News and Events

Tourism issues on Lord Howe Island - Part 1

01-Sep-2014

A viable tourism industry in a remote World Heritage location requires a careful balance between conservation and business. Some of our most pressing issues are discussed below.

Air Service

Our community and our economy will not survive without a reliable air service. This is our most significant and pressing issue. The Lord Howe Island Board has been aware of the impending retirement of the DASH 8 200 aircraft for nearly a decade, but little has been done to prepare for it. We understand that the Board undertook feasibility studies on a possible runway extension over five years ago, and would now like to know the Board’s position, if any. The recent problems with Qantas, including the sale of two of the more powerful DASH 8 200s, should demonstrate the vulnerability of our current situation. Clearly the Board is now considering options, and the tourism industry should be informed and involved. We are aware of informal discussions between the Board and Qantas about the possible use of Q400s at a reduced payload, but there has been no communication with the business community about the likelihood of this as an alternative option.

We acknowledge that the possible extension of the runway will be a divisive issue in the community, and a difficult project to approve, finance and implement. But these are the reasons why we should be talking about it now.

We can only hope that the Board has a viable plan to ensure a continuing air service once the DASH 8 200s are retired (or sold), and that the plan can be implemented in the short term should the anticipated time frames change.

Local taxation

We have concerns about the way the Board makes decisions about rates, fees and taxes. Other local councils in NSW are required to have rate increases above the ‘rate peg’ (3.6% in 2012/13) reviewed by IPART, and increases of 5-10% are often rejected for being too high. The Board consistently raises rates, fees and taxes, in one instance by 290%. Complete discretion to raise rates, fees and taxes, without external review, allows for administrative inefficiencies, over employment and poor financial management. It also loads local businesses with substantial additional taxes above their NSW and Commonwealth tax obligations.

The attempted imposition of a 290% increase in the ‘bed tax’ (from $256 per bed to $1000 per bed) on accommodation businesses came without warning immediately after the GFC in 2008, when accommodation businesses were struggling. Again, this was not the act of a Board concerned with tourism and business interests directly, and broader community interests indirectly. Subsequent delegations to the Minister resulted in a 134% increase in the ‘bed tax’ (from $256 per bed to $600 per bed).

The current ‘liquor tax’ of about 50% on the wholesale price of alcoholic drinks means that beverage businesses either lose the majority of their profit margin or charge unrealistically high prices that fulfil the stereotype of Lord Howe being an expensive destination. In recent years, free postage of liquor from mainland suppliers to island residents, and cheap contract shipping rates for Australia Post, have put pressure on LHI Sea Freight and the Board liquor business. Both are now limited from a local liquor tax regime that we believe is out-dated, redundant and causing more harm than good.

We understand that the rate base on Lord Howe is low and that government funding is increasingly hard to obtain, however, we contend that the simple and somewhat lazy method of burdening local businesses with additional rates, fees and taxes is improper and unsustainable. The recent increase in PO, special lease and perpetual lease fees is a good example of this.

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