A major funding shift will see local councils pocket tens of millions of dollars previously destined for nature and tourism promotion.
Instead of introducing a proposed “Bed Tax,” the Government is diverting money from the International Visitor Conservation and Tourism Levy (IVL) directly to local councils.
Background papers released yesterday by Finance Minister Nicola Willis project that councils could receive $106 million a year from the levy by 2030.
Until now, levy revenue has directly funded conservation and tourism in two ways:
Around $64 million this year went toward targeted conservation and tourism initiatives.
165 million went straight into the core, day-to-day operational budgets of Tourism New Zealand and the Department of Conservation (DOC).
Under the new plan, guaranteed funding for both sectors will be capped until the 2030–31 financial year:
Tourism New Zealand takes a heavy hit. Total funding (combining projects and core operations) will drop from $124 million this year to a guaranteed $50 million annually.
Instead, the “reset” announced by the Government yesterday will shift that money to Councils.
“The way it is at the moment, the growth in International Visitor Levy (IVL) funding goes to baselines, so this will completely reverse it,” Tourism Minister Louise Upston said yesterday.
“What we are seeing with the IVL reset is that the growth in international visitor numbers directly goes back to the regions where the growth occurred.
“So, it’s a significant shift.
“The amount for tourism priority projects will come down from 90 million to 50 million, so we’re pushing money into the regions.”
Prime Minister Christopher Luxon said the cuts came from money which was used to promote tourism to New Zealand.
“Now as we see 95% of the visitors are back in town, I think over 110% of value being created is in town. So now we move back to the supply side and a little less demand creation,” he said.
Department of Conservation (DOC) funding holds relatively steady in the short term, moving from $104 million total this year to a guaranteed $100 million annually.
Because both grants are strictly frozen at $50 million and $100 million through 2030, neither agency will see their funding grow with inflation or rising visitor numbers—leaving councils to reap the future financial upside.
However, Finance Minister Nicola Willis yesterday said the Government would provide $100 million to conservation from the Consolidated Fund over the next four years to make up for the money it will miss out on from the levy.
“Going forward, what we’re proposing to do is continue to make sure that DOC gets its fair share of funding and that there’s a strategic tourism fund, but then make sure the regions are getting their fair share of the IVL,” she said.
“In order to make it whole and ensure no one misses out, we are contributing $100 million over the next four years, which will come from future operating allowances.
“That’s so we can keep people on the front line at DOC doing their jobs, and so we can ensure that we still have funds available to the government for strategic tourism priorities.”
Not surprisingly, some stakeholders are cautious about the new approach.
Federated Farmers is cautiously welcoming the National Party’s campaign promise to reset International Visitor Levy spending – but said the devil would be in the detail.
“New Zealand is desperately in need of further investment to support conservation and tourism work,” Federated Farmers conservation spokesperson Richard Dawkins said.
“The International Visitor Levy (IVL) is a great mechanism to help fund some of those initiatives, but there hasn’t always been full transparency about where that money goes.
“Agriculture is New Zealand’s largest export earner, and tourism is number two, but we still have serious issues with weeds, pests, and underfunded regional infrastructure.
In its list of policy priorities for the 2026 General Election, Federated Farmers has called for 100% of IVL funding to be spent on tourism and conservation projects.”
The organisation says it’s a sleight of hand for IVL funding to be reallocated to offset or replace existing Crown baseline funding to maintain current services.
“We’ve seen some great use of the IVL in the last few months that will really help control wilding pines and pests like deer – but that hasn’t always been the case,” Dawkins says.
“The levy raised around $230 million last year, but unfortunately only $90 million of that funding was used for its intended purpose of funding new discretionary initiatives.
“Just $55 million dollars was invested in new conservation projects and $35 million in tourism. The remaining $140 million was used to replace existing Crown spending.
“That’s simply not good enough when we have significant conservation challenges with wilding pines and an out-of-control pest problem that urgently needs more funding.”
Federated Farmers is now seeking assurances from the National Party that the $100 million annual allocation for conservation will be new funding.
“If that’s new funding from the IVL on top of the Department of Conservation’s existing spend, that will be a game changer for farmers and conservationists,” Dawkins says.
“But if it’s just going to be used to offset existing spending or patch over reductions in baseline funding, it will make absolutely no difference for farmers or the environment.”
Federated Farmers has written to the National Party’s conservation spokesperson Tama Potaka seeking further clarification of the policy.
The problem for the local bodies is that the initial grants from the levy fund will be small.
“This National Party announcement is a step in the right direction, but we are still around $8 million short, and it’s not yet a long-term solution,” said Auckland Mayor Wayne Brown.
“The proposed $19.1 million reallocation from the International Visitor Levy is a welcome start, but it falls well short of the $27 million Auckland needs each year for major events and destination marketing. But this shows they’re listening.
“This will still leave the future of some events like the ASB Classic, All Blacks tests, State of Origin, SailGP and the Writer’s Festival at risk.
“A bed-night levy and international visitor levy aren’t taxes.
“The bed-night levy is a fair user charge that would mean visitors, rather than Auckland ratepayers, contribute a few dollars towards tourism-related infrastructure and services.
“A modest 2.5 per cent bed-night levy would raise revenue locally from all visitors staying in commercial accommodation in Auckland and regionally without creating new barriers at the border.”
Brown is promising an announcement on the issue tomorrow.
