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

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Commercial-in-Confidence KI Traveller’s Levy Impact Assessment Those visitors who continue to visit KI despite the Levy are assumed to maintain the same level of expenditure on the Island. The introduction of what is effectively a tax, results in a reduction in visitors’ total net income, the impacts of which are spread across their entire consumption basket, not simply the KI trip. Given that in the context of an individual’s entire annual spend, a trip to KI represents an extremely small proportion, the impact on expenditure on the Island is assumed to be zero. In actual fact it is probably a very small negative number. 4.3 OPTIONS MODELLED Reflecting the preferred design characteristics discussed above, four key levy options have been modelled: Option 1: A flat per-passenger charge applicable to all travellers to the Island, payable as a one-way levy (this would also approximate the impacts of introducing a levy through wharfage charges and landing fees). In 2007-08 this would have resulted in a levy being applied to 210,332 persons. Option 2: A flat per-passenger charge exempting children, including resident children (which also approximates the impacts of a family pass). In 2007-08 this would have resulted in a levy being applied to 193,320 persons. Option 3: A flat per-person charge exempting residents. In 2007-08 this would have resulted in a levy being applied to 175,332 persons (i.e. just visitors to the Island), or in the case where both residents and children are excluded, 158,320 persons. Option 4: A flat per-night charge, applicable to all visitors to the Island in accordance with their length of stay. In 2007-08 this would have resulted in a levy being applied to 175,332 persons, based on 484,869 visitor nights, counting day visitors as one “night”. KI residents are excluded under this option. 4.4 MODEL RESULTS As discussed above, the Council’s goal is achieving a revenue target of $1.8 million. Under each option therefore, the modelling estimates the levy rate required to meet this target, then estimates the impacts on visitation to KI – and hence tourism expenditure – resulting from this. Critically, the modelling results presented in this section represent purely the price impacts of the levy, with no account taken of the potential offsetting impacts of improved or better-maintained roads. This is explored in Section 4.5.3. Estimated figures are for financial years, and it is assumed that a levy is introduced at the start of the 2011 financial year. OPTION 1: A FLAT PER-PASSENGER CHARGE As the option with the broadest revenue base, the required levy rate under a flat perpassenger charge payable by all travellers is lowest of the four options, with a per-passenger levy of $8.55 required to raise the revenue target. At this rate, the levy is estimated to dissuade 4,620 visitors in the first year of operation, and 43,330 visitors over the period 2011 to 2019 (Table 4.4). The reduction in visitation is disproportionately weighted towards day trip visitors, for whom the levy represents a relatively high proportion of their overall on-island spend. Day trip visitors account for an estimated 32% of lost visits in 2011, compared with just 9.5% of total visitors in the baseline. Overall, total tourism expenditure foregone is 27
Commercial-in-Confidence KI Traveller’s Levy Impact Assessment estimated at $1.87 million annually. In this scenario, changes to resident behaviour are also observed, with a reduction in trips by residents of 1,690 in 2011. TABLE 4.4: OPTION 1 MODELLING RESULTS Variable 2011 impact 2011-2019 impact Required levy rate $8.55 Change in visitor numbers -4,620 -43,330 Domestic overnight visitors -2,370 -21,910 International overnight visitors -790 -7.950 Day visitors -1,460 -13,470 Change in resident trips -1,690 -15,460 Change in tourism expenditure ($real) -$1.87m -$17.45m Levy revenue ($real) $1.80m $16.96m OPTION 2: A FLAT PER-PASSENGER CHARGE EXCLUDING CHILDREN Excluding children from the levy narrows the base of travellers upon whom the charge is levied. Children are estimated to represent around 9% of all visitors to Kangaroo Island and 6% of residents. If this group is exempted then one of two alternative approaches must be adopted: either a smaller amount of revenue is collected, or the value of the levy must increase to achieve a given revenue target. The modelling adopts the latter (Table 4.5). TABLE 4.5: OPTION 2 MODELLING RESULTS Variable 2011 impact 2011-2019 impact Required levy rate $9.41 Change in visitor numbers -4,550 -42,700 Domestic overnight visitors -2,300 -21,190 International overnight visitors -840 -8,420 Day visitors -1,420 -13,080 Change in resident trips -1,740 -16,000 Change in tourism expenditure ($real) -$1.84m -$17.16m Levy revenue ($real) $1.80m $16.97m When children are exempt, the required levy rate rises to $9.41, reflecting the lower number of visitors paying the levy (193,320 compared with 210,332 when children are included). Despite the higher levy, fewer visitor trips are lost, with a reduction of 4,550 visits in 2011, and 42,700 over the period 2011 to 2019. Although the levy is higher on a per-adult basis, excluding children reduces the burden on families (e.g. a family of four pays $18.82 compared with $34.20 under Option 1). OPTION 3A: A FLAT PER PASSENGER CHARGE EXCLUDING RESIDENTS Excluding residents from the levy necessitates a higher levy rate to achieve a given revenue target –$10.23 when children are included. Consequently, with the burden placed solely on visitors, the impacts on tourist numbers is greater, with an estimated 5,530 potential visitors 28
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