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Monday, 6 December 1999
Page: 12828


Ms GILLARD (3:37 PM) —It would be negligent indeed to start a speech in this House on the question of tourism without commenting on its importance to my electorate. My electorate of Lalor covers a number of very important tourist facilities in Victoria, including the Werribee Park Mansion, the State Rose Garden, the Werribee Open Range Zoo, the Point Cook Metropolitan Park and Homestead, the National Equestrian Centre and the Point Cook RAAF Museum, about which I have spoken in this place on other occasions. Indeed, I suspect that my electorate is the only place in Australia where literally 45 minutes after leaving an international flight at Tullamarine airport you can be in an open range zoo environment eye to eye with a hippopotamus or, if that is not your style, at the Werribee Park Mansion, a very beautiful old building which is currently being developed by a former Prime Minister into a prestige hotel and conference facility. So tourism is very important in my electorate and, as the previous speaker has said, very important to this nation.

Before moving on to talk about other aspects of this motion, I would note how important the tourism industry is to Australia economically. Our Australian national accounts do not measure tourism as an industry. That is understandable, given the diverse nature of the activities that would be covered under the umbrella of tourism. However, the Bureau of Tourism Research has made endeavours to measure the value of tourism to our economy. The bureau, in 1996-97, estimated that total tourism expenditure in Australia was valued at $59.4 billion, of which about three-quarters came from domestic tourism and the balance from overseas sources. The added value of the tourism industry—that is, the value of tourism output less the cost of materials used to produce that output—was $24.2 billion. Consequently we can say that 5.4 per cent of GDP is directly accounted for by the tourism industry. This makes it larger than the mining industry, significantly larger than agriculture, forestry and fishing and roughly equivalent in size to industries such as wholesale trade, transport and storage, and education.

International tourism makes a significant contribution to Australia's export earnings. In 1997-98 international tourism generated $16.4 billion in export earnings; it accounted for 14.4 per cent of Australia's total export earnings and 64.1 per cent of service exports. In 1996-97 tourism expenditure in Australia was responsible for the employment of close to one million people, or 11.5 per cent of total employment. This comprised 670,800 persons employed directly in the tourism industry and a further 291,000 persons employed indirectly. Domestic tourism expenditure generated the most jobs at 510,000 compared with 171,000 created by international tourism.

Against this backdrop of impressive statistics, we have to note that not all has gone well with this industry in recent years. Clearly there was a difficulty with our international tourism given the Asian economic meltdown; in fact, international tourist arrivals fell by 3.5 per cent in 1998. Fortunately, the falling visitor numbers from Asia were partly offset by increases in arrivals from North America and Europe. But we did see a fall in international tourist arrivals and, at the same time, we saw the continuance of the trend where more Australians holidayed overseas than ever before. Clearly, the figures for this year have been better. We can expect an upsurge in international tourism arrivals, given the Olympics next year and the number of people who will be attracted to that.

Against that background of an industry that is vital to our economy but which has had its stresses and strains in view of the Asian economic crisis, one has to question what is the appropriate government policy and response. The government has allocated resources to an advertising and promotion campaign. But promoting and nurturing an industry is more than just promoting in the form of advertising in the various media; it is also about getting the policy settings right. In that regard I would have to say that this government's answer to nurturing our tourism industry in the form of the imposition of a GST is not an appropriate policy setting if we want to facilitate growth, jobs and export earnings through tourism.

It is important to note that the GST does not cause tourism just one problem; it engages in a quadruple whammy on the tourism industry. There are four distinct blows that the GST package makes to the tourism industry. First, 75 per cent of our tourism industry is domestic. As people travel as domestic tourists, once the GST is in, basically all parts of their holiday will be GST affected, whether it be accommodation, restaurant meals, tour fees or fees for entrance to tourist attractions like the Werribee Open Range Zoo or what have you. That is blow number one to the industry.

Blow number two is that, for inbound international tourists, international air and sea travel as well as domestic air travel purchased by non-residents offshore will be GST free but international tourists will face the GST on accommodation, entertainment, food and transport. It is important to note that this is a highly competitive international industry. Tourists do not have to come to Australia. When in their home countries they are considering a range of holiday options, clearly Australia is one of those options, but it is not the only option. And this is an industry which is notoriously price sensitive; it has a very high reaction to movements in price. As the industry noted in the course of the GST debate, there is no doubt that the GST will create additional costs for international tourists travelling in Australia and it will make Australia a less attractive tourist destination than it was previously.

Blow number three to the tourism industry arising out of the GST package is the fact that international airfares for outbound Australian tourists will remain GST free. On the surface, that looks like a benefit in that people can go overseas without the GST applying to their travel to get there. But there are substitution issues in the tourism industry. When you are considering your holiday options, many people will look closely at the price of a domestic holiday—going to Cairns, for example—versus the price of going overseas to Bali or some such destination which also offer sea and sun and those sorts of holiday options. In considering that price effect, the fact that international travel will not attract a GST will mean that the relative costs for Australians of going overseas will be more attractive as a result of the GST being on domestic travel but not on international travel. We will see the government, through this package, sending a price signal to Australian tourists that they ought—on a price basis—to consider going overseas. That fact has been noted by expert commentators on the tourist industry.

The fourth blow from the tax package overall to the Australian tourist industry is that it is noted in Treasury estimates—for whatever they are worth—that we are likely to see an appreciation of the Australian dollar of 4.6 per cent as a result of the effect of the government's tax package. The effect of the appreciation of an Australian dollar on tourism is clear: it makes inbound tourism, which is people coming to Australia from overseas, more expensive; and it makes outbound tourism—that is, Australians holidaying overseas—cheaper. Once again, another blow to our tourism industry.

All of these effects were the subject of quite detailed evidence when the GST was considered by the Senate select committee and other Senate committees. Indeed, the Chief Executive Officer of the Tourism Task Force, Mr Chris Brown, ended up describing the whole package as a `$1.2 billion kick in the guts to the industry'.


Mr Emerson —A very expensive kick in the guts.


Ms GILLARD —That is right. Through modelling that his task force has done, he anticipates that we will see a contraction of seven per cent in the tourism work force in the first year of the new package. When he gave evidence before the Senate select committee, he referred to quite detailed economic modelling undertaken by his task force which showed that 59,000 full-time and part-time jobs were in jeopardy. It indicated that the tourism industry would contract by 59,000 full-time and part-time jobs as a result of the government's tax package. Clearly, in the tourism industry, this tax package is living up to its reputation as a job destroyer. (Time expired)