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Wins and losses for tourism from Australian Federal Budget

The Accommodation Association of Australia (AAoA), Tourism Accommodation Australia (TAA) and TTF Australia say this week’s 2017-18 Federal Budget has both wins and losses for tourism.

On the positive side, the accommodation industry is set to benefit from the Federal Budget’s significant investment in infrastructure.

However, cuts to Tourism Australia funding – $35 million over four years – could have a major impact on the sector.

AAoA CEO, Richard Munro said on the infrastructure front, Sydney and New South Wales, together with regional Queensland are among the areas which stand to gain the most.

“Investment in new infrastructure and upgrading existing infrastructure directly translates to more visitors staying in accommodation businesses, particularly in regional areas, as well as instilling confidence in our sector to invest and build new properties,” Munro told HM.

TTF Chief Executive, Margy Osmond, said the highlight of the Budget for the tourism and transport sectors was undoubtedly the AUD$5.3 billion over ten years to begin construction of the long-awaited Western Sydney Airport.

“The Government’s decision to proceed with building the new Western Sydney Airport itself is to be applauded because it helps to ensure this nationally significant piece of infrastructure will, in fact, be built,” she said.

“Given Sydney Airport is virtually at capacity, the accommodation industry would welcome the timetable for the commencement of flights at the new Western Sydney Airport to be accelerated.

“In Queensland, the Bruce Highway is one of the single-most important transport corridors for tourism in Australia and therefore, the upgrades of it which were announced in the Budget are important and very welcome.

“The additional funding to promote tourism as part of the recovery from Cyclone Debbie is another plus, in particular the areas affected by the downturn in the resource sector.

“Securing funding to build the Western Sydney Airport has been at the top of TTF’s list for many years now, and we are very pleased to see the Turnbull Government has finally made a rock-solid commitment to get it off the ground.

“The benefit of the Western Sydney Airport to the region’s visitor economy cannot be overstated – it will be a massive economic engine that will drive investment and jobs growth through the roof.

“However, it is disappointing the Government has failed to recognise the urgent need for rail access from the airport to the Sydney CBD as a critical piece of infrastructure that will benefit the NSW’s visitor economy and support the long-term development of Western Sydney,” Osmond said.

The Budget Papers also revealed a change in the level of funding for Tourism Australia, down AUD$35 million over the next four years.

“There is no doubt that if the accommodation industry is to realise its growth potential, there must be consistent ongoing and increased investment in marketing Australia as an international destination through Tourism Australia,” Munro said.

“Tourism industry businesses pay billions of dollars of taxes every year and this needs to be better understood by Canberra public servants who work in the financial portfolios.”

The funding cuts were slammed by TTF’s Osmond.

“As the national economy continues to transition from the end of the mining boom to a diversified services-based economy, investing in tourism and transport as the key growth areas of the future should have been a no-brainer,” she said.

“However, instead of recognising the tourism sector as the next super-growth sector, the Government has ripped AUD$35 million out of Tourism Australia over the next four years, and in the process put at immediate risk tourism jobs right across the country – jobs that are dependent on the hundreds of thousands of visitors that come to our shores off the back of Tourism Australia’s destination marketing.

“The harsh reality is that we simply cannot grow the visitor economy to its full potential in the face of extraordinary competition from other markets when the budget of our primary marketing vehicle has been so drastically reduced.”

In more bad news for the sector, Osmond said, visa application charges will now be indexed in line with the CPI.

“Australia is now one of the most expensive countries in the world to obtain a visa for. This visa increase is an extremely short-sighted move that will make it even more expensive for international tourists to come to Australia,” she said.

“The task of competing against the multitude of other destinations for the international tourist dollar has just become a whole lot harder.”

Tourism Accommodation Australia (TAA) CEO, Carol Giuseppi also had a mixed reaction to the Budget announcements.

“Clearly, the Australian accommodation sector would have preferred greater investment in tourism demand drivers, especially given the massive investment that the hotel industry is making in transforming the Australian hotel sector,” she told HM.

“International and local investors are spending $8 billion in developing over 120 hotels and 30,000 rooms across the country, and we look to the Government to support international marketing efforts to help fill these rooms. We will continue to work with Government to encourage future growth of funding for marketing efforts, particularly to attract international conferences and events, which is a particularly competitive market. The increase in visa application charges, which will now be indexed in line with the CPI, impacts our competitiveness as an international destination and we will be working with Government to ensure it is benchmarked against overseas destination.

“The massive expansion in hotel development is also going to put enormous pressure on attracting sufficient skilled staff to the sector, which the Government has acknowledged itself. Their report a few years ago identified the need for 123,000 new positions in the industry, and half of these were for skilled roles.

“The Government is to be congratulated for their investment in the Skilling Australians Fund with a commitment to investment in 300,000 apprentice positions but we are yet to have clarity on how our industry will benefit from that fund, particularly to fill our significant skills shortages in regional areas and to meet the needs of the new stock entering the market.

“Growing our own talent is a priority, but in the interim the industry is going to need to access temporary skilled staff from overseas in the interim, and the significant increases in visa charges will hurt hotel businesses, particularly smaller operators.

“Users of the temporary skill shortage visa (457 visa) will be required to contribute to the new Skilling Australians Fund, with $1.2 billion to be raised over 4 years. Businesses with up to $10 million turnover will have to pay $1200 per year for each visa holder. Larger businesses will have to pay $1800 per visa per year. This levy will replace the current training benchmarks. These fees are three to four times more than the amounts recommended in the Integrity Panel review of 457 visas, and are much higher than advised prior to the budget.

“We welcome the Government announcement that it will own and operate the Western Sydney Airport at Badgery’s Creek, committing $5.3 billion in equity over ten years ($606 million per year over the forward estimates) and this – along with other infrastructure projects – will benefit the whole of Australia’s tourism industry in the long-term.

”We also welcome Government’s allocation of $185.4 million over the forward estimates to improve visa processing, including biometric processing functionality.”

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