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"Tourism and transport industry" breakfast, Tourism Council Australia, 15 April 1999: address.



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15 April 1999 

AS6/99

Tourism Council Australia 

"Tourism and Transport Industry" Breakfast

Address By 

The Hon John Anderson MP 

Minister for Transport and Regional Services

Thank you for the opportunity to address you this morning.

It is one of the intere sting characteristics of Government arrangements that responsibility for tourism, which relies so heavily on transport, and which contributes so significantly to the prosperity of many regional communities in Australia, does not lie within my portfolio, Transport and Regional Services.

I say that not to suggest any desire to poach that responsibility from my colleagues Senator Nick Minchin and Jackie Kelly, who are doing a great job. Rather, I want to convey the responsibility I believe I and my portfolio have to the continuing success of tourism, and how important that success is to us.

One of the occupational hazards of my position is the danger of focussing too much on the transport industry , at the expense of transport users , such as the tourism industry. Transport is a major industry, generating over 4% of GDP and employing 380 000 Australians. But its real contribution to the success of the Australian economy lies in performing its task as effectively as possible.

By way of example, through the Supermarket to Asia Council the Government is working with industry to look at the product export task on a whole of chain basis, rather than from the traditional modal focus.

Exporters are looking to have their product delivered on time at the right quality and at the right price. This is the task for transport to deliver.

The requirement is essentially no different for the tourism industry.

It is to ensure that tourists have access to the destination of their choice and that we get them there in the shortest possible time via a system that provide quality service at the right price.

I am aware of figures which suggest that some areas of our international tourism industry are starting to overcome the impact of the Asian economic crisis. But there is still a considerable distance to go before we achieve the sort of growth that was apparent until 1997.

Needless to say, other countries' tourism industries have been similarly hurt, and will be even more competitive as they too seek to regain their place in the market.

As always, standing still isn't an option for your industry.

That's why I'm pleased to be able to describe a number of Federal Government initiatives that will ensure transport improves further on its contribution to your industry.

I have said already that transport contributes most to our economy when it performs its task as efficiently as possible.

To be more specific, industry benefits most when transport is, internationally competitive, effective and efficient, accessible, sustainable and safe:

As leaders in your industry, you know there is often overwhelming pressure to deal with the current issues at the expense of preparing the way forward.

However, given the changes taking place around us, it seems to me there will be growing recognition of the importance of finding the right balance between dealing with current issues and addressing what lies ahead. Failing to plan for the future invites future failure.

In transport, we need to ensure we have a good understanding of the emerging pressures and use this to inform a clear vision of the directions we wish to take. This is a responsibility as much for industry as it is for Government. Indeed, the governments are looking increasingly to private enterprise to provide transport infrastructure.

In recent weeks I have made the point that Governments today simply cannot fulfil their historical role in the provision of infrastructure. There are just too many calls on government revenue today for this to be possible.

Recently I learned that of the top 100 economies in the world, more than half of these are now companies, not nation states.

Needless to say, this structure of economic power is unprecedented, and, like so many other facets of globalisation, demands rethinking of traditional policy approaches by governments.

I believe we are headed for a new era of partnerships between the private sector and governments. Whether we are facilitating major projects, providing tax offsets or seeking to leverage private investment, the government believes we must work in partnersh ip with the private sector in order to meet the infrastructure needs of our economy.

In relation to aviation, while the industry itself would say it has been under policy review and change since the mid-1980s, it would be fair to say "who hasn’t?".

All the major service-providing industries have undergone substantial regulatory, competitive and structural change in that period. Since our election in March 1996, capacity for international air services to and from Australia has increased by 28 percent.

This substantial bank of available capacity promotes healthy competition, while still maintaining very high safety standards.

One major influence on future policy will of course be the Productivity Commission's inquiry into the effects of competition in bilateral air services arrangements. In establishing this inquiry, we wanted to ensure that, given the imperfect nature of this market, we were able to maximise the benefits to Australia and achieve the right balance between the interests of those supplying the seats on aircraft, and those whose livelihoods depend on filling them.

Of course, I'm sure when I talk about aviation developments nearly all of you will immediately wonder when I'm going to discuss Sydney Airport.

The Olympics dominate the short-term perspective for the airport. As you're aware, a slot system has been operating since March 1998, which will match demand for arrival and departure slots with available capacity up to, during and after the Games. The slot bids received from June onwards will be the best leading indicator of demand for Olympic traffic.

On the land transport side, major works are now under way to handle the sheer volume of visitors and athletes and get them to their destinations.

Sydney Airport will be able, under normal operating conditions, to cope with the demand effectively; and without any changes to the cap or the curfew.

In the longer term, it is not easy to predict when the capacity of Sydney Airport will be reached, but we know that the airport will reach its maximum capacity in the latter part of the next decade. The proposed very high speed train from Canberra could delay the date that Sydney Airport reaches capacity by two years at the most. Speedrail is a valuable project, but it is not a long term solution to Sydney’s capacity issues.

The Government is completing the EIS on the proposed Badgery’s Creek airport site, and I expect that it will be released at the end of May. The EIS process has been thorough and extremely consultative.

We are focusing on Badgery’s Creek for very good reasons. It was chosen in 1985 after an extensive selection process. It is the only greenfields airport site left in the Sydney basin.

A number of people have put forward alternative airport sites outside the Sydney basin, including Goulburn, Lithgow, and Newcastle. And every now and then someone proposes a floating airport off the coast.

Some of these proposals may appear attractive, but it must be remembered that they have not been subject to the same level of detailed analysis.

Sites outside the Sydney basin all suffer from the disadvantage of distance from Sydney Airport and the city centre, with associated costs and inconvenience for passengers. As you know, almost all major airports around the world are located within 50 kilometres of the city centre.

We may be able to build additional regional airports, but these proposals will not address Sydney Airport’s capacity limits. It is the travelling public who ultimately determine the success or failure of airports and airlines, and what they want is all too often forgotten. There is no point in constructing a four kilometre long stretch of concrete if no-one wants to land planes on it.

Moving to other areas of my portfolio, it is important to remember that 75% of all tourism within Australia is by roads. Our annual federal budget - of over $1.6 billion- is, by any judgement, a significant financial commitment and yet we could easily spend twice that on all the projects we would like to see funded. Our challenge for the future is to ensure we can maximise what funding is available - whether it is public or private sector investment.

Given the size of Australia - we have 810,000 kms of roads - and the remoteness of some of our communities, the fact that cars and trucks can drive right around Australia on 18,500 kms of a sealed National Highway is a reasonable achievement. The Federal G overnment has full financial responsibility for this highway; we also provide funds to state and local governments and we have a partnership approach with the states on roads that are classified as being of national importance - RONI’s.

Perhaps the most significant of these from a tourism perspective is the Pacific Highway. The NSW and Commonwealth Governments are spending $2.2 billion dollars over 10 years on the Pacific Highway to ensure this is as smooth and as safe as we can make it. It is a great tourist road and will be even more user friendly when we have finished our improvements.

The developments in rail over recent years have been even more impressive. After years of decline and neglect, rail services are starting to once again become innovative an d competitive. Australia can now boast world class services like Great Southern Rails’ The Ghan , that travels Melbourne - Adelaide - Alice Springs and Sydney-Adelaide -Alice Springs through Broken Hill and other inland areas of regional Australia.

The Ghan first started in 1929 and the revamped and expanded service reflects all the best that the era had to offer the first class traveller. Today’s Ghan has been described as having all the charm of the Orient Express, including the chilled champagne on ice.

The soon to be launched Great South Pacific Express, which will provide a service from Cairns to Brisbane and from Sydney to Brisbane, is from all reports the last word in luxury and I am sure will be a welcome addition to the tourism planner.

Both these trains reflect the renaissance in train travel in Australia, particularly for transport to Australia’s harsh exterior. It also demonstrates the diversity of transport infrastructure investment by the private sector.

Of course there are other private sector investments currently under consideration. I have already mentioned the exciting Very High Speed Train from Canberra to Sydney; others include the Australian Inland Rail Expressway from Melbourne to Darwin and the Adelaide to Darwin rail links. This revival in rail demonstrates a commitment by government and the private sector to ensure both commuters and tourists have the widest possible choice in travel.

Having said that, allow me to move to something much less controversial - the Government's tax reforms.

From correspondence I have received from people involved in tourism, I think there are two specific concerns - one that levying a GST on goods and services pre-purchased by foreign tourists is inappropriate and anti-competitive. And two, that the exemption we intend to apply to domestic air transport by foreign tourists, or domestic air transport as part of an international trip by residents, should be extended to all tourist travel.

In relation to the first point, the Government believes that all non-exempt goods and services consumed in Australia should be subject to the GST, regardless of whether they are purchased overseas. This is consistent with the international convention of taxing exports in the country in which they are consumed. Second, to extend the domestic air travel exemption to all travel would create an enormous administrative burden, one that would in many cases fall on small businesses.

Beyond these issues, I think there are some major gains for the tourism industry in the Tax Package, particularly through a more efficient transport industry:

  • Diesel fuel excise for passenger rail and tourist coaches will be cut;
  • Outback tour operators, remote area resorts, marine tourism operators and cruise vessels will receive a full excise rebate for t heir off-road use of diesel fuel;

- and in relation to cruise vessels I'm sure you're aware that on 9 March I announced that the Brisbane cruise port terminal will receive a $10.1 million tax rebate under the Infrastructure Borrowings Tax Offset Scheme, s ubject to its meeting environmental and taxation criteria.

  • Taxes aimed specifically at tourism, such as Sydney's bed tax, will be abolished.
  • And these all come in addition to the extra disposable income Australians will have from income tax cuts.

These are all direct benefits for the industry, but tourism, along with all sectors of the economy, will benefit from a vastly improved, and simpler, tax system.

I mentioned at the start how significant tourism is to many of our regional areas. I'd like to discuss regional tourism briefly, and what we are doing to further enhance the role of the industry there.

I’ll be frank and say I think we've got some work to do in regional tourism.

Let’s look at one area of concern - international passenger traffic. Traffic to and from Australia has doubled to 14 million passengers in the 10 years to June 1998.

But increasingly, those passengers are heading to our major population centres - and direct international air services to regional Australia and our smaller cities are therefore coming under considerable commercial pressure.

To give you an idea of this trend, in terms of international passengers, Adelaide has been declining for at least five years or longer; and direct international air services to Hobart, Townsville and Broome have actually ceased.

Now, of course, much of this has been caused by the economic crisis to our north. But it has also occurred despite the increasingly liberal outcomes in air services negotiations that we have achieved. For example, under current arrangements, 62 international airlines now have access to Adelaide - but only five operate direct services, with another six code sharing.

What other factors are at work here? A decision not to operate to a destination is ultimately a commercial one made by an airline. Australia's regional areas compete with other Australian destinations, and with destinations across the world. It is clear from the trends we’ve observed that many of Australia's regional destinations are not competing as successfully as we would like them to.

We're seeking to address that through the Regional Tourism Program (RTP).

The RTP is one element of the close relationship I and my Department are developing with Ministers Minchin and Kelly to better coordinate our work on a number of industry issues. $8 million over four years was allocated for the Program in the last year's Budget and the Government had made a commitment to double this funding. This is in addition to the $8 million the Government has committed to the Australian Domestic Tourism Initiative.

The aim of the RTP is to improve the capability of organisations, businesses and individuals to deliver higher quality tourism products and services, enabling regions to attract visitors from traditional gateways and better meet the needs of both domestic and international tourists.

A number of grants will be announced shortly as part of the $2 million first stage of the RTP. Next on the list is the establishment of websites for regional tourism organisations and the development, implementation and marketing of the Tourism Council Australia's National Accreditation Program to lift and harmonise standards across the industry.

Ladies and Gentlemen Australia's tourism industry has been enormously successful over the last decade. But we in Government are conscious that competition from the rest of the world has never been greater.

If standing still is not an option for you, it certainly isn't for us, and we will continue to work on making the most effective contribution possible to your ongoing success.

Thank you. I would be happy to take questions.

 

ENDS

 

 

 

jy 19041999