that connection going despite all of the challenges of COVID.

Thank you very much, Mr Chair, and I’d like to reiterate Naisi Chen’s comments, saying that this is an industry where a number of participants have done it extremely hard, even those who managed to adapt to a market of only domestic tourists; it was still very tough for a number right across this country. But nor did Kiwis sit on their hands; they actually got on their bikes. In fact, one the great success stories was our cycle trails. The cycle trail numbers are up by over 10 percent, which translates into an over 30 percent increase in economic activity along these cycle trails—and over 2 million journeys, actually. Fantastic to see.

In terms of our investment into Tourism New Zealand, we’ve put over $100 million into Tourism New Zealand. Tourism New Zealand are our eyes and ears in international markets. They have done a fantastic job because they had to pivot from marketing campaigns to get people to come over here to a campaign to keep the brand alive. And, of course, they couldn’t tell people to come, because the borders were closed, and they did a very, very good job of creating aspiration.

I talked with the CEO, René de Monchy, and his team, and we decided that what we would try and do is ensure that New Zealand became one of the most aspirational destinations. People often forget that, in fact, we were open for a lot of the time when the rest of the world was closed. So, you know, we were on boats watching the America’s Cup in the middle of summer, having a really good time when there were many people across the developed world in lockdown.

What Tourism New Zealand was doing was building that aspiration so that when the borders opened, as they are now to visa-waiver countries, then people could decide, “OK, you know what, I want to go to that country. It’s highly vaccinated. It’s a fantastic place. It’s a warm welcome and it’s a safe place to come.” That was the role that Tourism New Zealand did.

But not only did they do that, they actually took on another important role. For the first time ever, they came back and they actually marketed New Zealand to New Zealanders. People will have heard the “Do Something New, New Zealand’ and, as Naisi Chen outlined, they did something new. Those who took their kids to the movies over the recess might have seen the new campaign for autumn, and it’s basically just “That’s autumn”—of course a play on words, it wasn’t made up. It’s quite clever. The campaigns are very good and I do take my hat off to the innovators and the marketers in Tourism New Zealand. They do a really, really good job of flying the flag. I think they did a fantastic job over the sort of two-year period when our borders were closed, and what they are now concentrating on is taking that aspiration and turning it into action.

As I highlighted in the question at question time, the international views for people who want to travel here are actually higher than they were pre-COVID. So the action stations, moving from aspiration into action, are well under way. Traditionally, it’s a soft time for tourism in winter, except for places like Queenstown of course. Again, Australians spend a lot of time in Queenstown. It’s a little-known fact that Australians actually travel for skiing more than any other nationality. So we’re hoping we’re going to have a whole lot of Australians into Queenstown, but then we expect things to pick up in October and hit the ground running once again. Thank you very much.

Thank you, Mr Chair. I just wanted to take a moment to acknowledge the incredibly hard work and the hard times that the tourism sector has been through over the last two years. It’s an industry that made a significant positive impact to New Zealand’s economy, delivering $40.9 billion—our largest export industry pre-pandemic. They have taken a huge hit for New Zealand so that New Zealand could protect itself during the pandemic, and now we’re seeing the first green shoots of being able to have people from visa-waiver countries and from Australia returning to New Zealand. That is a great positive.

I do want to ask the Minister: has he turned his mind to the issue of workforce, and is he advocating lobbying with his colleagues to solve this issue? I note that in the first 12 months after borders closed, four out of every 10 tourism jobs were lost. There was an average 40 percent reduction in staff numbers since New Zealand’s borders closed in the first 12 months, and the lower South Island saw the biggest workforce drop, down 53 percent.

I noted with interest the Minister’s speech to the Otago University Tourism Policy School on 25 March 2022, a few weeks ago, where he said “Our legendary hospitality in no small way helps to shape these positive impressions and we benefit from sharing our stories and places with these visitors in ways that are more than purely financial … Because if we don’t ‘live the brand’ we will never be the premier destination we desire to be. If we are mediocre in our service delivery, no amount of crazy scenery and breath-taking experiences will lift us above many other destinations around the world.”

Now, as the member of Parliament representing Queenstown and Te Ānau, I’ve seen first hand the impact on that industry. I’ve seen first hand the efforts that businesses have taken, and most of them small businesses, to try and keep going, taking mortgages on their homes, in many cases, and sometimes second or even third mortgages, to keep the doors open and keep their staff employed. They’ve been working very, very hard. However, the consistent message I’ve been getting is that they hear a message from the Government that they need to improve conditions, need to up their salaries, need to make it more attractive, and I keep on hearing “Well, that would be fantastic. We’re trying to do that, but the workforce just isn’t there.”

I note that we’ve got record low unemployment in New Zealand now, of 3.2 percent. In fact, there’s an article out in the Otago Daily Times today from the Hilton Queenstown general manager, who has said occupancy levels at the hotels are “being restricted across the board by accommodation providers because of a shortage of staff to service rooms … many hotels were not cleaning rooms for the duration of a guest’s stay.” He says “I’m not going to name names, but some of the five-star hotels are not offering a five-star experience — I can’t lie, [we’re] struggling,”. And he said “It’s not through a lack of salary, there’s just a lack of people. Salaries are going up and up and up, but there’s still a massive, massive shortage [of willing workers].”

I note another local business in Queenstown put a post up a few days ago where they said “Sadly, we were forced to close again yesterday due to lack of staff. If you know anyone keen to ski or snowboard this season, send them our way. We’re offering competitive wages along with a season pass for those willing to help us out. We need kitchen and front-of-house staff members to start immediately.” These are just two examples of many, many, many I’m hearing in my region, and I’m asking the Minister: what is he going to do to help this sector who desperately wants to offer a first-class experience for our international visitors but simply don’t have the staff?

Thank you very much, Mr Chair. I acknowledge that the member lives in, and represents, a beautiful part of the country, but I also acknowledge that it has been incredibly hard hit by the lack of international tourists. That is the reason why we did invest in the Tourism Communities: Support, Recovery and Re-set Plan, about $100 million into that part of the world—five districts down in that area.

There are a couple of things I would say. First and foremost, before I took on the role of Minister of Tourism, I had a perception of what working in tourism was like, and this perception is actually recognised by a number in the industry, and that is that there are low wages, long hours, and rather precarious employment conditions. Now that I’ve become the Minister of Tourism and now that I’ve seen what goes on in the sector, I know that there are just so many opportunities for young people who would like a career in tourism, would like to engage in tourism, and be part of the tourism offering both here and globally. But we need to change, first and foremost, the perception so we actually do get people considering tourism as a career, going forward. It’s one of the reasons why we set up an industry transformation plan on tourism, and the first thing that the industry transformation plan is looking at—and keeping in mind this is a partnership between the sector, between unions, between iwi—is workforce development, and what we need to do to ensure that we have a workforce and a career that is aspirational, and a workforce that can deliver on the brand expectations that a lot of our tourists coming overseas expect. Certainly, when you’re paying a lot of money to travel halfway around the world, you do have a very strong expectation of high service delivery.

In the short to medium term, I do acknowledge that there are worker shortages. My understanding is that we have signed off between 5,000 and 6,000 working holiday visas, so I expect that number of working holiday people will come into this country. The member’s marketing line that he said, I think, one of the tourism destinations was using to get people down here is a good one, but they need to live by that: if you want to ski, if you want to earn good money, if you want a great experience, go down to Queenstown. That may well be the case, but the bottom line is the industry has to be able to deliver on good terms and conditions, and good money, and a great experience. I’m sure they will. But one thing I will say is we do need to ensure that the service we are providing is good.

The last thing I’d say before I sit down, in response to the member’s queries, is that we recognise that a number of businesses in Queenstown were doing it incredibly hard—it’s why we offered $5,000 worth of business advice, and then another $5,000 to actually implement that advice. So what we did is we said to these businesses: hey, this is tough. I’ve been quite open about the fact that I don’t think tourism is going to return to where it was in the pre-COVID world, and the example that I have used numerous times is that, pre-COVID, there were 940,000 people down in Milford Sound. Now, that level of numbers down there—I mean, people used to describe it as a “camping van carpark”. We absolutely were not delivering on our brand promises when I would wager a bet that 50 percent of the posters around the world advertising New Zealand carried an image of Milford Sound or Mount Cook or a destination down that part of the world. We need to be able to deliver on our brand promises. That means an engaged, well-paid, well-educated workforce, and the industry recognises this themselves; it’s the reason why we’re working hard to achieve that.

Thank you, Mr Chair. Minister, I understand 5,000 working holidaymaker visas have been issued. Is the Minister aware that since that has come into place, only 438 working holiday makers have come to New Zealand? We have businesses as of today that are not open, because they can’t get enough workers. Is the Minister going to do anything to help those businesses today and tomorrow who need to be able to open their doors and who need staff so they can actually have the workforce available when the ski fields open and, hopefully, we have a lot more tourists?

One thing I will say is when I was down in Queenstown last—and as the Minister of Tourism, I think I’ve been to Queenstown either six or seven times, so I’m well engaged with the community down there—what we heard and what the Prime Minister herself actually promised and what we are delivering on now is Immigration working with Tourism New Zealand. It’s sort of out of the bounds or out of the mandate of Tourism New Zealand, but they’re working with Tourism New Zealand to promote the working holiday scheme. We are issuing these visas. We want to get people in here as soon as possible. People want to come here as soon as possible. They’re not going to arrive today or tomorrow, but they will get here hopefully in time for the ski season.

One of the things we have done in terms of making sure that the people who come over here to ski get the best possible experience working with the sector themselves—there are a number of visas that were sponsored by Tourism New Zealand that Cabinet has approved for fast tracking, so those workers who pretty much spend 50 percent of their time in the Northern Hemisphere, 50 percent of their time in the Southern Hemisphere, working in the ski industry globally are here and can deliver on that experience for everyone who wants to come over.

Thank you, Mr Chair. I want to just get the Minister to elaborate on some of his answers just then, because it sounds like the tourism industry is going to be 100 percent relying on working holiday visas. There seems to be no other option. And, as the Minister has already pointed to, only 5,000 have been granted. Only 400 or so have actually arrived in the country. And I note that the Minister just said that he hopes more arrive. Well, that’s very nice, but pinning our tourism recovery on the hopes of the Minister probably isn’t the best response.

What I want to know from the Minister is: what discussions did he have with the Minister of Immigration or the Prime Minister or anyone else in his caucus or in his Cabinet around getting more of those working holiday visa holders here to New Zealand much sooner? We note that in Australia they said that if you come before a certain date, you can get all your fees back. In fact, they’re offering £10 flights to get to Australia from the UK. What are we doing to get people here? Because, actually, just saying we hope they arrive isn’t enough. There are a whole lot of options that we put out—things like allowing them to come if they’re a bit older, coming to have a second bite at the cherry—a whole range of options to attract more working holidaymakers here, but it sounds like what this Minister has done is just said, “Well, let’s hope they come.” Only 400 have arrived—that’s not enough across the whole country; it’s certainly not enough for the ski sector. I want to know what discussions the Minister had with the Minister of Immigration around making us a more attractive destination for working holidaymakers.

I completely refute the assertion that the tourism industry is going to be built on the back of working holiday visa holders. In fact, I’ve been very, very clear that the tourism industry will not be built back on the back of cheap labour. You know, as I said in my initial answer, what we need to do, and what the sector recognises, is in fact they need to work really hard to build an aspirational career vision for those who want to enter into the sector. The sector themselves recognise the fact that the perception of the sector as a vocation is poor; the sector themselves have said, “We need to up our game in terms of attracting people into the sector.” And I completely buy into that vision, and we will do whatever we can to help them along that course.

But, you know, we have to remove the perception that tourism is low wage, long hours, and precarious—because it should not be and it will not be going forward, because it just can’t be, if we are to deliver on our global promises that we are making to tourists who we’re targeting. What I would say in terms of working holiday visas, you know, the ski season—and Mr Mooney will be able to tell me when the ski season starts in earnest in Queenstown. But, you know, there are 5,000-plus people who have signed up for a working holiday visa. No doubt they are waiting for their ski season to start, they are sorting out their affairs, and they will get over here.

It’s like what we have done, in terms of working with the ski industry themselves, to say: “What do you need to allow you to be able to deliver on the brand experiences that we are going out to global markets with?” They told us what they needed in terms of workers. We worked with the ministry of immigration and we’re getting those workers in here, exactly in a way that the industry said they needed. So what did I do? We had a conversation with the Minister of Immigration; the Prime Minister herself heard what was needed. The Prime Minister herself, when I was there, had a conversation with the head of Tourism New Zealand, and she actually asked the head of Tourism New Zealand, “Can you please work with the immigration department to see what can be done to better target working holiday visa aspirants so they can come over here and enjoy this country?”

The thing that we know—the thing that all the research is showing—is, actually, people do want to come to this country. We’re seen as safe. I mean, in Auckland, my understanding is about 96 percent of people in Auckland have had at least one shot—we’re seen as a safe place to come. I have absolutely no doubt that we’re going to attract tourists and workers that will be able to deliver on the type of experience that Tourism New Zealand spent the last 18 months building.

Thank you, Mr Chair. The problem that needs to be solved for our tourism industry is how to make it sustainable, how to make it enduring, and how to make the experience a quality experience but also, importantly, how is it that New Zealand tourism businesses and operators can remain profitable and deliver the quality experience that we would like them to?

I’ll point to the issue of the Milford aerodrome and the Milford tourism operators. About 800,000 tourists arrived in Milford by road every year, prior to 2020, and about 50,000 by air, who landed at the Milford aerodrome. In 2020, this administration, under the Labour-led Government, announced a $3 million upgrade for Milford aerodrome because it was regarded as getting to the end of its service life and it needed better facilities, including, for example, a toilet.

But what I want to ask the Minister is: why has this project not been delivered to support the tourism industry; where has the money gone, Minister, that was allocated—the $3 million—for Milford aerodrome, which supports the tourism industry? Does the Minister agree with Save Milford Airport representative Mark Quickfall that the Milford Opportunities Project—which is their plan to close Milford Airport to fixed-wing aircraft—is out of step with the market place and the realities of tourism and is quixotic and utopian? Is he prepared to defend the rights of Milford tourism operators to fly into Milford aerodrome against the Milford Opportunities Project plan to close the aerodrome, which is supported by the Department of Conservation—Minister?

A couple of things I would say. We’ve actually moved on from sustainability in terms of tourism and we’ve moved to regenerative. Sustainability is about not doing any damage or the old, “Take only photos, leave only footprints.” Regenerative tourism is about how tourism can actually add value to our communities, so that’s what we’re working hard on. In fact, what we’ve done is we’ve provided about $49 million—obviously, allocated across the regional tourism organisations—to allow them to develop their destination management plans around the regenerative tourism concept.

In terms of profitability, well, it’s not for me to say to a tourism business how to run their business; it’s for an operator to determine how they’re profitable and what they need to do to ensure they are. What I do know in tourism is there are a lot of people who are absolutely passionate about what they do, and in some cases—and I worked for one of these companies at one point in time—they’ve taken something which was a real interest and turned it into a business, and congratulations to them, and they show a very high degree of passion. But again, they will need to take a good, hard look at their business model; if, in fact, it’s not profitable or if there are variables that have changed markedly that will impact upon their business model going forward. And it is the reason why, as highlighted in my last answer, we provided $5,000 for these businesses to have business advice, and another $5,000 for them to implement that advice.

Back to the Milford Opportunities Project—

💬 Simon Court: Point of order. Specific question which the Minister has not addressed—it’s about the Milford Opportunities Project.

CHAIRPERSON (Ian McKelvie): I’ll remind the member that the Minister can use his time as he sees fit. You’ve asked him a question; he’ll either answer it or he won’t, and you haven’t given him time to answer it.

I was just about to say, now, when it comes to the Milford Opportunities Project—I was getting there, but I want to provide the member with a full answer, hence I was answering the first part of his question first.

Look, I’m a huge backer of the Milford Opportunities Project. As I again alluded to in a previous answer, my understanding is there were 940,000 tourists who went into Milford Sound in the year before COVID. That is, in my view, not delivering on the brand promises that we were putting out to the world. As mentioned, I would wager a bet that 50 percent of all—probably more, actually—the posters that are around all our offices and all our advertising internationally had a shot of either Milford Sound or Mount Cook or an iconic—maybe Hawke’s Bay winery, of course, they’re right up there!—piece of scenery down there. Now, I’m a huge fan of the Milford Opportunities Project, and I’m one of the three Ministers responsible for oversight; there’s myself, there’s the Minister of Conservation, and there’s the Minister of Transport. One thing I will say, though, is there’s a lot of water to go under the bridge before final decisions are made. But one thing that I will also say is I think what they are looking at, certainly in their draft proposal, is something that is really innovative and in a way that will drive our economic vision around decarbonisation of the economy, that will allow us to tell stories that we haven’t been able to tell, and that will certainly allow us to deliver on the brand promises, whether that’s decarbonisation, whether it’s clean green, whether it’s Milford Sound, whether it’s whatever an international tourist has come to this country to see. But what I would say to Mark and to others is: keep engaging with the Milford Opportunities Project team.

No decision has been made yet, but one thing we do need to make sure we do is—and I’ll come back to this, and I will keep coming back to this because it’s part of what I believe in—we have got to be able to deliver on the promises we make. And pre-COVID, this was a campervan car park, as the member mentioned: 50,000 people coming into Milford Sound by aircraft, you had massive big cruise ships, you had a campervan car park, and you had planes buzzing. I do not believe that that was delivering on the brand promise for those who paid money to go to Milford Sound.

Why should New Zealanders trust the Minister of Tourism to spend public money effectively, when the Office of the Auditor-General’s report released on 31 March 2022 confirmed many of the concerns small operators raised when the $290 million Strategic Tourism Assets Protection Programme’s (STAPP’s) fund was allocated in 2022, including finding that Ministers handing the money out struggled themselves to define what a strategic asset was, some criteria being unclear, tens of millions of dollars being given to businesses owned by profit or parent companies when the money was supposed to support struggling businesses, ignoring official advice to halt the programme, and the Auditor-General concluding that limited documentation meant it was hard to determine value for money or to adequately explain their decisions made?

One thing I would say is that, actually, what we’ve done—and I think very successfully—is given taxpayers’ money to businesses to allow them to make decisions themselves. In terms of the money I’ve just alluded to, the $49 million that went to the regional tourism organisations, I wrote them a letter of expectation around destination management plans and regenerative tourism, but it was up to them to determine how they in fact engage with their key stakeholders. In terms of the COVID-19 Short-Term Absence Payment (STAP), there have been a number of reviews done—Deloitte, I think, have done a couple—the only recommendation that came out of the Auditor-General’s report was a recommendation that the Ministry of Business, Innovation and Employment take a look and determine whether what we wanted to achieve out of STAP in fact had been achieved. What we have got is an organisation, a company—I think they’re called Angus & Associates, I think that’s the name—to take a look right across the tourism sector to do an audit, to see how well that money was spent, and whether we achieved what we were out to achieve, and the impact it had. But that’s right across the tourism sector. But we certainly will deliver on the Auditor-General’s recommendation, and we’ll take a good hard look to see whether STAP delivered what we intended it to deliver.

One thing I will say though, when the STAP was put in place, we were at the beginning of a global pandemic. We had just closed down the borders. We knew that there were going to be no international tourists that were going to come to this country. We had to act really, really fast. There was no playbook, keep in mind, for how to manage a global pandemic. There are a number of tourism businesses that actually wrote to the Government and said, “If we do not have some form of support, we will close.” So Ministers had to act quickly to ensure that money got out the door and we didn’t see either the closure of these businesses, or what was also mooted, which was the sale to international interests.

Could I ask the Minister what is just a couple of quick-fire questions, a quick-fire round. What’s his understanding of why tourists from all countries can’t come to New Zealand right now?

Well, we have Australian tourists, we have tourists from visa waiver countries, and we have countries that you have to have a visa to come into the country. We have not opened the borders at this point in time to tourists from countries that require a visa to come in.

Members, our time with the Minister of Tourism has ended. The Minister of Housing is now available for one hour to respond to members’ questions.

Housing