Emissions Trading Scheme threatens tourism businesses

Tourism businesses will be hit hard by expected electricity and fuel price increases resulting from the Government’s proposed Emissions Trading Scheme (ETS), the Tourism Industry Association New Zealand (TIA) says.

Some may be forced out of business unless there is targeted support for the tourism sector, TIA Chief Executive Fiona Luhrs says.

“The introduction of the ETS has been too rushed and there has been limited consultation with industries such as tourism, which will be impacted by the scheme from the outset,” Ms Luhrs says.

“As the government has stated, there will be increased energy costs associated with the introduction of the ETS. While the trading component of the scheme will not apply to tourism, the energy price increases will hit businesses hard, especially small and medium size businesses in the tourism industry.

“In the accommodation sector, for example, it is expected that financial yields for individual businesses could drop by between 3% and 14%. This is in a sector that is already characterised by low margins,” Ms Luhrs says.

“Recent analysis by Business New Zealand supports the view that the introduction of the ETS threatens the viability of many businesses in the SME sector, with the potential loss of thousands of jobs.

“Tourism businesses are already facing slowing visitor growth due to the high New Zealand dollar, economic slowdowns in some of our key markets and intense competition from other international destinations.”

New Zealand’s early participation in the ETS ahead of other countries also places New Zealand tourism businesses at a disadvantage to competitors in offshore countries. A number of these countries have no obligations under the Kyoto Protocol, Ms Luhrs says.

The tourism industry strongly supports the Government’s goal of environmental sustainability and that commitment is demonstrated in the New Zealand Tourism Strategy 2015 www.nztourismstrategy.com. Many tourism businesses are already making changes to meet the challenges posed by climate change.

However, the development of climate change policies must be cognisant of business reality and of the longer term timeframes needed for businesses to introduce change.

“The Government has indicated that there will be transitional government assistance to help industries adapt to the ETS but there has been no detail advised on what this support might be.”

TIA believes the government assistance programme should consider:

longer term timeframes for tourism businesses and other SMEs to adjust to change

providing targeted incentives to encourage tourism businesses to take up new energy efficient technologies

recognising businesses committed to reducing carbon emissions through an accelerated depreciation scheme, such as writing off depreciation charges on older, more energy intensive plant and equipment.

Read TIA’s full submission on the ETS at www.tianz.org.nz

Key statistics about tourism:

Tourism is the world's fastest growing industry

New Zealand tourism arrivals have increased by 61% since 1999 to 2.4 million

Forecast annual growth is 4% on average for at least the next five years

Tourism is New Zealand's single largest export sector. International visitors contributed $8.3 billion dollars to the economy in the year ended March 2006. That is19.2% of exports

Domestic tourism contributes $10.3 billion to the economy each year

Tourism directly and indirectly employs 10 percent of the work force. That is one in 10 jobs in New Zealand.

Tourism represents 8.9% ($12.8 billion) of gross domestic product and generates $531 million in GST returns from international visitors each year. Tourism is the only export sector whose international clients pay GST.

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