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

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Commercial-in-Confidence KI Traveller’s Levy Impact Assessment wharfage (which is a single, annual charge) commensurately. Landing charges, which are a per-passenger fee, would simply be increased by the value of the Levy. Again, ensuring a ferry traveller and an air traveller pay an equivalent Levy would be important. Compared with a direct charge, indirect charging would see Council forego control over the specifications of the Levy. Both SeaLink and the airlines would be free to recover the cost of the levy in a fashion which is in their best interests commercially, including by increasing freight charges. That is, even if landing fees were increased by, say, $10 per passenger, the levy paid by the traveller may in fact vary from this. Commercial imperatives would drive operators to recoup the additional costs in a fashion that minimises impacts on their business; hence the outcome may in fact be a relatively efficient one, albeit less controllable from Council’s point of view. Once in place, the system would be simple and low-cost to administer – equally or more so, than a direct charge. Option 3: Per-vehicle levy A per-vehicle charge would be a hybrid of Option 1, introducing the Levy at the point of car hire in addition to a Levy on those who bring a vehicle to the Island via the ferry. Visitors travelling by bus would be charged separately and motorcyclists could be subject to a concessional rate. Given SeaLink currently charge on a per-vehicle basis, such a levy could be readily integrated with their existing pricing structure, provided a suitable regulatory/legislative mechanism exists. The major hurdle would be Council’s legislative power to impose a charge on rental car businesses, which, while not explored in-depth here, would appear beyond their jurisdiction. With different levies for different vehicles and the need to ensure compliance through monitoring both arriving vehicles and hire cars, this option would also be the most costly to administer, monitor and enforce. Conclusions In many respects, given the user-pays rationale for a Traveller’s Levy, a per-vehicle levy fits most closely with the policy intent. However, it would be the most costly to administer, would impose the most significant burden on industry and faces unknown legal barriers. A direct charge gives Council the flexibility to structure the Levy according to its preferred design, but again the challenge to implementing such a model would be a legal one. An indirect charge whereby a levy is rendered through an increase in wharfage and landing fees is likely to face relatively fewer barriers to introduction and would be the most costeffective to administer, though even in this case significant impediments would need to be overcome. Council foregoes direct control over the charges travellers face, though commercial imperatives would mean that the outcome is not necessarily a less efficient one. 5.2 ASSESSING THE COSTS OF ADMINISTRATION AND IMPLEMENTATION While it is difficult to estimate the cost of collection and administration without the specifics of such processes being refined, if integrated with existing mechanisms, the costs of collection would be negligible. Indeed in the case of a levy being factored into wharfage fees and landing charges, the ongoing costs of administration would be close to zero. A direct levy aligned with operators’ existing pricing structures would be marginally more expensive. 37
Commercial-in-Confidence KI Traveller’s Levy Impact Assessment The greater costs are likely to be those associated with implementing a levy. For operators, this would involve updating existing pricing schedules, re-printing brochures, and reprogramming booking systems. For Council, the largest and most uncertain component will be the legislative costs of introducing a levy. These are unknown at this stage. 5.3 THE FEASIBILITY OF EXEMPTING LOCALS The report has discussed the case for excluding residents (and off-island ratepayers) from a Traveller’s Levy, concluding that there is a strong case for doing so. While practical mechanisms can be conceived for such an exemption, whether their implementation is ultimately feasible is a question of cost-effectiveness. For ferry travellers, as SeaLink already requests identification when selling discounted fares to locals, such an exemption would appear administrable (i.e. their residents’ discount would simply be greater). Alternatively, Council could offer a refund to locals on presentation of their tax invoice. In the case of air travellers, this would indeed be the only option. While feasible, the merits of such a system would hinge on Council’s ability to develop a low-cost re-imbursement mechanism. 5.4 POTENTIAL IMPEDIMENTS AND BARRIERS Desktop research and, in a particular, consultation with local stakeholders, revealed a range of potential impediments and barriers to the introduction of a Traveller’s Levy on KI. Opposition from local tourism businesses: both discussions with local tourism operators and the survey results revealed a level of opposition to the introduction of a Traveller’s Levy. Of the 51 respondents to the KI Council Tour Operator Survey, 44% said they would support a Levy to assist the Council in maintaining/improving KI’s roads and other infrastructure and around half believe that the implementation of a Traveller’s Levy would impact negatively on their business. Strong opposition from SeaLink: given the importance of securing the ferry operator’s support, SeaLink’s stated opposition to a Traveller’s Levy poses a major challenge to its introduction. While this need not present an impasse, it is among the greatest barriers that introduction of a Levy would face Issues of legal jurisdiction: introduction of a Traveller’s Levy would invariably face a number of issues of jurisdiction which would need to be investigated, and which would ultimately determine what, if any, method of implementation was feasible. Imposing a levy on ferry operators. Imposing a levy on air operators. Imposing a levy on car hire businesses. Acceptance from travellers: despite survey results reporting a high level of support for a Traveller’s Levy (71% of respondents indicated they would support a levy) concerns are regularly raised about the cost of travel to the Island, which many suggest is excessive. Travellers will be therefore be more resistant to the Levy if they see it simply as adding to the cost of travel, rather than adding to the cost of their visit more generally. Legal precedents: state government authorities raised concerns that the introduction of a Traveller’s Levy on KI may create a precedent which allows other jurisdictions with similar fiscal shortfalls to seek such a solution, irrespective of the appropriateness of their circumstances. 38
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KI Traveller's Levy Economic Impact Assessment - Kangaroo Island ...

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