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Tuesday, 22 May 2012
Page: 5172


Mr BALDWIN (Paterson) (19:49): It is sad to reflect that nowadays Australia is led by a Prime Minister whose electoral game plan is to engender class warfare to save her own political skin and with a simplistic view of Australians as either billionaire businessmen or worker battlers. That was evident in last week's budget, which abandoned 350,000 tourism business owners, 90 per cent of whom own struggling small businesses and fit into neither category. They are the backbone of the tourism market and hospitality industry, doing our nation's heavy lifting. Australia needs good government that supports investment, rewards enterprise and restores confidence, a confidence that has been crushed by the indifference and indulgence of the Gillard years. Yet the budget delivered on 8 May cancels the undertakings that the government had previously made to business for real tax relief.

Tourism expenditure is mostly a discretionary spend and is a price-point sensitive market. Yet since coming to power in 2007 Labor has made it more expensive to visit Australia through a series of cash-grab measures and has made it less attractive through reducing service provisions. It is not surprising that Australia has fallen from fourth place, when the Howard government left office, to 13th last year in the World Economic Forum's travel and tourism competitiveness index. These measures have been introduced at the same time as the tourism and hospitality sectors have been doing it tough. We have seen anaemic growth in many of our largest markets for inbound tourists exacerbated by a strong dollar. We have struggled to compete with new and highly competitive destinations in our region and we have survived the impact of natural disasters such as the Victorian floods, the Western Australian bushfires and Cyclone Yasi. Tough times for tourism are nothing new.

Just as the Howard government rose to the challenges of the collapse of Ansett, the SARS virus and 9-11, so an Abbott government will keep faith with the tourism market. We will restore its competitiveness and tackle the widening trade-tourism deficit. This will include repealing the Gillard carbon tax, with its disproportionate impact on the tourism and hospitality sectors and their energy intensive businesses. The sector are appalled that, despite employing almost one million Australians, they were not awarded any direct industry-specific compensation beyond the Great Barrier Reef visitor levy reduction for marine tourist operators, for the select few. Tourism and hospitality will also benefit from a future coalition government putting government finances in order to relieve interest rate pressure, reducing burdensome regulations and tackling the sector's 36,000 worker shortage.

Recent treatment of the tourism and hospitality sector leaves any observer knowing that Labor thinks tourism is a luxury, an unnecessary part of the services sector, less deserving of help than Australian steelworkers, who received $300 million in carbon tax assistance. To those opposite who think along these lines, I say to you that the service sector, as in many Western economies, represents 80 per cent of our economy, and tourism is one of the most important parts of the service sector. Tourism's contribution to Australian gross domestic product is $73.3 billion or 5.2 per cent of the Australian economy. That is twice the contribution made by agriculture. In Australia tourism directly and indirectly employs 907,100 people, representing 7.9 per cent of total Australian employment. That is four times the mining sector but, unlike mining, accommodation and food are shrinking. Arguably tourism is most deserving of support because it is one of our best economic multipliers. For every dollar generated in tourism, an extra 91c is generated elsewhere in the economy. What is good for tourism is good for Australia. What is bad for tourism is bad for Australia.

The tourism sector is doing it tough. Australians now spend in excess of 132 million nights abroad each year. During its peak in the Howard years, Australian tourism generated a trade surplus of $3.584 billion. Next year the sector will have a trade deficit of $8.7 billion. Yet, although the sector was already stressed, in the 2012 budget Labor has failed to provide adequate carbon tax compensation for tourism. To be clear, the tax stands to destroy 6,400 jobs in tourism, mostly in regional and rural areas. Labor has reduced Tourism Australia's budget by 6.2 per cent or $8 million in real terms. Labor has increased the passenger movement charge by 17 per cent, from $47 to $55 per passenger, and now CPI indexed. Labor has passed on $118.1 million in costs related to AFP security at airports, which will increase ticket costs. Labor has announced cuts to Customs staff, potentially increasing tourist wait times at airports. Labor has undermined its own six-day-old policy, announced on 2 May, to attract investment for new hotels with its managed investments trusts tax. Budget measures applied this year, as every year, cannot focus on any portfolio in isolation. The totality of Labor's economic mismanagement has consequences that must be paid for. Australia's net debt, now over $140 billion, dwarfs the $96 billion debt left to us by Keating. Over the past few months we have all noted that Labor's policy is to encourage illegal boat arrivals at Christmas Island, but there is no support for the profitable cruise ship industry's access to Sydney's Garden Island. Because of Labor's failed policies, including our ballooning asylum-seeker costs, we now face an economic crisis.

Through these bills, Labor now seeks to extract even more money from the industry least able to withstand this punishment. Nothing demonstrates this more clearly than the massive hike to the passenger movement charge. The PMC is a departure tax paid by all passengers departing Australia. The government has announced that the PMC will rise from $47 this financial year to $55 in 2012-13. The price of air tickets will increase by $8 per passenger. According to the Tourism and Transport Forum, this will mean a family of four from New Zealand, Australia's biggest source market, will pay more than NZ$280 just to leave our country, reducing the amount of money they spend while they are here. It will lead to a reduction in economic activity that will threaten jobs. It will collect as much as $1.04 billion by 2015-16, and this is the equivalent of $2.85 million per day. For example, a one-way fare of $69 is the equivalent of 1,667 people flying from Sydney to the Gold Coast every hour, filling more than nine Jetstar planes.

Of this $1.04 billion, Tourism Australia will receive only $134 million, in 2015-16. For every dollar given to Australian tourism, it is robbed of a further $8. This tourist tax hike in itself will not solve our outbound tourism crisis unless it is matched by investment. As the coalition's staycation.org.au campaign highlights, since the Australian dollar reached parity with the US dollar in 2008 Australian tourism has been hurting. Australians, who traditionally make up three-quarters of our visitor economy, have been leaving our shores in droves, and the 2012 budget has not helped. In fact, the government's reduction of Tourism Australia's budget by more than 17 per cent in real terms since 2008 has served to hasten the industry's decline.

When Labor reformed the PMC in 1994-95, the rationale was to cover the cost of Customs, Immigration and quarantine, plus funding to cover short-term visas. Since then it has steadily grown from its $27 per passenger base. Under the Howard government, moderate increases were applied to cover the cost of the then Australian Tourist Commission and the See Australia First campaign, and to boost screening at airports for foot-and-mouth disease. Under the Rudd and Gillard governments, two more increases have been made, the first with no rationale or explanation given. Then, this year's budget announcements included earmarking only 10 per cent of the increase for an Asian marketing fund.

Where this tourism tax is concerned, there are important differences between the Howard era and the Rudd-Gillard era. The coalition can look tourism operators in the eye and justify its increases. Labor can do so for only 10 per cent of one of its increases. Labor cannot point to an original rationale for the PMC and then link it to its tourist tax hike. In this budget, Labor will allocate $7.9 million for SmartGate passenger facilitation, whilst at the same time cutting $10.4 million from passenger facilitation. This is a Labor con job, giving with one hand whilst taking even more with the other.

They are also cutting 190 staff from Customs, which will increase passenger processing times at our airports. It is reasonable that there should be some measures of cost recovery in maintaining our immigration program, and this should be reflected in the PMC. When Labor introduced the PMC, $8 of the total $27 covered short-term visas. Now, because of Labor's inability to manage our borders, this government expects tourism to pay the price. The Department of Immigration and Citizenship's operational costs are through the roof because of illegal boat arrivals, up over $800 million between budgets. That is $4.7 billion since the 2008-09 budget. Some in the industry ask, 'Why are we still paying for the See Australia campaign?' The obvious point here is that, under the coalition, as the PMC went up our funding for Tourism Australia also increased. Conversely, PMC increases have continued under Labor whereas their funding for Tourism Australia has decreased. The tourism sector understands their obligation to maintain their $8 per ticket share of disease management, but this should not be used as an excuse to hide Labor's waste and mismanagement in other areas.

The aviation sector cannot withstand the endless hikes on top of the $6 million cut to the en-route subsidy scheme and paying for baggage screening that have already been announced. In five weeks time these rising costs will be exacerbated by the arrival of a carbon tax. The Tourism and Transport Forum submission on the impact of a carbon tax stated that it would 'kill off up to 6,400 jobs, mostly from regional and rural Australia' and mean also that the net beneficiary would be outbound tourism.

Recently the coalition has highlighted that the government's reduction of the Great Barrier Reef visitor levy to offset the carbon tax impact shows that they have begun to 'pick winners' and that that was at the expense of marine park authority research and reef management. In this budget the government has topped up funding towards the Great Barrier Reef Foundation to make up for its reduction in the reef visitor levy. I say to the Prime Minister: stop this money-go-round and drop your carbon tax! 'Picking winners' like reef tour operators ignores other marine tourism operators, like the Spirit of Tasmania, who have announced they will pass on an extra $3 per passenger per journey and an extra $6 per passenger vehicle per journey. The Spirit of Tasmania’s announcement follows similar ones made by airlines which mean that a family of four holiday from Perth to Cairns will cost an additional $24 in airfares.

We simply do not know the full cumulative effects because Tourism Research Australia has been prevented from undertaking carbon tax modelling. The Treasurer pre-announced his tax loss carry back measure as one to help businesses that were suffering in the two-speed economy. Yet the conditions applied to the $700 million tax carry back fillip mean that those in the 'fast lane' will be eligible but for those hoping for relief only incorporated companies or those businesses taxed as companies are eligible. Even then, only those that have made a profit in one of three years can apply. The reality is only 24 per cent of all businesses are incorporated. Tourism and hospitality is a classic small business sector: 90 per cent of these businesses employ less than 20 people. The ATO found in 2009-10 that 35 per cent of companies were trading at a loss. And since 2008 a great many tourism businesses have been posting consistent losses.

This measure is a mirage. On 2 May the Minister for Tourism launched the Australian Tourism Investment Guide, a policy to attract investors to build new hotels in Australia, and I applauded the move. Yet on 8 May the budget includes a management investment trust withholding tax that has made such investments less viable for many overseas investors. Tourism Accommodation Australia has referred to legal advice recommending 'that non-residents holding Australian assets through MIT structures consider whether an MIT remains the most appropriate structure for their investment'.

Secondly, the Treasurer also announced the removal of the 50 per cent discount on capital gains tax for offshore individuals, meaning it is now less attractive for offshore individuals to invest in, say, strata title hotel developments. The news comes as a further blow to the Minister for Tourism, Martin Ferguson, whose ability to deliver for the tourism industry has been called into question with his government's decision to increase the PMC despite his repeated, separate assurances that this would not happen.

Since the crisis in outbound tourism in 2008 this government has treated the tourism and hospitality sector as the country's 'cut and come again' magic pudding. The cuts outlined in this budget will mean many in-bound tourists will choose not to come again. This government needs to realise the importance of the tourism and hospitality sector with the million people that it employs and reward it appropriately, not put in the way barriers that will stymie growth and stymie opportunity. This government needs to follow what the coalition will do, which is to restore reward, hope and opportunity.