Places that attract significant numbers of visitors have to provide infrastructure and services for many more people than their resident populations alone would suggest.
Visitors use roads, public spaces, toilets, waste services and transport. They rely on safe and resilient infrastructure. They enjoy the natural environments and community assets that make our regions compelling places to visit.
Those things need to be built, maintained and renewed.
Yet while visitor numbers can significantly increase demand for local services and infrastructure, they don’t create additional rating units – the individual parcels of land or properties used to assess and obtain council rates.
That is the fundamental mismatch.
The Government’s 2026 National Infrastructure Plan recognises it, identifying tourism as a driver of infrastructure demand and highlighting the pressure on destinations with high visitor numbers and small resident populations.
It is why councils, regional tourism organisations and operators across the country have backed the New Zealand Tourism Funding Charter, calling for a legislated, enduring national approach to funding visitor-related infrastructure.
The Government’s proposed rates-capping system brings this issue into even sharper focus.
The current proposal would establish an initial national target range of 2 to 4 per cent for increases in average non-water rates revenue per rating unit.
But communities across New Zealand face very different circumstances.
Some are growing rapidly. Some have significant infrastructure renewal requirements. Others face resilience challenges, historical under-investment, or costs associated with delivering services to large numbers of visitors.
A single national range cannot make those underlying differences disappear.
Nor does limiting revenue make necessary expenditure disappear.
If a road needs renewing, a public facility needs maintaining or resilience work needs to happen, delaying that investment may simply transfer the cost into the future.
For tourism communities, there is another dimension.
New Zealand rightly wants a successful visitor economy. We want people to explore our regions, spend money in local businesses and enjoy high-quality experiences.
But successful tourism depends on successful places.
Visitors notice when infrastructure is under pressure. Communities certainly notice when the cost of supporting tourism falls disproportionately on them.
Over time, that matters not only to the visitor experience but to the relationship between tourism and the communities that host it.
A cap also narrows what councils can do to support their economies. Destination promotion and regional events, supported by council funding, keep visitors coming outside peak periods – and matter more as cost-of-living pressures make New Zealanders more cautious about travel. Under a tight cap, they are among the first things at risk.
That is why this conversation shouldn’t become a choice between unconstrained council spending on one hand and nationally imposed rates caps on the other.
There is a third part of the equation: funding reform.
We need stronger accountability and cost discipline, but we also need funding tools that better reflect who creates demand for infrastructure and who benefits from it.
Tourism already generates significant public revenue: GST on tourism spending alone was $4.4 billion in the year to March 2025. Most of that flows to central government, while much of the cost of hosting visitors falls on ratepayers. The issue is not a shortage of tourism revenue, but how it is shared.
The answer needs to be enduring and nationally coherent, rather than requiring individual communities to continually find their own solutions to what is, in many respects, a national issue.
Tourism does not stop at council boundaries. Visitors, whether from overseas or from the neighbouring region, don’t distinguish between infrastructure funded locally and infrastructure funded nationally. They experience New Zealand as a destination.
We also need to be realistic about the services and infrastructure we expect communities to provide and honest about what they cost.
A rates cap may put a limit on one way of paying for those services. It doesn’t answer the bigger question of who should pay.
For New Zealand’s visitor destinations, finding a fair and enduring answer to that question is becoming increasingly important.
Andrew Wilson is the chief executive of tourism organisation RotoruaNZ, and chair of the membership-based advocacy body Regional Tourism New Zealand.
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