KI Traveller's Levy Economic Impact Assessment - Kangaroo Island ...

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Commercial-in-Confidence KI Traveller’s Levy Impact Assessment international visitors it is 2.7 nights. 4 The comparable averages for South Australia as a whole are 3.5 nights for domestic visitors, and 18.9 nights for international visitors. Chart 1.4 details the length of stay by overnight visitors to the Island for 2008. Of these, 65% stayed for three nights or less, while only 2% stayed for more than one week. CHART 1.4: OVERNIGHT VISITORS TO KANGAROO ISLAND BY LENGTH OF STAY, 2008 1% 1% 14% 33% 28% 1 night 2 nights 3 nights 4 to 7 nights 8 to 14 nights 15 or more nights 23% Source: TRA Many tourists to Kangaroo Island visit as one stop on a longer trip. Table 1.5 provides details about how long visitors stayed on Kangaroo Island compared with their length of stay in Australia. Although some who stayed in Australia for a very short time spend a large proportion of their trip in Kangaroo Island, these data suggest that more than 98% of international visitors to the Island visited as one stop on a longer trip. On a similar basis, some 80% of interstate visitors to Kangaroo Island are also estimated to be visiting as one stop on a longer trip, however most visitors from South Australia visit the Island as a discrete trip. TABLE 1.5: INTERNATIONAL VISITOR LENGTH OF STAY ON KI BY LENGTH OF STAY IN AUSTRALIA, 2008 Nights on Kangaroo Island 4-7 8-14 15-21 22+ 1 night 2 nights 3 nights Nights in Australia nights nights nights nights 1-9 nights 660 453 - 195 - - - 10 to 39 nights 9,295 11,080 4,705 1,137 127 90 - 40 to 99 nights 1,728 1,989 1,018 1,598 - 50 - 100 to 199 nights 272 946 504 134 - - 118 200 nights or more 692 799 507 - 118 - - Source: TRA 4 2007-08 TOMM data suggests higher average length of stay, with 4.8 nights for intrastate, 5.0 for interstate and 3.1 for international (2.5 in 2006-07). For a summary of the differences between TOMM data see Appendix D. 9
Commercial-in-Confidence KI Traveller’s Levy Impact Assessment 1.3 WHY CONSIDER A TRAVELLER’S LEVY FOR KI A Traveller’s Levy has been under consideration for some time by KI Council as one of a number of options for improving Council’s financial position and ensuring that local infrastructure – and hence the quality of the KI tourism experience and the amenity of locals – can be maintained and enhanced. Revenue shortfalls, coupled with a large road network and commensurately high road maintenance bill – reflecting, in part, the level of road usage by tourists who visit the Island – have led to consideration of a levy on travellers to the Island. Council’s fiscal position KI Council has identified a need to consider alternative sources of revenue in light of pending budget shortfalls and a fundamentally unsustainable financial position. In 2007-08, the Council posted an operating deficit of $3.36 million or 32% of operating revenue, while the budget for 2008-09 projects an operating deficit of $2.8 million (27% of operating revenue). 5 Despite residents paying above-average rates relative to comparable councils 6 ($489 per capita in 2005/06), the Island’s fiscal position is a challenging one due to the combination of its limited ratepayer base, the large land area that it governs (443,000 hectares) and the significant local road network associated with this (1,316km). Further, by the very nature of the area on an island, Council incurs higher costs of delivery for most services compared with other councils. It also bears the cost of maintaining roads which, under other circumstances, would likely fall under the jurisdiction of other levels of government. In particular, as JAC Comrie Pty Ltd note, Council are responsible for some roads that it considers have characteristics that elsewhere may result in them being classified as arterial roads and therefore be the responsibility of the State. Though Council’s Long Term Financial Plan sees its operating budget returning to surplus by 2017, this is only achieved by significantly restraining outlays, and in particular, by reducing infrastructure spending below that which is required for satisfactory up-keep of Council facilities. Indeed total Council expenses are projected to grow by just 0.8% annually, in real terms, over the eight years to 2017 in order to achieve the budget target. In addition, it is a plan predicated on the Council securing additional sources of revenue. The significance of tourism to the Island KI Council is by no means unique among local governments in experiencing fiscal challenges. However, one of the defining characteristics of the KI situation is the significant level of tourism activity – and by extension, the reliance of the regional economy on tourism. Indeed, as noted above, tourism expenditure on KI was estimated at around $82 million in 2007, resulting in the industry accounting for some 15% of employment on the Island. With such levels of tourism, however, come additional costs to local infrastructure. In particular, extensive road usage by tourists contributes to the Island’s sizeable road maintenance costs. Determining the proportion of total road usage which is accounted for by tourism is not possible due to an absence of recent data. Though research undertaken by Council in the early 1990s identified residents as the greatest road users, tourism numbers have grown significantly since this time. Anecdotally, the layout of the Island and the 5 Kangaroo Island Council, Long term financial plan, 2009-2019. 6 Compared with 18 Councils with similar characteristics – see JAC Comrie Pty Ltd (2008). 10
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