A Budget for many things but tourism and hospitality not one of them

BudgetTax

20 May 2022

Tourism and hospitality businesses looking for immediate relief and assistance after more than two years of disruption, closure, and isolation, will be struggling to find much from Budget 2022. Instead, this year’s Budget focuses on helping to ensure tourism and hospitality businesses are ready for the borders to be fully reopened on 31 July and that they have enough staff to operate.

The Innovation Programme for Tourism Recovery was the headline measure announced for tourism. The government has allocated $54.2m to support the tourism sector’s recovery from COVID-19 with an intent to “reset and rebuild tourism on a sustainable model”. What this actually means is yet to be determined.

Stuart Nash, the Minister for Tourism, stated that this new programme is subject to further design work and will prioritise innovation and low emission projects. So, more work and consultation with the industry is to be done before businesses will know what this means and how it will help them.

None of this addresses the immediate issues for tourism and hospitality businesses, such as rising costs and staff shortages. The latter of these had a heavy focus due to the Accredited Employer Work Visas originally requiring such staff to be employed at nearly $28 per hour, which was thankfully reduced to $25 for the tourism and hospitality sector. However, this doesn’t address the core of the problem of hiring staff in such a tight labour market.

For immediate relief, impacted businesses will likely need to turn to regional advisory/development funding or the Tourism Kick-start Fund (for certain South Island regions), although the take-up of Kick-start fund has not been great due to issues with eligibility criteria.

While there is not a huge amount of direct tourism support, there could be some business initiatives that might be of relevance, such as the Business Growth Fund that was announced in Budget 2022. The Business Growth Fund is aimed at allowing the government to fill a gap in capital markets for small to medium businesses that require growth capital. How beneficial this will be remains to be seen.

The tourism industry should receive some ancillary benefit from some of the broader measures, such as a spend on climate related projects which might help with New Zealand’s natural attraction. For instance, there is funding for biodiversity and freshwater measures that could assist with brand New Zealand.

There is also some very targeted funding to support access to the outdoors (such as for the Te Araroa Trail) and improving safe access and use of the government’s recreational assets. There is also funding for New Zealand Maori Arts and Crafts Institute to assist with training, which will assist Maori tourism.

The Budget also provided funding to implement some of the programmes that will affect all businesses, such as the Income Insurance Scheme and Fair Pay Agreements. As well as funding to implement new regulations concerning plant and structures to ensure the health and safety of workers. These will likely result in additional regulation and costs for businesses to contend with.

Check out the full coverage from Budget 2022, which will continue to develop throughout the day as new insights and video content are published.

Author: Daniel Gibbons

Daniel joined Findex in 2007 as a taxation specialist. Daniel works with many clients in New Zealand and offshore, to achieve the right outcomes in a variety of tax and commercial matters. Working in Central Otago, Daniel has specialist experience in international investment, structuring, income tax and GST implications, property transactions and immigration issues.