CHAIR —Do you have any comments to make on the capacity in which you appear?

Prof. Christie —My appointment as City of Mandurah Chair in Entrepreneurship and Business Innovation is to do research and carry out economic development work outside of the university in the Peel region. Part of the interest for that community is tourism, and it has national implications from a policy point of view.

CHAIR —Although the committee does not require you to give evidence under oath, I should advise you that these hearings are formal proceedings of the parliament. Consequently, they warrant the same respect as proceedings of the House itself. It is customary to remind witnesses that giving false or misleading evidence is a serious matter and may be regarded as contempt of parliament. Having said all that, I invite you to make some introductory remarks.

Prof. Christie —My interest is in the area of professional development of micro small and medium enterprises. I think we have a great opportunity here in the tourism sector to apply some concepts that already exist in Australia but which can be replicated in a more systematic and coordinated manner across the country. Also, in terms of micro small enterprise best practices, to look at some models and examples from other countries—say, from Europe or New Zealand and other parts of the world. In a free market economy I think we have to ask: why do we need this? Unfortunately, we do not have a perfect free market economy. Individuals themselves are not necessarily perfect in their knowledge of, say, management of their particular business. They may not necessarily have the resources of larger operators in, say, a particular sector. What are the mechanisms available for us to drive some development and to raise standards in the industry? The underlying issue in all this is global competition. Even though we do not have a perfect market, we do have global competition in this sector. I think there are opportunities for us to further develop the sector in terms of best management practices from the owner’s point of view in their professional development.

CHAIR —What sort of management skills seem to be lacking? Is development of workforce issues the sort of thing you are talking about?

Prof. Christie —There is a whole range of things. The way I would like to approach that is in terms of executive development. In the past we very much focused on the functional skill development needs of micro small business owners. But if we are going to look at this strategically and at the strategic development of these firms in this sector, it is about executive development. Even though they may be micro small business owners we need to develop them as general managers to be able to grow their businesses. There are critical issues such as human resource management. Some very poor practices can be occurring. This may not be the owner’s fault but just a lack of experience in the industry. There may well be a high turnover of firms, particular micro firms and the smaller small businesses in the sector. So there are many variables that can affect the quality of delivery of customer service.

CHAIR —Would a lot of people in the tourism sector fit that mould? In the small business sector we often hear of those who have literally bought themselves a job, who are retired or whatever.

Prof. Christie —That is one of the factors that may drive it, particularly with, say, baby boomers going into the sector. It may be a retail shop but tourists go to that shop. So there is that type of factor. But from international examples and examples within the existing industry in Australia there are some very good case studies, if you like, of firms which are doing very well in terms of best practice; selection and recruitment of staff; customer service; and, marketing of their businesses, whether it is through their own marketing efforts or through cooperative marketing arrangements.

CHAIR —We heard evidence earlier today on a couple of fronts, one being that those who are at the very rudimentary ends of the tasks in a business are not as valued as they should be, and many people see tourism as a place you go to before you do something else. Equally, everybody, be they large or small operators, large or small cogs in the overall machine, is part of a team. I guess the point you are making is that many of these small operators—these micro businesses—lacking skills also let down the whole tourism sector. 

Prof. Christie —Yes, it is the weakest link in the chain, if you like. That is the point you are making, and that is why it is so critical to have a national systematic effort to address what I would see as a human resource issue. We often see small business owners as entrepreneurs and we think that entrepreneurs are invincible. But, in the day-to-day reality of running a business, they have all the fatal flaws of all of us.

CHAIR —The smaller the business the more likely it is that you will be cleaning the toilet as well as doing the books.

Prof. Christie —That is right. You can be spread very thin, working very long hours, being a jack of all trades and master of none. And there are a lot of pressures around managing the cash flow and making ends meet—which is an important issue in the Australian tourism industry, because of geographic fragmentation. You do not necessarily get the customer volume through your business. Perhaps another national issue is how to get tourism throughput, whether it is domestic or international tourism, through these businesses in a coordinated manner. Tourism authorities are doing that in a good way, but there are still cash flow problems for the smaller micro-operators.

CHAIR —You are looking at the dynamics of the tourism sector. The ‘where the bloody hell are you?’ program is supposedly going to drag hundreds of thousands of extra visitors to Australia over the next couple of years. We are told there are about 45,000 new jobs to be created in tourism across Australia, but no-one can specify where those jobs are, what they are going to be paid and all those skills-related issues as well. In looking at things from a broader perspective, would you be concerned about the capacity of the sector to cope with extra visits and extra visit nights? Have we got the capacity to meet people’s expectations when they come through our doors?

Prof. Christie —For the small-scale operator?

CHAIR —Or even the large one.

Prof. Christie —Some will do very well out of that opportunity, out of their own efforts, and using resources external to their businesses, but then there is the bulk of people, as you identified earlier—who are the more inexperienced, naïve operators—who may, as global competition increases, affect the image of the industry.

CHAIR —So the whole could be let down if we do not get this training aspect right.

Prof. Christie —I would think so. That is the worry, I think.

CHAIR —Mr Henry, you are the local member; you get to go first.

Mr HENRY —Thank you, Chair. Professor, you just said small business owners are entrepreneurs. That is an overgeneralisation, I would have thought.

Prof. Christie —Oh, yes, that is right—to be controversial.

Mr HENRY —What do you mean by ‘entrepreneurship’ and can it be learned? Can we teach people how to be entrepreneurs and to be innovative in their business approaches?

Prof. Christie —I believe so. This is why I am making the point about professional development. There is a lot of material available, nationally and internationally, on professional development for business owners. If you take a bell curve, some people will be exceptional operators and will absorb that information very well and apply it to their businesses very quickly and become very good with best practice. There are opportunities for peer learning in the sector, through, for example, a tourism corridor and getting those operators together to do peer learning—because that is a very important element.

Mr HENRY —So it is not necessarily about individuals learning to be entrepreneurs but about adopting entrepreneur strategies and applying them to their own businesses as such.

Prof. Christie —Yes.

Mr HENRY —What would you call an entrepreneur?

Prof. Christie —I think it takes perhaps 10 to 15 years for a small business owner to become an entrepreneur. I do not think it happens overnight. I do not think you are necessarily born with it. You may come with a family of entrepreneurs, but that does not mean that you will be an entrepreneur. I think it is a development process, an intellectual process and an emotional process. It does not just happen overnight. I think that success is a major issue for becoming an entrepreneur, because it reinforces the knowledge, experience and behaviour. It is about insight.

Mr HENRY —It is also about creativity, isn’t it?

Prof. Christie —Yes. In the same way you do not necessarily become a general manager overnight, I see entrepreneurship as being the same. There are exceptional people who will do that, but I think that, on the whole, people muddle their way through it. From a policy point of view, we can speed up that process through learning networks and learning experiences.

Mr HENRY —Entrepreneurship and business innovation go hand in hand in one sense, but you can only be innovative to a point, can’t you?

Prof. Christie —And particularly for cash strapped firms it is tougher, but in a way they need to be more innovative and more original in the way that they go about doing things. That is where the learning environment comes in, whatever learning environment is created—and there are wonderful and different learning environments available for the owner manager. That will give them insights. Often, they do not have time to reflect and take on new knowledge that they can apply in their business to be more innovative.

Mr HENRY —That is all focused on business. Then you have to come to the practical issues of business management.

Prof. Christie —That is right.

Mr HENRY —Staffing and skill needs.

Prof. Christie —That is where something like peer learning helps. They can share the common problems that they have in each of their businesses and come up with solutions.

Mr HENRY —In establishing a national centre for entrepreneurial tourism, how is that all going to come together and how will that benefit, for example, Western Australia and regional tourism opportunities in Western Australia?

Prof. Christie —Small business owners in the sector currently learn in a fragmented way. They glean some information from a trade show; they talk to their peers over the phone or at the trade show or wherever or find some information on the internet that might be helpful. If they are larger, they may have consultants come in to help work with them. Having a national clearing house where systematic research is done developing best practice cases and financial benchmarking and having systematic programs designed on the basis of that type of research would provide these smaller operators with a much better way of delivering consistency across the industry. At the end of the day, if we look at the Irish example, consistency of operators on the ground in the day-to-day management of their businesses is very good practice for us to think about.

CHAIR —Could you flesh that out? What is the Irish example? I am a student of comparative public policy, so I am always interested in those sorts of things. What have the Irish done about from running great B&Bs?

Prof. Christie —You have to ask why they are such great B&Bs. Underpinning that is a national development centre that delivers these programs for the development of small business owners. They do things more comprehensively than what I am arguing for this morning—I wanted to focus on the learning needs of the tourism operators. But there are some interesting models there.

CHAIR —They are affiliated with the national B&B system or they are not in Ireland. To get affiliated, they have to go through this national centre. Is that what you are saying?

Prof. Christie —Yes. That opens a whole new area of debate about this regulation. How do you regulate the small-scale operators? Do you need licensing?

CHAIR —So we are on to the sort of CPA concept here, aren’t we?

Prof. Christie —Over the last 100 years we have seen entrepreneurs come into the mainstream agenda in terms of public policy. The period since World War II has laid out the foundation for, as you say, a CPA type of development program. But it has to be very specific to their particular business. We have to move away from these sort of generalist development programs.

Mr HENRY —If we establish such a centre—and you have talked about a regulatory system of licensing to get people engaged in it—and if we want innovation and entrepreneurship, we want people to be actively engaged without compulsion. How do you achieve that?

Prof. Christie —We have to draw the line somewhere without using a sledgehammer. It is about being supportive and encouraging without constraining—if that is possible.

Mr HAYES —One of the consistent pieces of evidence we have received so far is that the lack of training in this industry is basically because employers take the view that the staff are not going to stay for career opportunities so why should they train them; yet another piece of evidence is that, whilst a lot of people might leave one enterprise, they seem to gravitate to and stay within the industry. The argument is enterprise versus industry initiatives, isn’t it?

Prof. Christie —The challenge of implementing a policy challenge is to make the business owners aware of their own professional development needs. In the Australian context, that is perhaps as much a challenge as anything. I agree with society resisting more regulation, more licensing, and that is why I would argue for case studies where people can see how people went about improving their businesses. We are a very hands-on society and we like to see those practical things about learning. I think one of the challenges for the sector is that small business owners also need to encourage their own development, that it is not just about the staff. I think that is a delivery challenge.

Mr HAYES —Development involves not only the interests of the small business owner but also their level of contribution to the sector generally.

Prof. Christie —Yes.

Mr HAYES —For instance, if you are applying strategies to attract and retain staff, perhaps those strategies should be looked at in terms of retaining people within the tourism industry as opposed to simply retaining people in a particular enterprise.

Prof. Christie —Yes, career paths are certainly a major issue. I am not sure what you can do about that when people see working as a waiter as a way to get through university. I do not know how you encourage people to consider that as a long-term career prospect. I am not sure whether any real mapping out of that has been done.

Mr HAYES —Some people have wanted to talk about careers in the industry, but a number of people have made submissions to this committee saying: ‘All we want to do is to be able to allow backpackers to stay longer. It is not a matter of training or anything; just giving us bodies on the ground.’ It is a bit of a short-term approach, I would have thought, to an industry development program.

Prof. Christie —Yes. The model I am arguing for is to encourage people to see not only their businesses more strategically but also their industry with a longer term view. There is a high turnover of smaller operators—they might be in the industry four to five years as they spend their superannuation funds on their businesses—and a critical structural issue is to find ways in which development may be able to stabilise that group by encouraging the development of an intelligentsia about these longer term industry structural issues, perhaps through debates within the industry about these sorts of issues. As you say, as you travel around the world you see that other nations are leapfrogging us in this area.

CHAIR —The European scheme was brought up as an example of appreciating the front house stuff more than we do. For instance, there is actually a career path involved in being a bus boy, a waiter or a maitre d’, but that is not available in Australia.

Prof. Christie —Yes, and there is a long history of that in Europe.

Mr BRENDAN O’CONNOR —It predates any national centre of entrepreneurial tourism, I imagine.

Prof. Christie —Yes.

Mr BRENDAN O’CONNOR —I guess that is my point. Many small businesses in any industry fail, just by their nature. Therefore, I wonder the extent to which government can involve itself in the market to pick successes. This debate about having industry regulation, industry policy, in all industries is an ongoing debate. I can see the need for intervention, to a degree, in certain circumstances and in certain industries. You might already have this in detail in your submission, but would you outline the main characteristics that you would see as being required for the centre that you are supporting to be a success?

Prof. Christie —I think that at the end of the day it is about the firms’ performance and making these firms more profitable and more competitive. That could be measured through a database system of gathering people’s financial performance data.

Mr BRENDAN O’CONNOR —How would they go about seeking to do that, for example? I guess it is more about looking at the means by which they can reach that end, not the end itself.

Prof. Christie —The means would be this. There is a training experience. What you want at the end of that training experience is for them to identify what parts of their business they are going to improve and how they will do that, then you go to the businesses that decide what they will implement and then you follow up afterwards to see what changes occurred in the businesses as to business improvement. Is that what you were after?

Mr BRENDAN O’CONNOR —Yes. As Chris indicated, one of the problems that we see confronting the tourism industry, and I imagine it is even more pronounced in Western Australia, is the fact that there is a lot of precarious employment. It is a chicken-and-egg situation, it seems to me. On one hand, people stay in the industry because it is not forever and it is precarious and people, because they do not stay in the industry, have employment that is precarious. I am not sure where it all began, but that problem is compounded, certainly in this state, by the drain because of the mining boom, although I imagine there are some benefits that flow from the money washing around the place as well as the clear downsides.

Let us leave aside the entrepreneurial capacities of business, and I accept that they are things that have to be learnt as they are not things that you are born with. What is the best way for businesses, small or otherwise, to try to maintain skilled staff? How do you convince employers, particularly small ones, to invest—and this is a great impost—time in having their staff acquire skills if they do not have any confidence that those staff will be around for much longer?

Prof. Christie —What is happening now is that the larger tourism operators are bringing chefs in from the Philippines, not so much because there is a lack of chefs as because of the wages that the chefs are asking to be paid for the work to be carried out, because of the economic boom that is occurring here.

Mr BRENDAN O’CONNOR —Would you explain that, please. What do you mean by the wages that the chefs are asking for?

CHAIR —I want you to be sure about what you are saying, Professor Christie, because that would not be lawfully possible in theory, so we would like to know about that.

Mr BRENDAN O’CONNOR —Professor, are you saying wages would be up because of the boom?

Prof. Christie —People can go and get paid elsewhere.

Mr BRENDAN O’CONNOR —So you have chefs in mines at the moment; is that what you are telling me?

Prof. Christie —That is right.

Mr BRENDAN O’CONNOR —Leaving that phenomenon aside—and I accept that is a problem peculiar to Western Australia, although I guess it is more of a problem here than it is elsewhere—it seems to me that one of the things that any centre could involve itself in, in assisting businesses in the tourism industry, would be trying to find ways to capture staff and keep staff who are loyal to the particular business and are very effective to the industry. That in itself is a real problem.

Prof. Christie —There are a lot of opportunities in human resources best practice. A major focus of the Telstra awards is best practice as to staff recruitment and selection, and retaining staff. There are major opportunities in team development, relationship development and in owner-operators building more effective teams in their businesses. I think that often gets neglected in terms of the professional development of the owner-operators.

They may not be able to pay people the wages, but there is an intrinsic value that the majority of small-scale operators would not necessarily be aware of. They could do things in their workplaces through developing case studies from other firms that are doing best practice on this. That sort of mechanism is a way of getting consistency across the industry.

Mr BRENDAN O’CONNOR —But you would accept the general proposition that if businesses are not able to sustain themselves then they should not stay in the market?

Prof. Christie —That is right. But from a public policy point of view a lot of commercial opportunities are available that are not necessarily being taken. This comes back to the argument about individuals not necessarily ever being perfect in the marketplace—and so letting those commercial opportunities go missing.

CHAIR —The idea is good but the ability is missing, so an economic failure is being built in because no investments are being put into training them.

Prof. Christie —There is investment, but not enough.

CHAIR —In the establishment of a national centre for entrepreneurial tourism, what sorts of resources are we talking about? I just want a rough estimate—back-of-the-envelope stuff, if you like.

Prof. Christie —In a dollar amount?

CHAIR —Yes, if you have a dollar amount in mind. Are we talking $10 million, $20 million, $5 or what?

Prof. Christie —I think you could deliver a successful national program in the training and development side with a staff of five or six, allowing for development of resources and material. A lot of partnerships could be arranged in terms of delivery. I think there is an opportunity for existing providers and industry associations to be involved in this.

CHAIR —The only way it is going to work is if you have the industry well and truly engaged on it, if the industry themselves want to participate.

Prof. Christie —That is right.

CHAIR —I am sure you want to comment on the sorts of criticisms that we hear from people saying: ‘TAFE courses and university courses provide a piece of paper, but it doesn’t do much.’

Prof. Christie —That is right.

CHAIR —We heard yesterday of a terrific operator up in Broome who is basically saying: ‘I’ve engaged the local TAFE and am giving them $130 per staff member, whether they are at the top of the pole or at the base of the pole, regardless of what their experience has been and what pieces of paper they have. I have hired this TAFE to induct them and check them out and give them all the skills so they can do anything within my business.’ That is the sort of engagement you want. You want business to drive it—that demand-driven approach.

Prof. Christie —One of the challenges is developing small business operators to be more open-minded, more broad-minded.

CHAIR —And to have a commitment to training as well.

Prof. Christie —Yes, and not be so inward focused. That is a great example of that. That is a person who I would consider to be an entrepreneur, because of that sort of behaviour.

CHAIR —I have a rough feeling that Cable Beach Club Resort is doing as well as it is because of this kind of approach.

Prof. Christie —That is right. It is in the larger operators that you get that. The interesting thing for the industry is to see the guys who started off with a small staff and now have a much larger operation and how they evolved themselves into these sorts of operators. That is about becoming the general manager of your business and how we can develop that type of skill.

CHAIR —You appreciate everybody in your team in the process. We heard an excellent submission from Mr Wesley earlier today about making everyone feel strongly about being part of a team. You might want to talk to him afterwards.

Prof. Christie —All right.

CHAIR —Thank you very much for your time, Professor.

Prof. Christie —Thank you.

[9.54 am]