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

Commercial-in-Confidence
KI Traveller’s Levy
Impact Assessment
1. INTRODUCTION AND BACKGROUND
Access Economics was engaged by the Kangaroo Island (KI) Council to undertake a study of
the likely economic impacts of a levy on travellers to Kangaroo Island (a ‘Traveller’s Levy’).
The aim of the study was to explore whether the KI circumstances justify the introduction of a
Traveller’s Levy and to analyse what impacts such a levy would likely have on the local
tourism industry, on residents, on visitors and on the broader economy.
In addition, the study was tasked with canvassing options for design and administration and
identifying practical impediments to the introduction and collection of a levy. Excluded from
this is an assessment of any legal obstacles that the introduction of a Traveller’s Levy would
face – though such issues are noted throughout this report, they have not been analysed indepth
here and would need to be investigated in a dedicated piece of analysis.
The approach to the study has been a multi-faceted one. Detailed desktop research was
undertaken to survey the literature on the responsiveness of tourists to taxes and charges
and to identify relevant case studies and examples which might inform the study. A purposebuilt
economic model was constructed to simulate the impacts of a Traveller’s Levy on the KI
economy under a range of alternative assumptions and designs. In addition, key
stakeholders were consulted to canvass views toward a potential levy, collect anecdotal
evidence of the possible impacts and explore practical issues and impediments to collection
and administration.
In the first instance, a Traveller’s Levy is modelled without direct regard to how the revenue
generated is expended, or what the counterfactual may be in absence of a levy. Council’s
financial position suggests that if a levy were not introduced, either roads and related
infrastructure would continue to be under-maintained or alternative revenue would need to be
sourced to fund adequate road maintenance (the feasibility of this is not examined here,
though the options would appear few). Against a counterfactual where roads and road
infrastructure are under-maintained over time, the road maintenance that a Traveller’s Levy
facilitates can be expected to lead to an improvement in the KI tourism experience.
Assessing the extent of this improvement, or its impacts on the tourism market, is
challenging.
This report outlines the findings of this study and presents an assessment of the overall net
impact of a Traveller’s Levy for Kangaroo Island. It is structured as follows:
The remainder of Section 1 provides background to the study, including an economic
profile of KI and the KI tourism industry, the basis for considering a Traveller’s Levy
and relevant case studies and examples.
Section 2 overviews the economic principles and concepts underpinning the design of
a Traveller’s Levy and its likely impacts.
Section 3 considers, in light of the analysis in Section 2, the optimal design of a
Traveller’s Levy.
Section 4 presents the modelling framework and reports the results of economic
modelling.
Section 5 discusses practical and logistical issues surrounding the possible introduction
and administration of a levy.
Section 6 summarises the report’s key findings and conclusions.
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