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New Zealand’s tourism future

20 June 2004 Speech

Professional, focused, and high quality: New Zealand’s tourism future

(Hon Mark Burton Speech to the Holiday Accommodation Parks of New Zealand’s 50th anniversary conference)

Ladies and Gentlemen, welcome to your 50th Anniversary conference. I’d like to thank you for inviting me to officiate once again this year.

This is the fourth time I’ve had the pleasure of opening this conference. It’s become an event to look forward to, and it’s great to see so many familiar faces. I think that one of the many, many advantages of my role as Minister of Tourism is getting the opportunity to visit so many different operators from all around New Zealand, and to hear their views on the industry.

Congratulations on your 50th Anniversary. This is a real milestone, and certainly cause for celebration. But today is not only about celebrating your past. As the title of your conference—Investing in the Future— suggests, it is also an ideal time to look to the future.

And with more people here today than at any previous conference, that future looks bright indeed!

Holiday Parks and camping are part of New Zealand culture. The range of accommodation you offer at modern holiday parks—cabins, lodges and self-contained flats—means the experience is no longer just available to caravan owners or those hardy enough to stay in tents. Instead, you cater for a broad range of travellers and holidaymakers.

Caravan parks hosted over 6 million guest nights in the year to March—20 per cent of New Zealand’s total guest nights and proof positive of the importance of Holiday Parks to the tourism sector.

Tourism is vitally important to New Zealand—one of our largest earners of foreign exchange and, by any measure a vital domestic industry. Tourism is, quite simply, a premiere industry for the New Zealand economy.

All projections point to a healthy growth in value over the coming years.

In 2003, international visitors spent a total of $6,383 million in New Zealand—an impressive 3.9 per cent increase on 2002’s record figures. In the same year, the inbound market from Australia reached $1 billion in export earnings for the first time ever—a real milestone in our relationship with our closest neighbour and biggest market. And domestic spend on tourism was well over $8 billion, more than 50 per cent of the total sector value.

We do indeed have a lot to celebrate, but none of it has happened by accident. Today, the industry is underpinned by strong government/sector partnerships that have survived and strengthened through prosperity and challenges alike. But only a short while ago, this kind of relationship was all but unimaginable.

When I became Minister of Tourism four and a half years ago, there was no recent history of such partnerships. I just want to put the visitor numbers in perspective for you, because I think comparisons with other major industries really help to illustrate just how significant tourism really is. Consider this—every international visitor to New Zealand is worth the equivalent in earnings of 2.7 tonnes of apples, 2579 pounds of butter, or 1.6 tonnes of kiwifruit.

Tourism contributes nine per cent of GDP and close to 16 per cent of New Zealand’s total export earnings. The sector makes a vital contribution to our economy at the national, regional and local levels, supporting more than one in every eleven jobs.

Cleary, you are a sector this government takes very seriously!

The past few years have seen both a quantum leap in our international profile and incredible growth in visitor numbers and, more importantly, visitor yield. At the same time, we have seen the development and early implementation of New Zealand’s Tourism Strategy 2010.

As I said, we certainly have the right to celebrate, but I think you all know that I am not a believer in resting on one’s laurels!

The tourism environment is a volatile one. As an industry, it is vital to adapt to changes and capitalise on new opportunities.

Your conference theme suggests that you share this view, and I hope that these few days will challenge and stimulate you to meet future challenges head on.

Fergus has requested that I address a number of specific issues today of concern to your membership. (In fact, not only did he provide a comprehensive list to my office, but I’m told at least one member of the Ministry of Tourism has been urged to provide “a speech of substance that addresses some key issues!”)

The first of these issues is employment legislation. Changes to employment law have implications both for employers and employees.

Those of you who are employers will be aware of the Government’s recent changes to the Holidays Act, and the proposed changes to the Employment Relations Act. I understand you may have some questions about these changes.

A common question businesses have faced is how to make up for extra labour costs on public holidays. I believe that most New Zealanders are pretty fair-minded. When people have to work on a public holiday, giving up time away from family and friends, I think most of us would agree they should be fairly compensated.

A number of businesses and industries have chosen to charge customers surcharges on public holidays. I am told that, as a group, you support building any additional costs brought about by the changes into your overall rates, rather than adding a surcharge.

As the Minister of Tourism, I fully support this approach. I want to commend you on the rational, long-term perspective you have taken on this issue.

Surcharges are akin to special taxes. The idea of imposing charges on visitors is often raised in the tourism industry, whether through road tolls, visitor charges, bed taxes, or, as we have seen over recent months, in the case of some businesses, adding 15 per cent to a visitor’s cup of coffee.

I cannot stress enough how short-sighted this attitude is. Not only does it send the wrong message to our visitors—it also impacts on those New Zealanders who just want to enjoy a meal out on their day off.

(Interestingly, I would note that, when penal rates were phased out in the 1990s, I don’t recall prices going down as the result of a reduced wage rate!)

Adding a surcharge may very well give our guests the impression that both government and industry will take any opportunity to squeeze every last dollar from them on their holiday. And, given that surcharges are largely appearing only in the service industry—the very bars, cafes, restaurant they are likely to frequent—they could well be forgiven for taking that view.

[Retailers, far from adding an extra 15 per cent, seem to be able to put their entire stock on sale on a holiday…]

So let me state my support once more for incorporating any extra costs where they belong—in your overall charges. You are entitled to charge fair rates—ones that reflect the quality of the facilities and services you provide, and the people you employ.

A further employment-related question has arisen over the proposed changes to the Employment Relations Act.

The government believes that the changes will help to ensure that the Act better meets its key objectives of fairness, improved productivity, and effective employment relationships—all outcomes that help a business to run smoothly and profitably.

The government is well aware of business concerns on the part of some about what the Bill means in practice. I know your membership has raised the issue of employer requirements in the sale or transfer of a business, and I assure you that my colleague Paul Swain, Minister of Labour, is listening carefully to your views as stakeholders.

The Bill is currently before the Select Committee, and they have heard all of the submissions. I am sure that both employee and employer perspectives will be taken into consideration by the Committee as it prepares its report, including any amendments for the House.

A third employment issue that your group has raised is the lack of quality staff in the industry. It may be of cold comfort, but tourism is not alone in experiencing staff shortages. With unemployment at a sixteen-year low of just 4.3 per cent, businesses are increasingly vying for staff.

The government has recognised that if tourism is to grow, we need the right people, in the right place, with the right skills, at the right time.

Currently, the Ministry of Tourism, in partnership with the Tourism Industry Association and three Industry Training Organisations, are conducting a study into the future work force and skill requirements of the industry.

The study will identify and prioritise the skills necessary in the industry, as well as finding present gaps in training to acquire and develop these skills.

Work such as this is an important part of making sure that future tourism growth will not be limited by a lack of qualified and capable staff due to inadequate training opportunities or facilities.

In this way we, as government and industry associations, are doing our part to ensure human resource supply and capability into the future. On this note, on Friday night I was pleased to participate in the launch of the National Certificate in Tourism Maori (level 3)—a course that will commence in just a few short weeks at the Manukau Institute of Technology.

Maori tourism offers an important point of difference for New Zealand on the world stage. We know from our research that target visitors are extremely interested in learning about and engaging with Maori culture, and we need the brightest and the best to fulfil Maori tourism’s full potential. Appropriate education is one of the keys to achieving this.

As operators, you, too, must play a part in ensuring that tourism is seen as a viable career option, not a “fill-in” or temporary job.

Tourism has long been known as an industry that pays low wages to those on the front line—the very people who make face-to-face contact with our guests. These are the people you are counting on to make that good impression, to be knowledgeable and competent, and to go above and beyond in meeting your customers’ needs—and deliver on the promise of a high quality visitor experience.

So, I would like to pose this question for your reflection: In a competitive labour market, you, as operators have to assess whether the wages and benefits offered to employees are realistic relative to the expectations you have of them. Is the industry offering enough to attract quality staff, or can those staff do a whole lot better elsewhere?

Because the fact is, you are competing with a range of employers for the same people: agriculture, horticulture, other service industries, a growing cultural sector, and an expanding business sector. How will you attract the managers, front line staff, and support crew that you need to run your businesses successfully?

Tourism may have an appealing image. But the bottom line is that attracting and retaining quality staff means paying appropriate salaries, and offering career opportunities for the future.

We have had another bumper season of arrivals and expenditure, and a strong domestic market. If we are truly committed to sustainability, we have to reinvest in the people who are at the core of the industry. This may well pose some fundamental questions about price structure in some parts of the market.

In addition, both the private and public sectors need to invest further in the infrastructure that underpins our industry.

Rapid growth in tourism can place pressures on some small communities. They may be well placed to contribute to and benefit from tourism growth, but due to the level of capital investment needed in relation to the size of the ratepayer base, they may under-invest in infrastructure.

Where rating bases are small, the per capita investment needed to build water and sewerage infrastructure to meet the needs of visitors is many times larger than that in larger population centres.

This government is committed to working with regions and communities across New Zealand to maximise opportunities for economic growth and well-being. Tourism is a crucial part of this, so it is essential that sector growth is based on solid foundations. Part of this is providing consistent, quality infrastructure across New Zealand.

Last year, a joint Ministry of Tourism and Ministry of Economic Development report found that, although visitors are currently paying for their use of water and sewerage infrastructure, some smaller communities may well face difficulties in funding the capital costs of upgrading or replacing these facilities in the future.

In response to this finding, I was pleased to announce recently that Budget 2004 allocates an $11 million investment over the next three years to subsidise infrastructure needed to meet tourism demand on water and sewerage treatment systems in small communities. This may include expanding, upgrading or building facilities to cope with the demands of tourism.

I have been very pleased at the positive response to this initiative, although there are those who have stood up and said, “It’s not enough.” And, in a sense, they’re right—$11 million will not solve all of our tourism infrastructure issues. But it’s a first step, it’s in the right direction, and it’s another clear illustration of this government’s continued commitment to playing its part alongside the industry.

The Ministry of Tourism is now looking into other types of infrastructure affected by tourism demand and at overall, long-term, industry infrastructure requirements.

Another issue I know is of concern to your membership is freedom camping.

I understand that you are concerned about street camping, as well as rest and reserve area camping, and its impact on the environment. Although this is not a central government issue, I am happy to make a few comments. Currently, local authorities have the power to set standards and enforce them for freedom camping—something that government supports, and we encourage them to address the issue in a proactive way.

The introduction of long-term council community plans encourages communities to decide what their priorities are, and I encourage you all to take part in the planning process.

From a government point of view, however, we certainly don’t want to see negative social and environmental impacts from uncontrolled freedom camping. In the right place, with the right facilities, we believe that it can be a positive form of tourism, which both local and international visitors have enjoyed for many years.

But there is no excuse for littering or dumping waste, and absolutely no role for this kind of behaviour in the vision provided by the Tourism Strategy.

Maintaining high quality, both in our natural and made environments, is fundamental to our ability to offer our guests a high quality tourism experience.

I understand that your group has developed a set of minimum quality standards, to be discussed at this conference, and I’d like to commend you on this initiative.

Quality is crucial to ensuring that our guests’ experiences live up to their expectations.

I understand that HAPNZ is about to see an exciting new development—a seminar series on business excellence. Members who participate in the programme will look at what it takes to create a business of Tourism Award standards. This is a valuable opportunity, and I encourage you to take part—not only in this particular series, but in all business and quality development opportunities available to you.

One way in which the New Zealand government works to ensure quality within the tourism industry is through continued support of Qualmark, our reliable, easily recognised, standardised, world-leading quality assurance system. Over the past two years, we have fostered the development of Qualmark through $2.5 million worth of additional funding, to develop assessment systems, automate the business, and expand it beyond its original brief of accommodation assessment.

Qualmark is now available across the product spectrum: from adventure activities, cultural and nature experiences to rental car companies, bus and coach operators, museums, tours, retail, cafes and more.

But don’t think that the accommodation sector has been forgotten. Qualmark launched a new ‘exclusive’ accommodation category at TRENZ just last month.

At TRENZ, I was also delighted to announce Budget 2004 funding of an additional $500,000 of development funding to Qualmark over the next two years.

And it is quality that has to be at the heart of everything we do in developing this, New Zealand’s most exciting and opportunity rich industry. Whether in our international marketing campaign, the assured quality of experience for our guests (international or domestic), or the quality of employment opportunity for our people—the long-term future of New Zealand’s unique tourism experience lies in competing professionalism, quality, and value.

And, in closing, I’d like to congratulate your organisation again for actively encouraging quality within the industry. I know that a large proportion of you have adopted Qualmark as your standard, and I am pleased that HAPNZ continues to promote Qualmark as the leading quality brand in New Zealand. And, of course, I hope that all members continue to aspire to Qualmark membership.

With that, I wish you all the best for a very successful 50th anniversary conference. I hope that my comments this morning have passed the test of a “speech of substance.” It gives me great pleasure to now declare the HAPNZ conference officially open.

ENDS


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