TTF View – August 2013


Ken MorrisonTourism can give taxpayers better
‘bang for buck’ than car industry

By Ken Morrison, chief executive, Tourism & Transport Forum


WHATEVER the outcome of the September 7 federal election, the challenges for Australia and the Federal Government are clear. The mining investment boom is tapering and we need to shift our focus to other sectors to drive economic growth. Few industries are as well placed as tourism to help deliver that growth.

In the lead up to the election, we released our national agenda for the Australian Government. Called Australian Tourism: Backing Our Strengths, it included a 10-point plan for tourism and outlined five areas of focus for the next term of government. It also highlighted the fact that tourism is Australia’s number one services export.

To help tourism reach its potential, we need the Federal Government to make the tough decisions. We need to look rationally at where our limited resources are directed and ensure we are getting the biggest bang for our buck.

The visitor economy is already important for Australia, with tourists spending more than $107 billion a year. To get the optimal outcome, it will be critical to ensure that our scarce resources are prioritised to those sectors with the ability to drive economic growth, rather than to prop up industries in terminal decline.

We were stunned to see the PM commit a further $200 million to the car industry. This latest largesse added to more than $6 billion in assistance provided to the sector over the previous decade, during which one manufacturer pulled out of Australia altogether and another announced its withdrawal. A third maker recently sacked 500 people and the fourth is still threatening to cease manufacturing operations.

Why throw good money after bad to support an industry on the wane?  It’s not a question of begrudging people in car manufacturing their jobs, it’s a question of opportunity cost. Every dollar that goes to the car industry is one dollar less to promote industries of the future, including tourism.
Tourism already directly employs more than half a million Australians and indirectly employs another 400,000. These numbers will continue to grow because, while some observers have called time on the mining investment boom, the people boom is just beginning.

Across Asia there is a growing middle class emerging. They have the money and they are travelling.  Australia’s challenge is to ensure they spend their money here.

From $13 billion in 2000, spending by Chinese international travellers was $102 billion in 2012, up an astonishing 37 per cent on 2011, and further growth is expected.

Add in the potential from India and Indonesia – the second and fourth-largest countries in the world – and federal investment in tourism stands to generate even greater export income than it does currently – more than $25.5 billion a year.

Governments around the country have committed to the Tourism 2020 targets of growing overnight tourism expenditure to up to $140 billion a year by the end of the decade. With support like that afforded to the car industry, not only would those targets be achievable, but it would put tourism in the driver’s seat and put Australia on the right road towards a prosperous economic future.

It’s time for the country to back its strengths, not try to hold back the economic tide.

TTF View appears quarterly.