Auschamber view – July 2017

Richard Lindsay, manager of Australian Chamber -- Tourism explains why the Federal budget will affect tourism.

Richard Lindsay, manager of Australian Chamber — Tourism

Booming tourism needs policies to match

At a time when many Australian industries are struggling, tourism is booming.

The latest International Visitor Survey shows once again that the tourism industry is Australia’s unsung economic hero, with international tourists staying longer and spending more when they come to Australia.

The 7.7 million visitors that came to Australia in the year ending March 2017 spent a record $39.8 billion and stayed 262 million nights — both up by 5%.

Despite the current healthy figures, we cannot take the future growth of tourism and the visitor economy for granted, particularly at a time of uncertainty for the global economy and fluctuating currency movements.

Government forecasts tell us that international visitors to Australia are likely to rise from 8.3 million in 2016-17 to 12.3 million in 2024-25, and by that year inbound tourism expenditure could generate $67.8 billion in today’s dollars.

So with domestic tourism expenditure also expected to grow substantially, the visitor economy could be one of the biggest drivers of new jobs over the next decade — but only if the policy settings are right in this highly competitive international market.

That’s why Australia Chamber — Tourism was disappointed to see the recent Federal Budget miss the opportunity to support growth in the tourism sector, hurting efforts to attract more visitors to Australia.

In particular, the decision to not quarantine Tourism Australia’s funding from broader cuts means its government funding will fall 7.8% next financial year. This will reduce Australia’s ability to compete in the market to attract international visitors.

This impact will be exacerbated by the decision to index visa fees, including fees for tourist visas, making Australia a more expensive destination for international tourists. This will hurt the hundreds of thousands of small businesses that rely on Australia welcoming visitors from abroad.

These businesses will also be hit by the new training contribution fees for temporary and permanent skill visas, which will exceed $1,200 per annum for each temporary skilled migrant and $3,000 for each permanent migrant. Inevitably this will reduce local job numbers by limiting the ability of local businesses to grow.

The significant 3.3 per cent increase in award wages from July will also affect the many sectors in tourism that are heavily reliant on awards to regulate wages.

The importance of tourism to the economy means that we need to ensure that policy decisions support and enable the sector, rather than add costs to Australian tourism operators and potential international visitors. We need to ensure Australia is effectively marketed to potential overseas visitors, the costs of visas are internationally competitive, and that our tourism businesses are not slugged with unsustainable wage increases.

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