Address to the Travel DAZE Conference, Sydney

6 June 2016

Address to the Travel DAZE Conference followed by Q&A session

Sydney

Subjects: Future of travel, tourism boom; visa reform; aviation; emerging markets; investment pipeline; labour and skills; marketing; the Great Barrier Reef; sharing economy; funding; backpacker tax.

EO&E........................................................................................................................................

Thank you, I'm not sure what to say about that but I hope to be around a little bit longer. It took the industry a little while to get back a Minister for Tourism and I'm very excited to be the Minister for Tourism. As Malcolm would say, there's never been a more exciting time to be the Minister for Tourism and I think that's right in the context of where the industry sits. I certainly hope to be given the opportunity to take the job on again post the second of July.

Obviously, the industry at the moment is in a critical place with strong numbers and the figures released last week that showed a 17 per cent increase on spend over the previous year up to 37, nearly 38, billion dollars in international visitors is good news for the sector.

Given that almost everybody is talking about the tourism industry at the moment, even the Reserve Bank has mentioned the tourism industry, that in setting interest rates they are considering how strong tourism is going, and in the financial papers discussion around the tourism industry.

So it's obviously an exciting time in the industry to see numbers so strong and having been identified as one of the five key super growth sectors for the Australian economy over the next decade.

It is really important for us as government to ensure that we get settings right to encourage and facilitate the growth of the industry and to make sure that those settings provide you with the opportunity to conduct your businesses as seamlessly as possible, and, quite frankly, with as little interruption from government as possible. That's very much the philosophy that I bring to the sector.

Having said that, there is a lot of hype around and it's very easy to get caught up in the hype that is generated through the media and through just general conversation. One of the things that's also very important, and I was reminded of that quite recently over the weekend talking to somebody in my home state of Tassie from the manufacturing sector, is to make sure that we keep our eye on the fundamentals.

We need to make sure that we understand what the key fundamental market drivers for the sector are, keep our eye on those and our investment decisions are made very coolly in light of what those fundamentals might be.

I think it's a very salient point. It's very, very easy to get caught up in all the hype, it is a good time, projections are good, but making sure the decisions that we make are sound are really important in the process.

If you look at the numbers that came out last week where, from China, there is a 23 per cent increase in numbers and 38 per cent increase in expenditure; the US 12 per cent increase in numbers and 22 per cent increase in expenditure; the UK 5 per cent and 10 per cent; Japan a 12 per cent increase in numbers but expenditure only up 10 per cent in comparison to that, and New Zealand continues to be strong.

All of the core indicators remain in positive territory for the industry and even though we have seen quite exciting numbers in the context of yield, particularly out of China and the US, the thing that's been underpinning that for a long period of time quite consistently, regardless of where say the dollar might sit, is that numbers continue to grow and it's important to maintain that.

With the numbers out of China projected to be somewhere in the order of 200 million people taking an international holiday, up from 120 million last year, by 2020 there's obviously strong growth coming from that sector.

India likewise, which I think is probably the market you ought be looking at beyond China, is the next developing market, also has very strong growth coming through it as well and they are only still developing their own internal tourism sector. I think there's an opportunity for us to engage as that sector grows internally and to develop that into an international offering, in time.

So it then comes back to the core settings that we have across the economy and across the sector to make sure that, as I said before, things are as seamless and easy as possible to come to Australia and we don't have any hiccup points when people are making the decision to come to Australia.

So in that context there's always the old chestnut of visas. I think it's important that we continue to monitor what's happening internationally with our visa offering because there's a lot of reform and a lot of innovation, to use the popular term, occurring in that space not only here in Australia but around the world and it's often quite easy and quickly that you can see the impact of that.

I was in Indonesia in November last year when then-Minister Robb and Minister Dutton and I were able to announce a three year multi-entry visa from Indonesia. It was extremely well received by those that we spoke to in Indonesia but I didn't quite realise the impact it was going to have until I ran into a group of agents from Indonesia at an event in South Australia run by Tourism Australia a couple of months later. They all rushed up to me to say that their bosses had told them to come and significantly increase their trade into Australia off the back of that revised visa setting.

Similarly work that we are doing in China with the development of a 10 year multi-visit visa, which we hope to have finalised this year and also offering it online, and for the first time in Mandarin. It's something that I think will have a significant impact and I hope it assists us to increase our proportion of Chinese visitors who are taking an international holiday.

If you consider that we were very excited last year to have a million visitors out of China for the first time, but there were 120 million who took an international holiday. That's less than 1 per cent we have picked up, so if we can follow the growth in the numbers that are projected to come to take an international holiday, 120 million to 200 by 2020, and potentially increase our volume in that market as well, there is, I think, real opportunity for us there.

Obviously aviation is something that is critically important. Connectivity, we all understand, is a key element in growing visitation not only internationally but within Australia as well and we need to remember three quarters of our industry is local. The international connections, particularly out of China, that have grown over the last year or so off the back of the free trade agreement are really one of the things that's helping us to grow.

The announcement that was made by Virgin last week, I think, is another demonstration of that. The fact that they now have a significant stake being taken in their business by a Chinese based airline business that will give them access not only to the key markets of Shanghai and Beijing but also a number of secondary cities which actually opens up a whole new range of opportunity and new customer base that can be developed.

We need to continue to work on that, that accessibility through the aviation sector, because connectivity is really quite important. It's interesting in talking to some of my colleagues in other countries. I was in the Middle East in January talking to, particularly, the United Arab Emirates and they're talking about how we can engage with them to share their markets. When you consider that we get about 6.5 to 7 million international visitors into Australia every year and they get 20 million through there, now recognising that they're obviously a hub, but they get 20 million stop.

They were talking to me about how they make Australia's visitors this year their visitors next year and their visitors this year our visitors next year. So when you look at the ratios there's an opportunity for us to have a conversation and they have some fantastic data that they're collecting and the opportunity for us to engage with them and share that data, I think, is quite exciting.

Even Indonesia which is a market that I think we can continue to develop - a million Australians go there on an annual basis and about 140,000 to 150,000 Indonesians come here. We can grow that market but even the Indonesians in Australia a few weeks ago were talking to me about how we might engage with them to grow both Australia's and Indonesia's visitor economy. So it's quite innovative thinking that's going on.

One of the things Andrew Robb did quite brilliantly was to work around the world looking to attract investment into our industry here in this country. I think that was one of the really important things that he did, alongside the three free trade agreements that he negotiated, because they open up relationships and they open up the opportunities for our economy to engage with others. As I said before, China's probably the classic example of that at the moment.

He built a significant investment pipeline for infrastructure in the Australian visitor economy - about 30,000 hotel rooms which is a really important piece of work. The task now is to make sure that we can realise that investment pipeline.

A piece of work that we published just before Christmas, the Urbis Report, looks at the inhibitors to that and I think as a government we need to make sure that we work with our state and local government colleagues to ensure that those inhibitors are minimised as much as possible so that investment can be realised.

One of the pressures that we really face in the country at the moment is our supply side constraints, so the infrastructure that we have here, as the visitor numbers grow, to be able to meet that market and ensure that we can provide the unique experience that Australia is so good at.

Obviously, we need to be able to manage and continue to grow our labour and skills - very, very important. Research indicates that we've got a significant deficit now with about 38,000 in the industry now but that's going to continue to grow over the next decade as well.

One of the things I think I'd really like to see is the change in the perception of the visitor economy and the tourism industry as a career. I think many of you in the room would understand only too well what a strong and positive career path this industry can provide, but it's not necessarily the perception from outside.

With people like career counselors who are providing advice to young people who might want to come into the sector, they are certainly not providing that kind of advice. So we need to, collectively I think, turn around the way that we project as a sector and it's very, very important that people see that there is a strong career path and there's an opportunity to make a good living in the sector, which there certainly is.

It doesn't necessarily depend on what your particular skills are. There are many career paths in the tourism industry and the visitor economy that can provide very strong lifestyle for anyone who wants to take that up. So we need to continue to work on that.

Of course we've done some work already around the development of tourism employment plans, particularly in areas of high unemployment and the opportunity to give people a taste, to come to the industry through some of our other employment programs, I think, can also assist with that.

Marketing obviously is one of the key elements of this industry and I have to say the work that Tourism Australia does in projecting Australia out into the world is really quite important. The There's Nothing Like Australia campaign, which has a number of elements to it, I think has, in recent years, focused on areas of Australia's attributes that have contributed to the continued growth of the sector.

Starting with the Restaurant Australia campaign which was about dealing with a market perception problem, a difference in what people saw when they came to Australia and what people experienced when they came to Australia in the context of our food and beverage offering versus what they thought about it when they were considering coming here. This has demonstrated quite strong results and I see that and hear about that when I travel around the country.

So before that campaign started the perception of Australia's ranking, or where we ranked internationally, for the perception of our food and beverage offering was number 10 in the world and it is now number 6. So that campaign has had a positive impact and making sure that we use the research to determine our marketing, I think, is really quite important.

Of course the Aquatic and Coastal campaign that was launched in New York in January is playing to Australia's strengths and that natural attraction that is part of that marketing is obviously one of Australia's strengths, and I look forward to it continuing to grow the visitor numbers coming to Australia.

It was put to me in the United States, when I was there for Australia Business Week in February, that experience is the new star rating - and that's the way that they're looking to market the United States - I think that demonstrates what we have as an offering in this country and our marketing in that sense is really quite well targeted.

So, in summing up, I think we really do have quite an exciting time in this sector over the next decade. Obviously we need to ensure that we have our fundamentals right, we need to keep an eye on the fundamentals that run and support the industry, make sure that our decisions support those things that will keep this sector strong.

We will continue to engage quite actively with you as an industry sector so that we are well across the particular issues that focus your attention. We will continue to work cooperatively with the states and territories, as we have done for example with the Coastal and Aquatic campaign where Tourism Australia has made available cameos for each state and territory that focus on the attributes that each of those state and territories wanted to particularly market for their use in their international marketing campaigns so that there is a commonality of theme, which I think is really quite important.

So, while airlines and weather permitting and the voters of Australia, I look forward to the opportunity to continue to interact with you post the 2nd of July and I think we are going to do a bit of Q&A now, so rather than me babbling on about what I want to say, you can hear the answers to some of the questions you want to find out.

Thank you very much for the opportunity to be here. Can I thank the organisers for being flexible in their arrangements so I had the opportunity to be here today. It is important that we engage at this level even though we are in an election campaign and a big thank you for your attention.

Q&A session

Question: I'm going to start by asking a very pressing question - something that's been touched on by many speakers already today - it relates to the Great Barrier Reef. Now there has been a lot of media recently about the state of the Great Barrier Reef, coral bleaching being the big issue, and as Minister I'm interested to know how do we and government, how do you go about balancing the appetite for tourism to the reef against the potential for further degradation?

Answer: Well I think the good thing about the tourism industry is that it is the one industry where there is a significant opportunity for interaction with the reef without having a major impact on it and generating a real value perception of the value of the reef as a whole.

Obviously the recent events around coral bleaching are a significant issue for us all, a major concern for us all. I was very encouraged to hear the reports that came from GBRMPA (Great Barrier Reef Marine Park Authority) over the weekend about the actual condition of the reef - how much of it is actually now in recovery, which is good news. Obviously there is still some concern about those northern areas that were, perhaps, most impacted upon and, although the waters that they are in are well to the north and probably provide a better opportunity for recovery because there is so much less impact from mainland Australia, further up north towards the Torres Strait. I'm actually going up there later this week to have a look for myself.

A number of my colleagues have expressed concern about the state of the reef and particularly some of the messaging that has been coming out almost talking the reef and it's circumstance down and I am quite concerned that there has been some exaggeration of the damage levels on the reef and so that is why I was pleased to see the report that came out from GBRMPA over the weekend. I'll be talking to them during the week as well so that I can get a good understanding of the research that's being done there. We have made some quite significant investments in research; we have more monitoring sites on the reef than we have ever had before so that we can keep a close eye on it. It is one of the world's iconic locations and it's a major tourism attraction for this country - we understand that very well. So it's important that we do what we can to ensure its longevity and its recovery as quickly as possible.

Question: I know domestic tourism is close to your heart and I'd like to ask you about this, would you maybe gives us an example of an individual Australian tourism business or operation that you think is exemplary in the industry and is showing the way for others - it might be to do with sustainability, it might be a big new idea they have or it might just be the way they run their business, so is there anything that springs to mind?

Answer: There's probably a few things. I was at a dinner in Tasmania only a couple of weeks ago to honour one of the icons of the industry who has had a number of businesses over a period of time; Cradle Mountain, Strahan Village, Peppermint Bay and now a new development within the world heritage area and this is someone who has put their heart and soul into the business over a period of time - I suppose it's that sort of thing that you really look at. This is the emotion business, I talked before about experience, and it's about capturing emotion and it's about a lot of people in the sector who put their hearts and souls into the industry as well. So that story is almost the story of the industry in Tasmania over the last two or three decades and I suppose there is probably examples of that around the country as well where other people who have, over a period of time, dedicated themselves to this sector, made a career of it and are quite rightly recognised at the end of the day. It's about developing something that captures that emotion and I think, rather than pick out anything singularly or particular, that could apply anywhere in the country.

As I said before it's about understanding the fundamentals of the industry and what the drivers of the sector are, and then catering for that. Understanding what the visitor is looking for - there was some chatter in Tassie recently about tourists facing closed doors. People writing to me and asking me what I'm going to do about it. Well there is not much I can do about that particular circumstance but I can sit down and talk with them to see what they can do about it because other than me legislating for businesses to stay open for set times, which I am sure no one here will be excited about, it's about knowing what your customer wants and meeting that market and developing the market. So I think they are probably the core fundamentals that I'd look at rather than pointing to any particular business, it's about the fundamentals and happens right across the country. I've seen that at the National Tourism Awards the delight on their faces; a) to be there and then b) to be recognised.

Question: So it's an attitude thing? What you mentioned before, having more pride in the industry?

Answer: Well I think it's an industry that we should have pride in. You know it's one of Australia's largest services exports but it's about people to people interaction. It does a whole range of other things, you know the higher the level of visitation between two countries the better we understand each other, a whole range of things go into it so it is an attitudinal thing and its very much the public face of the country, the public face of Australia.

Question: Now, let's just say July the 3rd is a sunny morning, you wake up and you're still in the tourism portfolio, what's the number one priority, say in the first six months as Tourism Minister should you be still with us.

Answer: Well I think it goes back to those things I talked about before about getting the fundamentals right. I want to continue to work with my colleagues and I have to say they have been quite cooperative around making sure that we remain competitive in the visa space and if you look at what we are doing there is a fair bit of work happening there. Indonesia offered 169 countries a free one month visa only a few weeks ago. There is a lot going on in that space, some of it is expensive. The technology that sits behind electronic visas, offering it in languages and balancing that with security is expensive and there is some investment to be made in that and I know that is occurring. But getting those things right and making sure other inhibitors in the decision making process are as seamless as possible.

The work that we have done with facilitation through airports that we announced in the budget for example, takes away another wrinkle, if you like, in the system and it makes it easier for people, who are prepared to pay for the service, to come through our airports. Those sorts of things we will continue to look at because if we are going to meet our expectations with respect of projections of people we want to come here, it's a service industry a service economy, we want to make sure that we meet the fundamentals of that.

Question: Now you've talked a fair bit about China and India, burgeoning middle classes, potentially travel ready. You mentioned 80 million more people from China might be ready to visit or travel internationally in the next five years or so. What are some other countries, maybe in our region, that you think have potential to contribute greater numbers of inbound travelers to Australia?

Answer: Well look it's a good question and I think that we are at the stage now where we have got our 2020 targets, we need to be looking at what we do as a sector out to 2030. And so China is going to continue to grow, we know the demographics there, we understand that pretty well but what is next? How are we approaching that? How are we developing our marketing strategies to engage with those markets?

I mentioned India before, I think they are one of the countries, but you have, in our entire region, a number of developing economies where the demographics are changing and they are changing quite quickly and I think there is an opportunity for us to be engaged in all of those spaces to take advantage of that.

Again, I think that we should make sure that we follow that based on the research. We have, I think, in this country very good research, perhaps we can improve that, but we have good research and we ought to do that based on the research. Indonesia is another country, 220 million to our north, only 130,000, 140,000 visitors from there - on an annual basis I think we can grow that and that's a very important relationship for Australia and other South Eastern Asian nations as well.

Question: I'll go one more before I open up to the audience who I'm sure have some questions. Just lastly from me, another vexing issue is the Passenger Movement Charge. Can you tell us what the Coalition's policy is going forward? Will there be a move in the movement charge? Can you see it going up, coming down? Staying the same?

Answer: We said in the Budget we would hold it where it is. That's my ambition, I don't want to see it rise and I'm sure there are people here who would like to see it fall but I'd be completely off message if I didn't say we are in a tight Budgetary situation, which we obviously are. So holding it where it is at this point in time is a sensible place for us to be with that and we can look at things once the budget continues to improve. There is a range of costs in the sector that I would be keen to have a look at over time because they are also indicators but maintaining the charge at this current level is the current situation.

Question: Thanks Senator for your comments so far. I just have a question on the sharing economy and how you guys feel about it. Particularly, I'm from South Australia and we do have some very traditional businesses that are well established, including obviously the taxi industry like you all have in your states. How do you feel the sharing economy will contribute to tourism or do you think there needs to be some sort of protection for some of the existing businesses?

Answer: I think, as you've seen here today, the sharing economy is already contributing to the tourism sector and it will continue to. I don't think it really matters what governments might want to occur - it's a fact of life and it's here. The issue now comes down to how we regulate it and manage it.

There needs to be, in my view, fair and reasonable regulatory processes across the sector. There's probably an opportunity in, perhaps let's break it into two - ride sharing versus accommodation, you've already seen a process where a number of states have started to open up the ride sharing side of things. We've talked about it at our Ministerial meeting in January in Western Australia; my hope would be that the regulatory frameworks are as common as possible across all jurisdictions so that people understand what the story and the regulations are. And, pleasingly, the state Ministers decided that they would do that as far as possible.

There will be some transitional pain as that occurs, I mean I don't, it doesn't matter what sector of the economy you look at when you have some sort of disruption come in that there is some pain as the economy transitions in a particular sector.

In the accommodation sector I think there is probably an opportunity for some regulatory reform in the established economy that might make things a bit easier for them and I think that that should be the attitude. There is certainly some regulatory requirements that, perhaps, need to be enforced rather than put in place because having been on local government before coming to the Senate I know that conducting a business in a private residence requires specific approval from local government so I think enforcement is probably one of the issues that exists in that space but the opportunity for some regulatory reform across accommodation to make things a bit more common might be of benefit to everybody.

So I think that would be the way that I'd be looking at it. They are a fact of life; they will continue to be part of the visitor economy so I don't think there is too much point in trying to rail against it. It's about making sure that the regulatory frameworks that cover them all are as fair and as common as possible.

Question: Minister thank you for a very enlightening presentation, we appreciate the fact that it's a very busy time for you and the fact you have made time to come and talk to us is very good. You touched briefly on the issue of funding and I've been around this industry now for a long time and I think there is a perception out there that tourism has been perennially underfunded by subsequent governments. Could you possibly give us a couple of points on that and also on whether we might expect to see closer collaboration between state and federal governments for more efficient use of the funds that are available?

Answer: Look I think that is a really good question and look, we do talk about that. There is about $750 million annually in the pot for marketing for example, and I did mention before the fact that in our work with Tourism Australia we provided, basically free of charge, individual state offerings as part of the Aquatic and Coastal campaign so that they could, in their marketing, be as common as possible across state, territory and commonwealth jurisdictions. There is probably more work that we can do in that space but it is a very, very competitive world out there.

We, at a Commonwealth level, say that we market Australia - the states then go out and compete for their own share of that and then, of course, within that you have regions who are also after their slice. I see that as much in a small state in Tasmania as occurs anywhere else where the distances are much more vast. So you can only encourage people to work collaboratively. I have to say my experience is, in an international sense, that certainly works - people see Australia first then they pick up other elements within that. There's very few locations around the country that have their own brand, if you like, so I'm very much won over on having a common national brand that puts Australia, and a common face of Australia for want of a better word, that works across a number of sectors so look I share your sentiment in that space and because dollars are tight and scarce the more that we can do that the stronger the impact will be for the sector.

Question: Hello, I might not sound like it but I come from Western Australia and something that is important to us is backpackers. So let's talk about the backpacker tax.

Answer: Well, obviously I've recognised, and recognised quite a while ago, that it was an issue which is why I went to the Prime Minister and asked for the review process of where the tax was. There is still a little bit of work to do around that, obviously, but I am pleased that we put the freeze on it and decided it won't take effect until at least the 1st of January next year.

I'd urge industry to stay engaged with that process, it's really important that you do as the tourism industry. There are some moves out there to have an agricultural only visa class. I don't think we need a new visa class - we have got the visa class and it's called the Working Holiday Maker visa.

The issue is the tax rate and that's what we need to resolve, and so that will be the focus of the work I do in this portfolio if I am lucky on the 2nd of July because that is effectively what we have got to resolve.

I have to say I was very pleased with the level of engagement the industry had through the initial processes that we undertook and I thank you for that, but please do stay engaged - it's important that you do because it, as you quite correctly identify, is a very, very important source of top-up labour for this industry and in some places that are a bit more remote it's a significant source of labour. There is a million people, direct and indirect, employed in the tourism sector across this country, ninety per cent of those are Australians, but we do need that additional resource so please stay engaged with the process whatever happens.

ENDS.

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