Healthy Parks – Wealthy People

For many years the various organisations that have run Victorian Parks have had an objective of increasing visitor numbers. The most recent incarnation, Parks Victoria, has gained a new objective – a greater proportion of Parks expenditure is to be raised from users and less is to be provided through government budgets. Are the two objectives compatible? The recently released Regulatory Impact Statement (RIS) and its proposed increases in camping fees assumes the two objectives are compatible. I believe the RIS uses weak research and an avoidance of challenging questions to maintain this pretence. Here is why.

Horizontal equity – merely an excuse for regressive cost shifting:

The fundamental objective of the RIS is cost recovery for camping in parks. This objective is partially justified by the principle of horizontal equity. Stripped to its basics as used in the RIS, this is the principle that all users should pay the full costs of the camping services they use in Victorian Parks. No one group of campers should subsidise another. There are two problems with this simplistic principle.

• Why should horizontal equity only be applied to campers. Why should it not be applied to day visitors or to those who derive benefit merely from knowing that Parks exist and are accessible? The answer is that campers are more easily regulated.
• More importantly, the proposed fee structure will apply the same nominal costs to campers irrespective of income and so will discriminate against lower income campers who will be required to pay a greater proportion of their disposable income to camp. Its impact will be felt most strongly by those who choose camping as an affordable form of recreation. This is hardly horizontal equity. It is a form of regressive taxation. This regressivity will change camping behaviour in ways not anticipated in the RIS.

Most camping visitation is to low cost options – suggesting price influences camping choices

Three quarters of camping visits are to basic and very basic camp sites. Currently these sites have modest fees. The high useage suggests price is likely a factor in the choices of many of campers. This issue is dismissed by the RIS using short citations from a study by Deakin University. Too little detail is provided to determine if sample used in the study is representative of the high number of users of low-cost sites. But if the sample is representative, half of the respondents suggested they would choose another option if camping prices rose. This limited evidence of camping ‘price elasticity’ is dismissed in the RIS with no explanation. This is a fatal flaw in the RIS logic.

Price elasticity of camping demand – higher prices will divert campers

The charging of a $13 fee for a basic camp option may have little impact on the use of these facilities. However, most car-based camping sites that have till now been used as low-cost camping options are being re-classified as mid or high cost camping sites. The case of the Grampians is instructive. All eleven car-based camping sites in the Grampians have been classified as mid or high level service. Currently the majority are low cost options. After the new fees are applied, no low-cost options will remain. The daily fee per vehicle in any of these sites will be between $34 and $50 – a rise of between 170% and 300%. This is a very hefty rise. Despite the scale of proposed fee increases, the RIS makes no real attempt to assess the impact on visitation, other than to cite a poorly designed question in the Deakin survey which asked respondents if they were willing to pay a ‘reasonable’ fee. The concept of ‘reasonable’ is in the eye of the beholder. I imagine few respondents would have considered a 300 per cent rise to be reasonable. It appears the survey gave no indication of the potential scale of fee rises. This makes the survey useless as anything other than a tool for opportunistic citation. And this is how the RIS has used it. To paraphrase its argument- campers agree they would pay a reasonable charge. We define a 300 per cent increase is reasonable. Therefore campers will accept this fee increase. This is hardly credible analysis.

The survey should now be repeated and users asked whether the proposed fee increases are reasonable and whether they would be willing to pay them. We all know that the response to these questions would be very different to the repsonse in the Deakin survey. The outcome of the proposed fee increase can be predicted with reasonable confidence:

• Fewer camping visit: A significant proportion of low income (and possibly other) campers will reduce their visitation to formal campsites. Some may convert to day visitation. Some may not visit.
• Diversion to commercial facilities: Some current users will make an assessment that the price charged for basic Parks Vic camp sites is significantly more expensive than commercial campsites that offer services unavailable in Parks sites – hot showers, washing machines and camp kitchens etc. They will divert to commercial options. [This raises a suspicion that the fee rise is partly designed to increase the profits of private operators – particularly any future operators buying the new 99 year leases of park land]
• Informal and illegal camping will increase. The RIS acknowledges that non-compliance with fees is already high (60 per cent). The fee rises proposed will provide a vastly increased incentive for non-compliance. Parks will need to either increase surveillance of informal camping areas, or accept lower revenue and the potential threat to park values.

Is the future will remote campsites be closed due to negative returns?

If maintaining park visitation was considered a real objective of Parks Victoria, much greater consideration would have been given to the price elasticity and cross-elasticity’s of camping. There would have been a serious attempt to estimate the level of fee increase that could be achieved without reducing visitation. The absence of such a consideration from the RIS suggests that revenue raising is now the over-riding objective of Parks Victoria. If the proposed fee increases do reduce visitation, divert campers to commercial facilities and increase informal camping, the revenue estimates in the RIS will be proved grossly optimistic. Little additional revenue will be raised, but visitation will have shrunk.

At the same time, increased illegal camping and non-compliance will require the diversion of Parks Victoria staff, if not to enforce revenue targets, at least to protect park values where these might be threatened by informal camping. This will either increase Parks Victoria’s costs, or more likely decrease the investment of Parks Victoria budget in the rest of the work needed to protect our Parks.

If these predictions become reality, Parks Victoria will face the realisation that many lower level service and remote camp sites will never be self-funding. Given the current climate, the next logical step would be to close these campsites as unviable. This future seems quite at odds with an objective of increasing park visitation. Park visitation will become a recreation only for the wealthy able to afford to stay in the higher level facilities (more than $200 a night) or in whatever up-market facilities are created on the 99 year leases. These will not provide low cost camping. Parks Victoria could then change the logo on its vehicles from “Healthy Parks – Healthy People” to “Healthy Parks – Wealthy People”. This would only require repainting one letter and should be affordable within the currently stretched Parks Victoria budget. At least then we would all know where we stood. Parks exist to serve those able to pay hefty visitor fees. The alternative is a fundamental rethink of Parks Victoria priorities and an investment in credible research.

[Open Spaces: This piece was provided by one of our regular readers and who wishes to remain anonymous. It follows on from Glenn Tempest’s short blog/response to the Victorian National Parks Camping and Accommodation Fees Regulatory Impact Statement (Healthy Parks, Wealthy People) from last week. ]