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Shock at ‘dumb, farcical’ plan to gut Tourism Australia

May 5, 2014 Destination Global, Headline News 6 Comments Email Email

egtmedia59The government-appointed National Commission of Audit has recommended slashing Tourism Australia’s budget in half, folding the organisation into the Department of Foreign Affairs and Trade (DFAT), and taking an axe to any assistance to the tourism sector.

The tourism industry greeted the proposals with a mixture of amazement and horror over the weekend. The proposals are being considered by Cabinet as the Abbott Government prepares its first budget, due in just over a week, on 13 May 2014. The budget is expected to be harsh.

Tourism and Transport Forum (TTF) chief executive Ken Morrison branded the proposals a “dumb idea” which would dramatically impact business, local jobs and investment prospects for Australia.

The Australian Tourism Export Council (ATEC) said the recommendations were farcical and ludicrous. If implemented, they would take the industry back 30 years.

Before last year’s election, Prime Minister Tony Abbott said his government would be a “no surprises, no excuses government” which would Web-banner-300-250introduce no new taxes.

Surprises outlined by the Commission of Audit (set up by Federal Treasurer Joe Hockey and Finance Minister Mathias Cormann last year) include recommendations that Australia Post and the Royal Australian Mint be privatised, as well as cuts to Austrade – and halving Tourism Australia’s budget.

The Abbott Government is also likely to introduce some sort of “debt tax” – a levy which would translate into less money in people’s pockets to spend on discretionary items like travel.

The relevant passages in the Commission of Audit report are:

Recommendation 33: Assistance to exporters. As the benefits of exporting accrue primarily to the business undertaking the activity, the Commission considers that there is scope to reduce current Commonwealth assistance for exporters by: 

  1.    abolishing the Export Finance and Insurance Corporation, ceasing funding for Export Market Development Grants, tourism industry grants and the Asian Business Engagement Plan, halving funding for Tourism Australia and significantly reducing the activities of the Australian Trade Commission (Austrade); and
  2.    moving any residual functions of Tourism Australia and Austrade into a commercial arm of the Department of Foreign Affairs and Trade, with the existing loan book of the Export Finance and Insurance Corporation also transferred to the Department of Foreign Affairs and Trade to investigate options to on-sell or wind up the loans. 

The Commission of Audit points out that:

Approximately $185 million of Commonwealth funding is directed towards tourism initiatives and management. Most of this funding is for Tourism Australia, although other programs now administered by Austrade include ‘Tourism Quality’ grants and the Tourism Industry Regional Development Fund. 

The Department of Foreign Affairs and Trade is responsible for tourism policy. Nearly two thirds of Tourism Australia’s budget is directed to advertising and other promotional activities. While tourism is one of Australia’s main exports, most of the benefits of tourism accrue to the tourism operators. There is no clear reason why significant funding should be provided to tourism above other Australian export industries. 

The States already provide a marketing budget for tourism. However, it is arguable that marketing Australia as a destination for international tourists should be undertaken at a Commonwealth level rather than on a State-by-State level. The Commission proposes that grant funding for the tourism industry be ceased, and funding for Tourism Australia be reduced by 50 per cent, to focus on international marketing, with the function incorporated into a commercial arm of the Department of Foreign Affairs and Trade. 

As outlined in Chapter Eight, the Australian Trade Commission (Austrade) should be consolidated into the Department of Foreign Affairs and Trade, noting the growing maturity of global markets and Australia’s export sector, as well as the fact it assists only a small portion of Australia’s exporters. Tourism Australia should be consolidated into the department. The Export Finance and Insurance Corporation should be abolished. 

Exporters and tourism operators, struggling under the weight of a high Australian dollar, could be hit hard by the commission’s recommendation to abolish the Export Finance and Insurance Corporation, export market development grants, tourism industry grants and the Asian Business Engagement Plan.

TTF chief executive Ken Morrison said the proposal to cut funding to Tourism Australia was “a dumb idea”.

“Tourism Australia’s work is helping the tourism industry deliver AUD 42.3 billion in direct GDP each year,” Morrison said.

“While there are a number of constructive suggestions in this report, halving Tourism Australia funding is not one of them.”

He didn’t identify any constructive suggestions.

“Only the government can market Australia as a destination to the world,” Morrison continued.

“Tourism Australia is recognised around the world as one the most effective national tourism marketing bodies and must remain a statutory body governed by experts.

“The reality is that international visitors spend AUD 80 million across Australia every single day.

“It is an industry which supports 900,000 jobs and 280,000 businesses.

“For every dollar earned in tourism, another 87 cents washes around the rest of the economy. If adopted, this proposal would undo years of investment that have positioned the industry on a growth trajectory.

“The Australian government has identified tourism as one Australia’s key economic strengths. This recommendation flies in the face of this growth strategy.

“With the decline of the mining and manufacturing sectors, Australia needs the visitor economy to deliver sustainable growth and jobs into the future.

“Only our competitor countries would benefit from Australia halving its international marketing efforts. Tourism is Australia’s largest services export, generating AUD 28.9 billion in international visitor expenditure each year.

“The upcoming budget needs to position Australia for growth and cutting funding to Tourism Australia is an anti-growth measure.”

ATEC managing director, Peter Shelley, said the report’s recommendations to cut funding for the tourism industry were “farcical” and would take the industry back 30 years, undermining the growing success of a AUD 29 billion industry.

“These recommendations are simply ludicrous and fail to recognise the significant gain the Australian economy makes from a small investment in tourism marketing abroad,” he said.

“Australia’s tourism industry employs over half a million people and generates almost AUD 30 billion for the economy and is projected to grow significantly over the next five years – messing with this successful formula will only serve to irreversibly damage one of Australia’s growth export industries.

“The industry has worked hard to build a successful export market – driving international visitors to Australia – and we are now seen as a highly desirable destination abroad.

“Maintaining our marketing presence in a highly competitive global tourism market place is crucial to Australia not only continuing to attract visitors but in building these markets even further.”

Shelley said funding for Tourism Australia and grants such as the Export Market Development Grants were essential expenditures the industry had proved it could successfully convert into value for the Australian economy.

“Tourism is one industry where Australia has a huge natural advantage – we are unique, exciting and offer great access to nature and fantastic food and wine – these are proving to be highly desirable assets in the international tourism landscape.

“If we reduce our marketing efforts abroad, we risk being overtaken by other countries which are eager to invest in marketing because they recognise the value of the tourism dollar.

“We already know that every dollar spent on tourism generates an additional 91 cents in other parts of the economy –  these are higher than multipliers in mining, agriculture and financial services –  investing in marketing Australia internationally delivers a significant return on investment for the Government.

“ATEC calls on the Federal Government to reject these recommendations which would undermine the success of the Australia’s tourism industry and jeopardise the significant future opportunities it holds.”

Written by : Peter Needham

Currently there are "6 comments" on this Article:

  1. Michael Horn says:

    This government is brilliant in lying to us, twisting or hiding any facts, and divert our attention from much more important issues.
    Yes, the budget may contain nasties and some will pay more taxes or receive less benefits but if the government would implement some of the more serious recommendations of the audit report they will get punished at the next election. I did not see a recommendation to abolish those though it would not be too surprising after all those silly things this report recommends.
    I strongly believe that a big part of the game this government is playing is to keep our minds and attention away from the refugee debacle and Manus island. MH370 came in handy for a while but then the spin doctors discovered the forthcoming budget and lots of speculation about it to keep our minds focussed.
    Manus island is our national shame and will not go away. I hope the UN and human rights groups keep fighting for the truth. My overseas friends ask me all the time how we could sink so low. Yes, how could we. We worry about some financial pain yet there are people locked up in concentration camps that seemingly have no rights and no hope left.

  2. Mark Cameron says:

    what do you expect from such a Dumb government ! The warning signs were there when they failed to appoint a dedicated Minister for Tourism after winning the election.

  3. Peter says:

    Whilst I applaud the actions of this current Government after the debacle of the previous, debacle is being kind, a bunch of professional unionists who’ve never held down a proper job in their lives…and some proven thieves from their own workers. The point about not appointing a Minister for Tourism is a very valid point, the 2nd biggest industry in the country and we don’t have a Minister. Now that is dumb!
    However, when you have a “bean counter” doing this audit trying to save money. Please look at the big picture. It’s like some of our owners who won’t renovate until they get a good return to pay for it. Well that’s not how it works. You renovate, then you get the return you deserve, not the cart before the horse. That’s how this ‘bean counter” is addressing this issue. The more you spend on Tourism, the more you are going to get back. It’s proven. A “no brainer” as some would say. Let’s hope saner minds make the final decision, otherwise we (as a family) will be lost to the LNP forever! and we really mean that!

  4. Daphne Lowe Kelley says:

    This government obviously has no understanding of the value of tourism, especially the role of inbound tourism and its economic and social benefits to Australia. Certainly hope they don’t adopt any of these retrograde recommendations which would destroy years of good work by Tourism Australia, State Government Departments and many travel and tourism organisations..

  5. KimB says:

    I travel the world for 9 mths a year as a tourist…Average $250 USD per day, for the last 5 years. I love Oz. Oz – you need to fight like hell for that tourist dollar. You are a long way away and very expensive. Think very hard b4 you reduce capacity for the international awareness of your product.

  6. PhilC says:

    If you Give Tourism Oz to Austrade . You can guarantee that will be the kiss of death

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