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Tourism industry claims that any hotel bed tax introduced in the Budget would be disastrous for the industry

EXTRACT

GARETH EVANS: ... perfectly understandable that the Tourism Department should want to be in a position to assess the pros and cons of such a tax, in particular, I suppose, in the context of any enthusiasm for revenue that might be in the mind of the Finance Department at the moment. Nothing is to be assumed from that about the status of that particular proposal. It's no more than speculation. We're not responding to speculation on this or on any other subject.

ELLEN FANNING: Government Leader in the Senate, Gareth Evans, dismissing speculation about the introduction of a hotel bed tax in the next Budget. The Federal Government has commissioned consultants to examine the impact of a 5 to 10 per cent bed tax.

The Government says the proposal is just one of many options available for revenue raising in the May Budget, but John Brown, the Chairman of the Tourism Task Force, has told Ben Wilson a bed tax would be a disaster for an industry still struggling after years of losses.

JOHN BROWN: Well, the proposition, as I understand it, is for a 5 or 10 per cent tax on your hotel bill. Now, I can tell you, if it was possible to get the room rate up 5 or 10 per cent, the hotels would have done it. So to start thinking about imposing a 5 or 10 per cent tax on accommodation rates all across Australia-you're not just talking about the region of the Park Hyatt, now; you're talking about every lousy little motel around the country-would be disastrous for an industry that really does have the prospects of growth that we need in Australia.

But I am confident that Minister Lee and Prime Minister Keating, aware as they are of the potential of the tourism industry and also aware of the total lack of profitability over the last few years-which is why all of our hotels have been changing hands so rapidly-at very reduced rates on what they cost to build, will be aware that this sort of tax would be disastrous.

And I am very confident the Government will look at this dispassionately, see that it's, again, the sort of the catch-cry of the bureaucrats-you know: Here's an industry, the tourism industry, let's tax it. It's easy for them but it has no commercial reality whatever, so I'm sure it will get hit on the head.

BEN WILSON: How are we able to substantiate that people will actually change their minds on their travel plans because of a bed tax or no bed tax?

JOHN BROWN: It seems to me that if it were possible for the hotels to put this sort of impost on in increased rates, they'd have done it. I mean, they've all been gasping for breath. They're aware of the impact that an increase in rates will have on their clients. They've now got fairly good occupancies but at pretty low rates. Imean, we've got the cheapest hotels in the world, and if it were possible to put them up, they'd put them up. They wouldn't need someone to impose a tax. If a 5 or 10 per cent possibility was there in increased prices, they'd be doing it. They haven't done it, simply because they know that it will turn off the tap, that people will stop travelling. They'll start travelling overseas again. We've been fighting to keep them at home.

BEN WILSON: Do you consider it cynical for the Federal Opposition to be raising this issue as a pre-budget political tactic when its own state of policy was a 15 per cent GST?

JOHN BROWN: Well, you know what effect, rather the result of the proposed 15 per cent GST on the hotels-I mean, they were up in arms. They could see that what little fragile recovery there was would be lost immediately.

And they put this bed tax on in New York once. It had the effect of chasing people to any other city bar New York. They took it off quick and lively, let me tell you-it didn't last long there. And we just can't afford that. This is the industry that's got the best hope of producing great results for Australia in the next few years. For the bureaucrats to start looking at it as a milch cow is crazy. It's short-sighted; it's stupid. And for the Opposition to be making noises about it shrieks of hypocrisy.

ELLEN FANNING: The Chairman of the Tourism Task Force there, John Brown, and he was speaking to Ben Wilson.