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Ladies and gentlemen,
Thank you for the invitation to address Outlook 2010 - the national hotel and tourism industry policy summit.
After the global financial crisis, I'm pleased to say hotel occupancy yields are improving, airlines are reporting the return of business travellers and tourism regions are recording improved visitation. These are welcome signs of relief from the greatest global recession in 80 years.
As we leave the global economic downturn behind and deal with the resurgence in the economy, we must not make the mistakes of the past and we need to position ourselves to withstand future shocks. That means focussing our attention on the long game and the competitiveness and productivity of Australia's tourism industry.
Attempts to boost the industry's productive capacity are not new
The path of change started during the Hawke Government when in 1986, the Tourism Minister John Brown initiated the widely known Paul Hogan campaign to boost the industry's global competitiveness.
The challenge of ensuring we get the skills, investment and quality to capitalise on our marketing efforts is just as real today as it was during the Hawke, Keating and Howard Governments.
That is why the Rudd Government is focused on a National Long-Term Tourism Strategy which is delivering unprecedented outcomes.
Last week, Australia's tourism ministers agreed to a combined budget of $2.2 million and 41 priority actions to implement the National Long-Term Tourism Strategy.
This includes:
- Seeking the inclusion of chefs on the skilled occupations migration list;
- Improving labour mobility through national uniformity for Responsible Service of Alcohol qualifications;
- Removing barriers to investment by seeking the inclusion of tourism in the Commonwealth Enterprise Connect Program;
- Improving destination management planning, particularly through undertaking pilot projects and identifying gaps in research and dissemination of information;
- Building stronger links with tourism transport planning by revitalising the National Tourism and Aviation Advisory Committee;
- Supporting industry resilience with the release of the study of economic impacts of climate change on tourism; and
- Enhancing indigenous employment by identifying tourism program gaps and scoping out opportunities for inclusion of tourism in existing programs across Governments.
The Strategy is being backed by additional measures of support from the Australian Government.
China and the Approved Destination Status Scheme
Just two weeks ago, I announced $4 million in funding over the next four years towards the extension of the Approved Destination Status Scheme.
China is our largest two-way trading partner and our second largest tourism market based on visitor nights.
Last year, we had more than 350,000 Chinese visitors.
This is a market worth $2.8 billion and is forecast to increase at an average annual rate of 10.2 per cent to $5.5 billion in 2017.
The $4 million in funding will support the continued operation of the ADS scheme, including modification of the ADS Scheme Code of Business Standards and Ethics and monitoring of ADS Agents to ensure compliance with the code.
The ADS scheme supports the marketing of Australia as an international travel destination in China.
The funding boost by the Australian Government will see Chinese group leisure travellers continuing to enjoy a high quality tourism experience on our shores.
Since its introduction in 1999, the Scheme has been very successful in removing and keeping out rogue operators in the Chinese inbound tourism sector.
That is one of the reasons why the China market is continuing to grow for us.
The ADS Scheme supports Australia's strong desire to continue and grow its positive bi-lateral relationship with China - the world's fastest growing economy and a nation which will significantly shape the 21st Century.
TQUAL Grants
Through the TQUAL Grants Scheme the Australian Government has provided more than $8.3 million in funding to more than 70 projects across Australia.
In recent weeks I've announced TQUAL funding for innovative projects including linking Sydney's cruise ship industry to regional NSW.
We've provided more than $6.5 million to the Bradman Museum in Bowral and now we're helping with their business and marketing plans.
Today, I'm pleased to formally confirm that the TTF has been awarded $227,000 in TQUAL grant funding to develop a National Tourism Planning Code and to modify performance tracking software for business events.
TTF will develop and distribute the National Tourism Planning Code to provide a best practice guide for planning and approval authorities and give investors a standard frame of reference for planning approvals.
The TTF also receives a grant to expand the system for tracking performance data of business events, giving the sector a better understanding of supply and demand.
This will be welcome funding for business events given the sector was hit so severely during the global financial crisis, as businesses tightened their belts on business travel.
Jet Fuel Infrastructure
As conditions improve and visitor numbers grow infrastructure investments in Sydney airport will need to keep pace. It is the nation's biggest arrivals point.
Passenger movements through Sydney airport are expected to grow at four per cent per annum over the next twenty years. Passenger aircraft movements are expected to grow at a rate of about two per cent a year.
The smooth operation of our airports and the reliability of fuel supplies and other services to them is absolutely vital to our tourism industry - shut down transport routes and you shut down tourism.
In January this year I asked Sydney Airport, major jet fuel suppliers, airlines and infrastructure providers to advise me on the airport's jet fuel needs over the next 20 years.
The group identified the need for additional jet fuel supply infrastructure to meet future demand and has made several recommendations including calling for jet fuel demand forecasts to be included in the master planning process for Australia's key airports.
I expect commercial parties would welcome future jet fuel demand forecasts - it will make their investment and operations planning much easier - and I will take this matter up with my colleagues in the near future.
Earlier this year, Caltex completed a $2.5 million upgrade jet fuel supply infrastructure. Today, I welcome Caltex's further announcement to proceed with an over $20 million upgrade of their jet fuel pipeline to Sydney Airport which will increase supply capacity and reliability out to 2019. I also note Sydney Ports Corporation is continuing the development of a second bulk liquids berth in Port Botany which is estimated to be operational in late 2012 or early 2013.
These investments will give Sydney Airport greater jet fuel supply security over the next few years and I am very pleased that the airlines, the airport, the jet fuel suppliers and the infrastructure providers are working together to make sure we continue to plan for the long term.
Hotels
TTF has many hotels as members - they would be well aware of some of the infrastructure challenges for hotels.
An investor in the vicinity of Sydney harbour can expect a $30,000 per square metre return on a residential development, $11,000 on commercial, and $4,600 for a hotel.
It's not hard to see why finding investors is challenging, especially when they can often get better returns from residential and commercial property.
Hotels face intense competition for land, capital, building materials and labour - especially in resource-rich areas.
I was reading just this morning in today's press - an apprentice breakfast cook from Coral Sea Resort in Qld was snapped up by the mines and paid $65,000. That's $20,000 more than the resort could afford.
Returning to hotel development, however - Jones Lang LaSalle estimates as at March this year, there were over 2,200 hotel rooms under construction across 11 projects in Australia.
This investment will increase the quality of Australia's accommodation infrastructure and make us a more attractive destination.
However, Access Economics found there was a shortage of accommodation in Perth, and that the quality of the city's hotels was below international comparison. For a city that's at the heart of our minerals and petroleum industry and the global trading relationships that go with it, this is a situation we must turn around quickly. It is a city with enormous business events potential - it's also a great city for leisure tourism - and we must be in a position to take advantage of that potential.
Access Economics called for:
- Better strategic planning at the state and local government level;
- Land allocation for specific tourism purposes;
- Better project facilitation; and
- Increased marketing of destinations.
I'm sure Perth is not alone - the Access Economics report has implications across Australia.
That is why for the first time in our history, all tourism ministers through the National Long-Term Tourism Strategy have signed up to a cross-jurisdictional process to attract investment in hotels.
The objective is simple: to champion the reasons for investment in hotels, and remove the barriers to it.
Together, we'll assess how the planning system, environmental regulations and building codes affect hotel investment.
State governments work hard at attracting manufacturing projects - let's make sure these investment attraction services are also applied to tourism projects.
After all, hotels deliver net economic benefits to taxpayers.
Access Economics estimates that every dollar invested in new hotels will have triple the value in flow-on benefits.
We have a positive investment story to tell:
- Occupancy rates in Australia are high by global standards, and demand exceeds supply in some places;
- Tourism expenditure in Australia is the 8th highest in the OECD, while growth in visitor numbers to Australia is expected to exceed the global average; and
- Foreign investment in the tourism industry has quadrupled in the last four years.
Marketing
While we lift our focus on long term supply side challenges, our commitment to tourism marketing continues. More than $500 million went into promoting Australian tourism last year.
In October I announced that $9 million would be brought forward from Tourism Australia's 2010/11 appropriation to stimulate demand. This in turn leveraged a further $11.5 million in private sector and state government investment.
$18.5 million will be invested to stimulate travel from short-to-medium haul overseas markets such as New Zealand, China, Hong Kong, Japan, India, Singapore, Malaysia and the Middle East.
As part of this package, Tourism Australia will also provide marketing support for 23 special charter or supplementary flights, bringing over 7,000 additional seats into Australia from Greater China and Japan.
$2 million will help stimulate business travel including:
- $100,000 to boost delegate numbers in Tasmania;
- $300,000 to promote Victoria's regional areas for conferences and business events; and
- $30,000 to the Canberra Convention Bureau to support the International Mint Directors' Conference.
The short term demand boost will be cemented by Tourism Australia's new $150 million global campaign 'There's nothing like Australia', which will encourage more of those who say they want to visit Australia to actually do so.
Tourism Australia's new campaign offers a marketing investment opportunity for commercial partners - Qantas, Emirates and Accor hotels have already signed on.
While we need this support of big business we also need it from small business and 93 per cent of the industry is made up of small businesses.
That is why we provided $500 million in support for small business as part of the economic stimulus package.
Last Sunday the Rudd Government introduced a new tax plan to give small business a head start on the cut to the company tax rate, reducing it to 28 per cent by 2012-13.
They will also benefit from instant write-off of assets worth up to $5000.
This means less red tape and up front tax relief for our small businesses which dominate the tourism industry.
Small business did a huge amount of heavy lifting for our economy during the Global Recession and is a big part of the reason our unemployment rate has stayed so low.
The Rudd Government is providing our local small businesses with rewards for their hard work during the toughest of economic times.
Conclusion
Ladies and gentlemen, tourism is a $41 billion industry for Australia. It's our largest services export and employs almost half a million Australians.
The Australian Government's suite of measures will help position Australia's tourism industry to compete even harder in the global tourism market place.
For the first time in Australia, tourism ministers have a framework to engage as an economic portfolio, no less than any industry like ours deserves.
Thank you for all your hard work over what has been a particularly challenging period. I encourage every sector of the tourism industry to play its part in the future growth and success of Australia's tourism industry.
Thank you.