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Financial costs and benefits of international tourism

11 Jun 2018

The tourism industry in New Zealand contributes significantly to New Zealand’s economic growth and prosperity. Tourism is New Zealand’s largest export earner, contributing $14.5 billion (20.7%) to total exports for the year ending March 2017. Total tourism expenditure in New Zealand continues to increase (up 1.9% in the year ending March 2017 from the previous year), along with an increase in international tourist arrivals to 3.5 million visitors. This increase in visitor spend provides strong economic opportunities across the tourism sector and related industries.

The Ministry of Business, Innovation and Employment (MBIE) engaged Deloitte Access Economics to conduct a financial analysis of the amount and sources of revenue generated by international tourism, and the expenditure associated with hosting international visitors in New Zealand, for central and local government. This analysis does not take into consideration the wider costs and benefits associated with international tourism or other objectives that central and local government have that inform revenue and expenditure decisions.

To determine the expenditure and revenue associated with international tourism for central and local government, Deloitte Access Economics developed a framework that considers both direct expenditure and revenue, as well as expenditure and revenue determined through an apportionment approach. This approach aims to not only capture the direct revenue and expenses associated with tourism arrivals, but also capture the incremental expenditure associated with international tourists’ use of New Zealand’s infrastructure, resources and services in general. It also captures the indirect expenditure and revenue, as expenditure flows from businesses to suppliers, households, central government and local government. In addition, each revenue and expenditure item relevant to the analysis is analysed independently to ensure the original intent of spending, and accuracy of applied data, is maintained.

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