Perspective – June 2012

Thanks for something

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Ian McMahon

Thanks for something

AFTA chief executive Jay Westbury was scheduled to address the Council of Australian Tour Operators (CATO) annual general meeting in Sydney earlier this month but he cancelled at the last minute.

It is unlikely that his hosts took offence. Westbury was in crucial negotiations with Shadow Treasurer Joe Hockey.

A few days later those negotiations paid a valuable dividend to the entire travel and tourism industry.

They resulted in a significant watering down of the Federal Government’s Budget plan to savagely increase the tax burden imposed both on Australians travelling overseas and visitors coming to this country.

The Coalition parties joined with the Independents and the Greens to force a key amendment to the Government’s Passenger Movement Charge (PMC) proposals. Thanks to that amendment, the plan for automatic, inflation-linked annual increases in the PMC has been dropped.

Additionally, $40 million of the revenue collected from the tax increase will now go to a regional tourism fund, supplementing the money already hypothecated to Tourism Australia’s Asia Marketing Fund.

Yes, the draconian 17 per cent increase in the tax stays and, a hard-headed realist could well assess the amendment as only “a moderately positive outcome” – an assessment attributed to Flight Centre, a company that stepped up to the plate with cold hard cash to support the coalition of industry bodies that mounted the fight against the tax increase.

Yes, it is true that the amendment does not mean there won’t be further increases in the tax – it just means they won’t be automatic. But a hard-headed realist would also say it is extremely rare to force a government backdown on a Budget revenue proposal.

Moreover the scrapping of automatic increases is not insignificant – not least because any government contemplating future increases will now be acutely aware of the political flak it will incur.

As Tourism and Transport Forum (TTF) chief executive John Lee said: “Automatically increasing the PMC every year would have seen the burden grow and grow.”

And as Westbury pointed out: “Having an automatic increase on the PMC via CPI would have been particularly difficult for the travel and tourism industry to plan their annual budgets as the government would have their hand in the pocket of people departing this country before any commercial realities could be considered.”

But of longer term significance than the battle over the PMC proposals was the way in which the industry came together to argue publicly a coherent and compelling case against the tax increase.

Spearheaded by AFTA and the TTF the campaign displayed impressively professional lobbying expertise.
As Westbury points out in this month’s AFTA View “equally important is the fact that the travel and tourism industry got together to mount such a targeted objection”.

The industry has surely learned a lesson for the future.




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