Over the next two weeks about 24,000 interstate and international visitors will descend on Hobart to celebrate the dark, to celebrate the cold and to celebrate the unique event known as Dark Mofo.
This year Hobart City Council made a significant financial contribution to the festival, accompanied by in-kind support such as use of events equipment. It’s a great investment in many respects: it puts Hobart and Tasmania on the global stage, gets locals out in the depths of winter and results in significant economic benefits for the state.
Dark Mofo isn’t the only event we sponsor though. Throughout the year, the City of Hobart sponsors a vast array of events that bring people to our city.
The City Council also spends a considerable amount of its budget supporting tourism, ensuring visitors to our city have a memorable experience. An example of this is the improved infrastructure around Morrison St and Salamanca at the waterfront where there has been significant Ratepayer expenditure to support an area with arguably the highest use by visitors. Paying the city cleaning teams overtime to support a clean city at times of increased activity is another.
Kunanyi/Mt Wellington is one of the most visited tourist sites in the State. Yet, the Hobart Ratepayer bares almost all of the cost of managing the mountain. With more than $100 million of city infrastructure on the mountain, it costs the Ratepayer around $6 million per year to keep the mountain going, with almost no support from the State Government and minimal revenue raised from tourism operators. To give you an idea, a bus operator can run as many coaches as they like to the summit for a flat rate of $300 p.a.
It is time that tourists contributed more to directly support the visitor economy. With high CPI contributing to a cost of living crisis, there has never been a more appropriate time to shift some of the costs of supporting a thriving visitor economy to the people who benefit most, tourists.
Through differential rates, the City Council can opt to charge large hotels higher rates. These rates can easily be passed onto visitors, and the City Council can support this with information brochures thanking tourists for contributing to the city and asking for their feedback through a dedicated online portal. It could be applied across all large commercial hotels, so there would be no competition problems associated with the new revenue measure.
For less than $5 per room per night, this initiative will pay for the entire council events budget and contribute to broader revenue. Can you think of any tourists who wouldn’t visit our city for an extra $5 per night?
Is it reasonable to expect around 50,000 Hobart residents to continue to foot the bill for the massive events and supporting infrastructure that 2 million visitors use each year?
Raising revenue from visitors is not a new or novel concept, and frankly, I’m surprised the City of Hobart hasn’t had a better look at this in the past.
Around the world, tourist dense cities have implemented tourist taxes in some form. In Spain, Barcelona charges €3.25 per night, applied to large tourist hotels and Valencia €2 night. In Portugal, the small fishing village of Olhau charges €2 night. Venice, Rome, Paris, Prague, Berlin all charge tourist levies, and the list goes on.
This measure would directly lower rates for local residents and businesses. Rates are calculated by setting the budget first and then dividing by rating units. For residential property rating unit calculation is based on Annual Assessed property value. In the current economic situation with sky rocketing interest rates, councils around Hobart have raised rates to match or beyond. Clarence rates will rise by 6.5% while Huon valley have boldly upped their rates by 12.5%. Hobart City will be debating the budget and associated rates at the next council meeting and it will be interesting to listen to the debate and ideas put up by other progressive councillors and form an opinion on how we can strategically ease the burden on our Ratepayers, meaning you pay less than you otherwise would have.
In a cost of living crisis, councils should be looking for opportunities to decrease the burden on struggling Ratepayers and businesses. Many locals can’t afford to pay more at this particular point in time. Many struggling Ratepayers have very limited discretional expenditure. But those visiting Hobart clearly have the means to holiday and can afford to contribute a little more to their experience.
By tourists paying less than the value of a cup of coffee per night, it will decrease the magnitude of pain local Ratepayers have to endure as a result of yet another rates rise.