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Wednesday, 27 June 2001
Page: 28791

Mr FITZGIBBON (11:08 AM) —I am pleased that the member for Wentworth is in the chamber during this debate because as a former tourism minister—a very good tourism minister—he will understand only too well the challenges facing the tourism sector, but I will return to that later.

The Passenger Movement Charge Amendment Bill 2001 gives effect to the Treasurer's budget announcement: that quarantine protection to Australia's arrival points will be strengthened to protect the country from foot-and-mouth disease and other risks to our environment and agricultural sectors. The opposition supports the principles of the new arrangements announced by the Minister for Agriculture, Fisheries and Forestry last month. As a result of these arrangements, all cargo and mail entering Australia will be inspected and passengers and luggage arriving by air will be screened and/or inspected by AQIS officers. Indeed, the spending measures associated with this initiative are vital to ensuring the integrity of Australia's biodiversity and the viability of the country's agriculture and tourism industries.

I want to move on to the issue raised by the member for Batman and others, and that is the issue of the revenue measure and associated taxation arrangements. Therefore, I move:

That all words after “That” be omitted with a view to substituting the following words:

“while not declining to give the bill a second reading, the House condemns the Government for:

(1) ignoring the concerns of the tourism industry in this matter; and

(2) failing to consult on viable funding options for the Australian Tourist Commission, and breaking its promise not to increase taxes”.

I believe the amendment has been distributed. The opposition has reservations about the way in which the government will fund the measures identified in the bill—measures which I have pointed out that the opposition supports. In order to fund the measures, the government will be increasing the passenger movement charge—which in legal terms is a tax—levied on passengers departing Australia. The increase is of the order of 21 per cent, from $30 to $38. It will come into effect from 1 July this year. I appeal to the government to listen to the concerns of those who operate in the tourism industry, particularly the airline sector, which is concerned about the fact that it is going to have difficulty recovering the additional charge from those who have purchased tickets pre 1 July for use after that date.

The government have proved, and are still proving, how absurd their pre-election promises not to increase taxes were. Their sweeping statements about never, ever increasing taxes are starting to sound very hollow indeed. Since the 1996 election, if my count is correct, there have been over 120 instances where the coalition have increased taxes. I am sure the Australian public would not be surprised by this tally, especially those in the small business community, who have borne the brunt of the Howard government legacy of broken promises on the GST.

Of course, 85 per cent of the tourism sector is composed of small businesses. This segment was promised that, as a result of the GST, it would enjoy greater profitability and greater cash flow benefits. There is an almost universal consensus in the sector, amongst accountants and the peak small business and tourism bodies, that that has not been the case; that, indeed, the GST has had a detrimental impact on cash flows and a detrimental impact on the profitability of small firms, including those operating in the tourism sector.

We all remember only too well those taxpayer funded television advertisements which were run to the tune of Joe Cocker's Unchain my heart. People were breaking free from all the constraints of life, including the constraints of government taxation. How ridiculous those ads now look in hindsight, after almost 12 months of operation of the GST.

It appears that the objective of this increase, under the guise of a foot-and-mouth protection raising activity, will follow the tradition of previous passenger movement charge increases—that is, to feather the government's consolidated revenue nest. During the most recent round of Senate estimates it was revealed that, before the latest passenger movement charge increase, revenue collected from the passenger movement charge exceeded cost recovery by about $80 million a year. In other words, the government is raising $80 million more annually than it needs in order to undertake customs, immigration and quarantine processing of inward and outward bound passengers and the cost of issuing short-term visas.

So the questions that arise—and I heard the member for Batman raise this point—are: where is the money going? How is the government using this additional revenue? Why isn't the government accounting for this over-collection? Where is the fiscal responsibility and honesty that this government promised the Australian community prior to the 1996 election? I suggest that the government has made a new art form of deceiving the Australian community on these revenue and expenditure issues.

The associated issue is that, while the government is collecting this revenue, it is not distributing any of it to the industry which is arguably most affected by the tax levy—that is, the tourism industry. If the tourism industry is being milked to combat foot-and-mouth disease, why shouldn't some of this money be redirected to promote Australia's clean, green image? Why shouldn't some of the revenue raised by this increased tax be distributed to the industry which is arguably most affected by the tax being levied—the tourism industry? Certainly, it is an industry that has been adversely affected by the introduction of the GST, particularly given that outbound tourism is now more cost-effective than domestic tourism. By international agreement, we do not pay GST on international airline tickets. Therefore, it is now cheaper to go to Fiji, Bali or New Zealand, in relative terms, than it is to travel to the country's centre, Cairns or similar places. So, in relative terms, outbound tourism has become more attractive for Australian tourists than visiting the very good tourism attractions on this continent.

Tourism in Australia really is at a crossroads. The sector has many opportunities before it but it also faces very many great challenges. Like agriculture and manufacturing, tourism has faced and will continue to face significant economic adjustment over the next 10 years, and a falling Australian dollar is but one component. The relevance of this is our ability to purchase overseas advertising in those countries from which our tourists traditionally come and in those emerging markets from which our tourism will come in future. Some people will say that, if the dollar is low, tourism is happy and it should be booming. That is not true for probably three or four reasons. The first is that you will find that most people residing overseas do not have a clue about the value of the Australian dollar and do not really factor that into their travelling decisions. Indeed, you will find that most people contemplating an international trip do so at least 12 months in advance of that trip. Therefore, the value of a fluctuating dollar is not a large component in terms of their decision making process.

Further, the overwhelming majority cost of an international trip is the cost of the airline ticket and, as you know, the value of the Australian dollar is irrelevant to the cost of that airline ticket. So if you are coming from the States, the airline ticket is going to cost you the same, whether the Australian dollar is at 50c or 70c US. That is a matter of fact. Sure, when they arrive here they might have some additional money because of the lower value of the dollar, so they can spend some more money, which is a good thing. Overwhelmingly, a lower Australian dollar does not cause people from other markets to come running to Australia, but it does impact upon our purchasing power overseas—our ability to market our nation overseas on the television screens of Americans, those living in Asia, those in Spain and those on the European continent generally.

The second challenge is the GST. I will not dwell on it because I have already mentioned it, but certainly there is no doubt that the GST has had an adverse impact on this tourism sector. While I am not advocating it—I have to be careful here; it is a very expensive thing to ensure that all tourism exports are zero rated for GST—it remains true, notwithstanding that, that tourism remains the only export in this country that attracts a GST, and that is an inherently unfair thing.

The third challenge is with new competitors emerging, particularly in the Asian region. New five-star hotels and resorts in the Asian regions not known a decade ago are posing a real new level of competition for the Australian tourism sector. The fourth is increasing environmental pressure. Certainly, our tourism product is not a finite resource, and we all have to work to ensure that tourism in Australia is sustainable. But, notwithstanding that, it is true that these rising environmental pressures have placed pressure on the tourism sector. So all of these things are combining to pose new challenges for the tourism sector.

But while we are very quick to hand over government money to assist our more traditional sectors such as manufacturing, agriculture and mining—not that I begrudge them that assistance; it is eminently supportable—we seem reluctant to acknowledge the challenges faced by one of Australia's largest export industries, an industry currently earning Australia some $16 billion a year in foreign exchange. Too often people counter this view of mine by saying, `But we have growth in tourism. Tourism is growing; it is going okay. It doesn't need this additional assistance.' But we would expect that tourism would be growing; we would be very concerned if that were not the case. It is a question of whether it is growing enough. Is it growing enough to meet our expectations? Is it growing enough as an important segment of the services sector to deliver the jobs we will require over the next decade and beyond to replace those jobs that are being lost in more traditional industries where we do not have a comparative advantage and, no matter what government does in terms of economic and industry policy, those jobs are unsustainable?

The tourism sector is asking for some help. The tourism sector has acknowledged that growth is going to slow and we are not going to meet forecast expectations. It was hit by a double whammy: it was hit by the fall in the Australian dollar, which I have talked about already, and at the same time it was hit by the cessation in the supplementary funding it secured in recognition of the opportunities presented by the Olympic Games in Sydney during the year 2000. That supplementary funding, by the way, was raised through a $3 increase in the passenger movement charge, a $3 increase which is still in place despite the fact that that supplementary funding has come to a halt.

Fully conscious of this crisis facing the sector, the tourism sector went to the government and asked for help. What did it ask for? It asked for a mere $10 million over four years. It is well documented now that this government, the Howard government, is spending around $20 million every month on television, radio and print media advertising promoting its so-called initiatives to the Australian people in a desperate bid to pull itself out of the very deep political hole in which it finds itself. Yet when the tourism industry asks for $10 million over four years to provide Australians with jobs, particularly Australians living in rural and regional Australia—overwhelmingly younger Australians looking for employment opportunities in the services sector and looking for good, highly skilled jobs—the government says no, it cannot afford it.

Let us have a look at the impact of this. I point out that the amendment says `Australian Tourism Commission' when it should read `Australian Tourist Commission'—our mistake. I note that for the Hansard record before someone accuses me of not even knowing the name of one of the important tourism bodies in this country. Australian Tourist Commission television advertisements will be withdrawn in France, Germany, Hong Kong, Indonesia, Japan, Korea, Malaysia, Taiwan, Thailand and the UK, leaving only China, India, New Zealand and Singapore. ATC activity in emerging markets will be cut from five countries back to one country. This is a critical point for Australia's economy generally and a critical point for Australian tourism. In 1998-99, as I said, the coalition increased the PMC by $3 from $27 to $30 to raise revenue for the Olympics. In Labor's 1995-96 budget, the Australian Tourist Commission received $80 million. Based on this year's forward estimates and the 2000-01 budget appropriation, the Australian Tourist Commission's budget will be only $84 million in the year 2003-04. This represents a mere one-half of one per cent growth over eight years—not even anywhere near keeping pace with inflation in this country or in any of the markets in which tourism is critical.

Unlike the Howard government, the Australian tourism industry is pulling its weight. Between 1992 and 2000, contributions from the private sector—their attempt to grow tourism in Australia—have increased from 23 per cent of total ATC revenues to 32 per cent. Over the same period, the government's contribution fell from 72 per cent to 67 per cent. So the private sector is showing its recognition of the need to put more money into tourism promotion in Australia. But rather than have the Howard government say, `We welcome your contribution as an enhancement of our contribution,' what does the Howard government do? It winds down its contribution. So there is no net benefit. There has been only half of one per cent growth over eight years. The government should be welcoming it and saying, `Thank you. This is going to enhance our efforts,' and, if anything, increasing its own efforts as a means of encouraging greater effort again by the private sector. Alas, that has not been the case.

But then I suppose there is not much spare money after the Howard government has funded its GST related roll-backs. We are now counting $20 billion of budget surplus gone in 12 months. There have been roll-backs on petrol indexation, and changes to the business activity statement and beer excise. The list goes on and on. We support roll-back, but we support roll-back that reflects the cost of the GST—roll-back that would not have been necessary if the GST had not forced petrol excise and beer excise up and imposed such a burden on the small business community.

What does the tourism industry have to do to prove its case to the government? Tourism export earnings, as I indicated, are around $16 billion in foreign exchange, but tourism export earnings are forecast to grow from $15.4 billion to $20 billion in 2004-05. In this financial year alone, an estimated 175,114 jobs were created by inbound tourism. For every $1 billion in tourism export earnings, 11,367 jobs are created. Those are not bad statistics for an industry that is practically ignored by the Howard government. I had Minister Kelly challenge us in the House in question time last week, I think, about not having much to say about tourism. She does not say much, so she does not leave us much to criticise. I do try very hard to take a bipartisan approach to tourism, because it is one of those sectors where political point scoring can only have a detrimental effect on its growth. I try very hard, but if Minister Kelly wants a debate on tourism, we are inviting her to participate in this one today by moving this amendment.

Where are we going with ATC funding? The government made it quite clear that it would not be providing additional money in its 2001-02 budget. So the tourism sector was looking towards the passenger movement charge. It had identified it as a possibility. It said to the government, `If you will not give us the mere $10 million we are asking for over four years, will you look at an increase in the passenger movement charge, so that we can live up to expectations and provide the sort of growth we are looking to provide to create those all-important jobs?'

You can understand why, on budget night, the tourism sector was angry to learn that the government had increased the passenger movement charge by 21 per cent, without any consultation whatsoever with the sector. In doing so it denied the tourism sector that opportunity—

A division having been called in the House of Representatives—

Sitting suspended from 11.29 a.m. to 11.42 a.m.

Mr FITZGIBBON —Before being most rudely interrupted by a division in the House, I was talking about lost opportunities in terms of Australian Tourist Commission funding and, in particular, zeroing in on the total lack of consultation by the government with the tourism sector before imposing the additional charge. But to rub salt into the wound, I have it on very good advice that those in the sector went to the government, having heard rumours that there may be an increase in the charge, and said, `Look, if you are going to increase it by $8, increase it by $10. If you need the full $8 to prevent foot-and-mouth disease from entering Australia, give us the additional $2, because we desperately need this.' I understand that cabinet had, in effect, agreed to that measure, but somehow in the process that decision did not translate into the appropriate amendments to the draft bill. I invite the minister, when he summarises this debate, to explain to the chamber and the Australian community whether or not it is true that cabinet had agreed in principle to give the tourism sector an extra $2 out of the additional charge but failed to do so due to a breakdown in the process.

Funding for the Australian Tourist Commission has to be addressed. I pointed out that we have had growth of only half of one per cent over eight years. What is an appropriate level of funding for the Australian Tourist Commission? The fact is that we do not know; we have no international benchmarking. We do know that the city of Las Vegas spends more on promoting itself overseas than the whole Australian nation does. A cursory look at the figures would indicate that we actually fund the Australian Tourist Commission very well, but are we factoring into that assessment the tyranny of distance and our relatively weak branding as compared to a Paris or a Tuscany or some other similar European centred destination?

Of course we need to be spending more on an international basis, but where is the comparison, the benchmarking? This government needs to hold a review into funding for the Australian Tourist Commission. It needs to give away these arbitrary exercises of meeting a demand for an extra $20 million, $10 million or $5 million and for the first time get a real handle on what is an appropriate level of funding for the Australian Tourist Commission. At the same time, we need to get better at assessing the value of the Australian tourism sector to the Australian economy. We need to get better at measuring the on-benefits—the benefits that flow, for example, when a London based tourist goes back to the UK and continues to buy Australian wine for the rest of his or her life because they enjoyed that wine experience while in Australia. That is a very difficult thing to measure. But we can get much better at measuring the value of our tourism sector and, when we get better at it, we will also be better placed to determine what is an appropriate level of funding.

I want to say something about the Australian Tourist Commission because, in my almost three years as the shadow minister for tourism, I have grown very fond of it and developed a high regard for those who work within it; they do a fantastic job with very limited resources. Driving the commission while I have been in the job—and for a long time before that—has been Mr John Morse. Now, sadly, he has decided that it is time to move on and he has left the commission. But as he has taken up the very important position of Chairman of Tourism Victoria he will not be leaving the sector, and I know that he will continue to play a significant role in the industry, as he has done for more than 20 years. So my thanks to John Morse for all the work he has done. Recently I was fortunate in being able to attend the Australian Tourism Exchange in Brisbane, a magnificent event. Much of the credit for it goes of course to John Morse and his team. John will be sadly missed at the ATC but, given his new role, I expect him to be involved in the industry for a long time.

Due to John Morse's departure, we welcome Mr Ken Boundy as the new CEO of the Australian Tourist Commission. Mr Boundy joins the ATC with 25 years experience in international marketing, export industries, global operations and government. So he brings a vast amount of expertise to the sector and, if you like, a different perspective. Mr Boundy does not bring to the ATC the same expertise in tourism that John Morse had; he brings a different sort of talent, something that I think will be good for the commission. So I welcome Mr Boundy. I thank the Australian Tourist Commission for the wonderful work it continues to do, and I congratulate it again on a magnificently successful Australian Tourism Exchange in Brisbane.

I appeal to the government to open their eyes to what is happening out there. I ask those opposite not to stand in the chamber and say, `Well, tourism is experiencing X growth and therefore everything is fine.' The fact is, as I said earlier, that the sector recognises that that growth is about to slow. That means that, over the next 10 years, we will grow at a level lower than expectations, and that can only be bad news for the Australian economy. So I appeal to the government to accept the need to boost the ATC's funding—but again I invite them not to just do so on an arbitrary basis. Obviously the $10 million opportunity has now passed, given the way that the government have wound down the budget surplus. But I appeal to the government to start thinking seriously about doing some proper international benchmarking, a proper assessment of what the ATC requires, in order to live up to our expectation of that very significant jobs growth over the next 10 years and beyond.

I ask the government also to recognise the growing contribution that the private sector is making to the ATC's funding and, rather than wind back its own contribution as a result of that, say thank you for that—thank you for enhancing our contribution. As part of the review process, maybe the government could even consider a rewards based system in which government contributions grow in response to increased private sector contributions. Let us have some sort of ratio so that, every time the sector itself makes an additional effort, that is recognised by an enhanced effort on the part of the government. That would need to be capped, of course. We cannot throw money at the commission forever, regardless of the circumstances of the day. But the government could give the sector an incentive to make an investment in the sector itself, rather than discourage it by reducing government funding every time the sector itself makes an additional contribution.