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Positives and negatives for tourism in budget

SYDNEY HARBOUR - EDITED

The accommodation industry has welcomed several aspects of the Federal Budget, including an increase in funding for Tourism Australia.

The Chief Executive Officer of the Accommodation Association of Australia, Richard Munro, said the industry is also positive about the 1.5 per cent cut in the corporate tax rate for small businesses and measures to promote infrastructure investment in northern Australia.

“Australia’s accommodation industry is pleased with the Federal Government’s stronger commitment to Tourism Australia,” Munro said.

“It’s vital that Tourism Australia, as our leading international tourism marketing agency, continues to be resourced to enable Australia to attract more visitors which is why the extra funding in the Federal Budget is important.

“The funding pledge will assist with ensuring Australia is able to continue to compete in the aggressive global market for international visitors.

“Operators of accommodation businesses will also benefit from the 1.5 per cent reduction in the corporate tax rate for small businesses.

“This measure will provide much needed relief for our industry, particularly in regional areas where running a successful small accommodation business is a challenge.

“The Government’s vision of promoting investment in northern Australia has the potential to generate significant business for accommodation operators in the Northern Territory, as well as northern Queensland and WA.

“New infrastructure in northern Australia will translate to more room nights both during the planning and construction phases, as well as once projects are complete.

“The more new economic activity in northern Australia there is, the better off the accommodation industry together and the broader economy will be.”

Munro said these Budget announcements demonstrate that supporting tourism continues to be a high priority for the Government.

Tourism Accommodation Australia (TAA) has welcomed the increase in funding for Tourism Australia and the Business Events sector, and praised the accelerated depreciation measures for small businesses, but believes changes to Working Holiday Makers taxation arrangements and increases in visa charges will have serious negative effects for the accommodation sector.

TAA welcomed the increase in Tourism Australia’s 2015-16 budget to AUD$137.3 million compared with AUD$129.75 million in 2014-15.

This will include a small staffing increase and a continuation of the roll-out of the ‘There’s nothing like Australia’ campaign across all major markets, along with new funding for the Restaurant Australia marketing campaign.

There will also be a strong push on Business Events marketing to promote Australia as a business events destination targeting New Zealand, the USA and China.

“The continued increase in Tourism Australia’s promotion and marketing funding is imperative if we are to reap the benefits of the lower Australian dollar and grow demand for the new wave of Australian hotels that are coming on line across the country over the next five years,” said Carol Giuseppi, Acting CEO of TAA.

“Australia is experiencing its largest hotel expansion in two decades, and with the end of the mining boom, it is imperative that tourism and business events are targeted to create new demand.

“Australia has significant new convention facilities either opened or under construction, and given that it takes a number of years to secure major conventions and exhibitions, this is a crucial time to be marketing Australia’s business events capabilities to the world.

“Trade and Tourism Minister Andrew Robb has been very successful opening up Australia to key markets in Asia through liberalised Free Trade Agreements and it is important that we complement these advances with a positive and dynamic tourism marketing program.

“The benefits of a strong Australian tourism presence have already been seen in the sustained growth in inbound over the past few years m with over 760,000 Chinese visitor arrivals in 2013-14 spending around $6.5 billion or $8,600 per visitor, and that has had a direct benefit for accommodation, food and retail sectors.”

Giuseppi said Government figures showed that real travel expenditure by international visitors to Australia had increased by 11 per cent since the start of 2012, whereas real travel expenditure by Australian residents travelling abroad had decreased by 11 per cent. Overall, this has contributed to a sharp improvement in the trade balance of tourism-related services.

She also welcomed initiatives aimed at small business, with the reduction in taxation and immediate tax deduction benefits for items under $20,000 likely to benefit smaller hotels, particularly in regional and remote areas.

“It is vital for hotels to constantly update their facilities, and the new depreciation measures will enable small hotels to immediately upgrade items such as coffee machines, tables, chairs, fridges, beds and plant equipment. The measures will not only improve cash flow for hoteliers, it will significantly benefit the guest experience,” Giuseppi said.

However, regional and remote hoteliers would be particularly affected by the Government’s change to tax residency rules from 1 July 2016. Working Holiday Makers (WHM), generally made up of backpackers, would be disadvantaged from coming to, and staying in, Australia as a result of the decision to tax their earnings at 32.5 per cent from their first dollar of income.

“Backpackers make up a large percentage of the workforce in hotels in resort, regional and remote areas, and the previous WHM arrangements were an important incentive for backpackers to come to Australia and stay a lengthy period of time,” she said.

“They not only contribute significantly to employment in the accommodation sector, they are also amongst the greatest advocates for Australian holidays back in their home markets. The backpacker of today is likely to return with their friends, families and credit cards in years to come. This is a regressive decision that will affect our industry at a time when the hotel industry is going to need access to larger pools of labour during its rapid expansionary phase.”

Increases to the visa application charge (VAC) for a range of visas from 1 July 2015 would also have a negative effect on inbound tourism, said Giuseppi.

An increase in funding for Tourism Australia has also been welcomed by the Australian Hotels Association’s Western Australian office.

AHA(WA) welcomed the Federal Government’s announcement that it will provide AUD$36.7 million over the forward estimates in additional funding for Tourism Australia to support marketing activities abroad and depreciation incentives for small businesses that will boost tourism and hospitality.

“The Federal Government is to be commended on today’s announcement and recognition that tourism is a key player in ‎international commerce and can make better contributions to the Australian economy when given the resources required for growth,” said AHA(WA) CEO, Bradley Woods.

“The announcement of depreciation incentives enabling small businesses with a turnover of up to $2 million to write-off purchases up to $20,000 will drive new capital purchases and boost the hospitality and tourism economy.

“The Federal Government and Minister Robb are to be commended on today’s announcement; tourism has become a key player in ‎international commerce and can make better contributions to the Australian economy if it is embraced by government and given the resources required for growth.

“As well as economic growth, investment in Tourism will provide additional jobs for thousands of Australians looking for work.

“Australia must not miss the opportunity to market itself to those looking to travel, especially while Asia and particularly China continue to grow rapidly.

“We must compete strongly with other nations also looking to capitalise on foreign travellers and prove to them why they must visit Australia,” Woods said.

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