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Australian federal budget to drive future tourism growth

Chinese visitors Sydney Harbour EDITED

Australia’s Minister for Tourism and International Education, Senator Richard Colbeck, says the Government recognises that tourism is one of five super-growth sectors that will create new jobs and growth in the economy over the next decade.

“Tourism now accounts for 3 per cent of our GDP, supports one million Australian jobs and drives $30.7 billion in exports,” he said.

“With the landmark achievement of one million Chinese arrivals in a year and a 43 per cent increase last year in spend from China, there is much to celebrate.

“Record spend has been achieved from nine key markets including China but also the US, New Zealand, Singapore, Malaysia, Hong Kong, India, Taiwan and France.
For the first time since 2009 we are on track to reach the Tourism 2020 target of doubling overnight visitor expenditure to between $115 and $140 billion annually.

“However, we cannot be complacent and need to ensure our policy settings facilitate further tourism growth [and] that is why the 2016-17 Budget supports tourism through key measures,” he said.

Key measures include:
-Record funding for Tourism Australia of AUD$629 million over four years;

-Maintaining the current freeze on the Passenger Movement Charge;

-No increases to fees for Visitor or Working Holiday Maker visas;

-The announcement of a premium clearance service to international travellers within international airports, on a user-pays basis;

-A trial of three-year, multiple-entry visitor visas for India, Thailand and Vietnam to be implemented by July 2016 and for Chile by December 2016;

-Extending countries eligible for user-pays fast-track premium processing to include India and United Arab Emirates by December 2016 (subject to a preliminary evaluation of the trial currently underway for China);

-Providing $115 million to Western Sydney Airport to fund preparation work – including $26 million on concept design for rail access and $89m for critical preparatory activities at the airport site;

-Doing more than ever before to protect our great tourism asset the Great Barrier Reef by providing a $171 million boost to the Reef including an additional $70 million to the Reef Trust, bringing it to a total $210 million;

-Providing $50 million over 4 years to promote Australian wine overseas and wine tourism within Australia;

-Tax cuts that will benefit tourism operators – including a cut to the company tax rate for small businesses to 27.5 per cent from 1 July and in recognising that not all small businesses are companies, the unincorporated tax discount will be increased from 5 per cent to 8 per cent from 1 July 2016; and

-Over the next decade the small business tax rate will be extended to all companies and then progressively reduced to 25 per cent by 2026. The unincorporated tax discount will be progressively increased to a final discount rate of 16 per cent from 2026.

“Australia welcomed a record 7.5 million international visitors in the year ending February 2016 and this suite of measures will grow that number further,” Colbeck said.

“In particular, the announcements of a premium clearance service and extension of countries eligible to access fast-track processing will increase Australia’s tourism competitiveness, increase tourism spending and attract more high-yielding visitors.

“These announcements complement the three-year, multiple-entry visitor visa announced for Indonesia in November last year, and a 10-year visitor visa for China that will be available online in Simplified Chinese this year.

“This will be the first time Australia has trialled visa application lodgement in a language other than English.

“With the tourism industry projected to grow at 4.1 per cent per year over the next decade – well above the national average – the opportunities for the sector are immense.

“The 2016-17 Federal Budget ensures the industry is well placed to take advantage of the opportunities available for future growth, including in regional areas where 44 cents in every tourism dollar is spent,” he said.

Accommodation Association of Australia CEO Richard Munro says the tax cuts for small businesses and initiatives to boost youth employment announced in the Federal Budget have received support from the accommodation industry.

He said these measures are set to have a positive impact, particularly in regional areas.

“The Federal Government is to be commended for lowering the company tax rate to 27.5 per cent for businesses with turnover of less than $10 million,” Munro said.

“In the accommodation industry, this will see increased returns for owner-operated motels, among other accommodation businesses, many of which are located in regional Australia.

“Australia should ultimately be aiming for a company tax rate of 25 per cent to ensure our global competitiveness is maintained and to promote additional investment.

“Our industry is also pleased the instant write-off for equipment purchases of up to $20,000, which was to expire next year, will be extended and be available to businesses earning up to $10 million a year.

“Typically, these are not measures which will attract big headlines, but they have the potential to make a real difference to the bottom line of small businesses in Australia’s accommodation industry,” he said.

Regarding the youth employment initiative, “Youth Jobs PaTH (prepare, trial, hire)”, the Accommodation Association is anticipating it will lift workforce participation in the industry.

“The Accommodation Association – through the Accommodation Association Academy – plans to actively encourage our members to make use of the new youth internship incentives,” Munro said.

“The up-front payment of $1000 for a business to host an intern – together with additional incentives for job-seekers – will assist with generating employment in the accommodation industry.

“We look forward to more positive announcements for tourism – from both the Government and Opposition – during the upcoming election campaign.”

Munro said the Accommodation Association was hoping for change to the proposed backpacker tax, but this hasn’t eventuated as yet.

The Tourism and Transport Forum Australia (TTF) has said there is good news and bad news for Australia’s booming visitor economy in the Federal Budget.

“We are pleased to see the certainty of funding for Tourism Australia over the next four years but given the Treasurer’s strong rhetoric on supporting the future industries of the Australian economy which would include the tourism sector, we would certainty expect to see a significant increase in funding for Tourism Australia in the future,” said Margy Osmond, TTF CEO.

“The Federal Government’s decision to stay its hand on visa fees and the continuing freeze of the Passenger Movement charge at the current $55 rate is good news.”

Osmond said the industry is, however, bitterly disappointed that the Government has decided to forge ahead with the 32.5 per cent backpacker tax on working holiday makers.

“The Federal Government’s destructive backpacker tax is going to smash the number of people choosing Australia as a backpacking destination when working holiday makers are taxed 32.5 per cent on every dollar they earn on their holiday,” she said.

“Working holiday backpackers are a crucial source of labour for tourist operators in remote and regional parts of Australia. These are businesses that are heavily influenced by seasonality and locations where it is extremely difficult to find local or permanent staff.

“TTF will be actively working during the Federal Election campaign to hold both sides of politics to account to continue the freeze on the Passenger Movement Charge, scrap the backpacker tax, reform visas, boost Tourism Australia and privatise the Tourist Refund Scheme,” she said.

Osmond said on the transport front it is positive to see a down payment in this budget on the Federal Government’s renewed interest in investing in our cities and public transport.

“The establishment of an infrastructure financing unit to work with private sector to develop financing solutions for important infrastructure projects is a positive announcement,” she said.

“We are starting to see the fruits of the Federal Government’s Asset Recycling Scheme with a number of states and territories taking advantage of the fund to recycle their “lazy assets” into new productive economic infrastructure such as the Sydney and Melbourne metro rail projects.

“However, industry would like to see additional funding and support from the Government for high priority transport projects such as the Brisbane cross river rail, the Perth light rail and airport rail link and the AdeLINK tram network in Adelaide.”

Tourism Accommodation Australia (TAA) has welcomed the support for tourism in the 2016 Federal Budget, with a range of measures that will maintain the industry’s competitive edge.

TAA welcomed the maintenance of funding for Tourism Australia, the AUD$43 million Tourism Demand-Driver Infrastructure Program to improve the quality of regional tourism infrastructure, the decision by the Government to freeze the Passenger Movement Charge and a range of measures to make it easier for international visitors to access visas.

“In what is considered a ‘tough’ Budget, the measures outlined by the Government provide a real vote of confidence in the industry and its ability to generate both income and employment for the Australian economy,” said TAA Chair, Martin Ferguson.

“Latest Government figures showed that tourism – and particularly the accommodation sector – has been one of the most powerful drivers of employment in the Australian economy, with the number of people directly employed in the tourism industry reaching 580,800 in 2014-15, an increase of 6.3 per cent on the previous year.

“It has been estimated that over 120,000 new positions will be required in the industry over the next five years, and it is encouraging that the Government is placing major emphasis on youth employment through the new ‘PaTH’ program.

“We welcome the overall Budget stimulus for many millions of Australians through tax cuts, and smaller tourism companies will benefit from the cut in company taxation and the decision to continue immediate depreciation of equipment purchases.

“However, regional and remote areas will lose access to a vital source of labour if the Government proceeds with the ‘backpacker tax’ from 1 July. The tax concessions have provided incentive for backpackers and other temporary visitors to work in regional areas and provide an important source of seasonal labour that often cannot be sourced locally. The tax will be regressive for the tourism sector and could affect the viability of many regional and remote tourism businesses,” he said.

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