Melbourne’s port hike to send tremors through cruise and supporting businesses: Katz

Just when the cruise sector in Australia was starting to sail at a rate of knots again following the pandemic, one state is risking the prospect of sinking its own revenue stream through higher port charges. Adam Bishop reports.

A DECISION by the Victorian Government to hike taxes for ships arriving into Melbourne by sea undermines the cruise industry’s $380 million value, Cruise Lines International Association (CLIA) MD Joel Katz has warned.

The move by Ports Victoria has already claimed two unwanted scalps, with Carnival Australia protesting the increase in charges by announcing its Cunard and Princess Cruises brands will pull out of the Melbourne market in the 2025-26 season, a decision that Katz characterised as a “major blow” to Victoria’s economy.

“Australia already has some of the highest operating costs in the world for cruise lines and further increases directly impact the viability of operations,” Katz said.

“Cruise lines paid $227 million in fees and charges to Australian ports and governments during 2022-23, which is almost 20% of their spending in this country and this ultimately impacts holidaymakers and makes Australia an expensive country for cruise operators.”

Surveying the economic damage of the Carnival decision, Katz deduced the loss of the two big ships were equal to around 23 homeport visits and up to 69,000 cruise guests, with negative impacts inevitable for local businesses that rely on the multiplier effect of cruise, including tour operators, hotels, retailers, restaurants and bars, to name just a few.

A concerned Katz said Victoria risks undoing all of the country’s great recovery work in cruising.

The decision by the Victorian Government to make a grab for more cash arrives at an opportunistic time as well, with the cruise sector very publicly announcing the huge return to profitability after years of being cast adrift at sea during the COVID years.

“The cruise industry has achieved an incredible comeback in Australia and cruise guests have been returning to sea in huge numbers,” Mr Katz admitted.

“But the success of this industry is not guaranteed without close partnerships between ports, governments and cruise lines, and to sustain and foster cruising’s presence in Australia, there needs to better alignment and rationalisation of fees, taxes and other costs, to make us competitive with other countries.”

Echoing the sentiments of CLIA’s local boss was the Tourism & Transport Forum (TTF), whose CEO Margy Osmond said news of Cunard and Princess exiting the Victorian market was “deeply disappointing”.

Osmond said given the major development, greater collaboration between the Victorian Government and cruise companies was needed to “secure the future of cruising” in the state.

“We must address cruise ship operators concerns and ensure they have the support needed to prevent further erosion of the cruise industry,” she said.

“The value of cruising cannot be underestimated, having contributed nearly $380 million to Victoria’s economy in 2022-23 and helping support jobs across tourism, hospitality, retail and related sectors.

“Melbourne has already lost the Spirit of Tasmania to Geelong, diverting hundreds of thousands of tourists away from Melbourne, and as result we don’t want to lose any other operators.

“The State Government must work with industry to ensure tourism operators like Carnival Australia can have a continued presence in Victoria and help prevent further decisions that could reduce tourism investment,” Osmond added.

Figures released by CLIA and the Australian Cruise Association show cruise tourism generated a record $5.63 billion for communities around Australia in 2022-23, supporting more than 18,000 Australian jobs.

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