Growing Tourism & the Visitor Economy

The tourism sector and visitor economy is one of Australia’s strongest performers, defying the downward trend of many other parts of the national economy.

The sector directly contributes more than $43 billion, representing 3 per cent of GDP on the basis of a $100 billion total tourism spend. One in twelve people in Australia work in the domestic and international tourism industry – almost one million jobs.

Tourism is projected to grow by more than 4 per cent, year on-year, boosting national income and providing more than 123,000 additional jobs. Tourism is a highly competitive global market which will become only more contested and crowded in the coming years.

Australia should capitalise on massive expansions in key overseas markets, including China, India and Indonesia.

The World Economic Forum’s Travel & Tourism Competiveness index (2015) ranks Australia poorly in visa requirements, 49th overall, and 127th for taxes and charges. 

Australia’s $55 Passenger Movement Charge is the second highest international ticket tax in the world and highest short haul charge – an Australian travelling to Indonesia, for example, will now find a quarter of their ticket cost is Australian tax.

In 2015, 120 million Chinese travelled overseas and more than 1 million Chinese tourists visited Australia, with this predicted to grow. However this growth will be constrained unless we make our visa and entry arrangements more competitive.

Currently, most Chinese tourists have to fill out a 21 page paper form which has to be submitted to a visa office. This costs $135. The new ten year visa will cost $1,000.

We welcome innovations in electronic processing, introduced by the government, and the trial of Mandarin online applications due to start in 2016. But our competitors are moving faster, producing simpler and much cheaper entries and they are reaping the economic rewards with higher growth in visitation.

The business events industry is a key part of the visitor economy. It can maximise its contribution with targeted support and tailored visa processes for international delegates.

Tourism Australia does an effective job with the funds available, but its budget has declined in real terms. It should have adequate resources to promote Australia to the world. Tourism Australia and Austrade need to ensure business events are given an elevated focus.

The visitor economy including tourism, hospitality and events has an identified staff and skill shortage.

Given the complexity of government responsibilities for education and training, the next government must put in place a nationally agreed strategy for training and retention to ensure that the career opportunities available in the visitor economy are able to be filled by skilled Australians.

Although the primary focus should be on training and retaining skilled local staff, migration including seasonal, skilled and short term migrants also play a vital role in filling gaps. The next government must work with industry to ensure occupations on the skills list stay relevant and short term programs continue to serve their purpose.

Visitors on working holiday visas help meet the demand for labour. Working holidaymakers do not displace Australian workers, but instead create more economic activity and more jobs. Working holiday makers spend what they earn plus savings in a local economy and, particularly in regional areas, are a valuable boost for agriculture and tourism.

Rather than hitting working holiday makers with additional taxes, by removing the income free threshold (the so-called Backpacker tax), Australia should recognise their economic potential and the benefits they bring to existing workers. The tax will mean fewer workers in rural and regional areas, particularly in agriculture and hospitality.

The physical act of getting people in and out of our international airports quickly is vital to ensuring visitors want to return. Adequate staffing of the primary and secondary lines to reduce waiting times for visitors is vital. The roll out of e-gates across all Australia’s airports should be a priority. Long queues and hand stamped paper receipts for outbound passengers using the Tourist Refund Scheme need to be replaced with an online system linked to retailers.

The government has an important role to play in funding capital programs. Funding is currently directed at “demand driver” projects, there is an ongoing need for well targeted capital grants programs that assist in producing the facilities and attractions that will bring international and local visitors to a region. It is important that broader infrastructure planning considers the objectives of enhancing tourism competitiveness and achieving diverse tourism development. This includes ensuring that upgraded coach facilities are a part of public transport planning.

Recommendations:
11.1 Welcome more international visitors by making visas cheaper and easier to obtain. Speed up visa reform and roll out of e-lodgement in key target markets including China, India and Indonesia. Reduce cost and complexity of paper based and long term multiple entry visas for visitors and employees in key areas of need. Ensure that tourists in key growth markets can make applications in the source market language.
 
11.2 Freeze the Passenger Movement Charge (PMC) at its existing dollar rate of $55 for the term of the next government, and return a portion of the additional $225 million in revenue ($3 billion in total revenue) over the term of the next government to further build demand through targeted funding programs.
 
11.3 Work with business events and convention industry to streamline visa processes for international delegates to events.
 
11.4 Source and train long term permanent resident staff to address the serious skill-shortage in the tourism sector.
 
11.5 Address labour shortages by developing and implementing a nationally agreed strategy for training and retention.
 
11.6 Reverse the decision to remove the tax free threshold for Working Holiday Makers and expand the second year extension and eligibility to hospitality businesses in regional Australia.
 
11.7 Ensure adequate staffing of the primary and secondary lines at international gateways to reduce waiting times for visitors and continue the roll out of e-gates.
 
11.8 Reform the Tourist Refund Scheme to bring processing online and remove long airport delays.
 
11.9 Increase Tourism Australia’s funding in real terms by $20 million per annum to enable a greater focus on marketing to the developing Indonesian and Indian markets and continue targeted promotion in traditional and existing high growth markets.
 
11.10 Recognise that the Federal Government continues to have an important role funding capital programs for visitor economy related infrastructure which drive demand and support greaterdispersal of visitors across Australia.
 
11.11 Extend the Tourism Demand Driver Infrastructure program with administration and approval processes streamlined Extend the Tourism Demand Driver Infrastructure program with administration and approval processes streamlined and consultation with industry on objectives and criteria.

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