Tourism Council of Australia

Speech by the Australian Deputy Prime Minister and Minister for Trade, The Hon Tim Fischer to the Tourism Council of Australia Breakfast Meeting

Sydney, 29 July 1998

Bruce Baird, John Schaap, distinguished guests, ladies and gentlemen.

As ever, it is a pleasure to exchange views with representatives of the tourism industry. There are few more important industries for Australia in terms of jobs and quality of life. One need only look at recent statistics showing that the tourism industry currently accounts for 7.4 per cent of GDP and 8.4 per cent of the workforce to appreciate the vital role that you are playing in Australia's economic future.

And as Minister for Trade I can hardly turn my nose at the $16.5 billion in export earnings you have brought into the Australian economy in 1997 - all of which only serves to reinforce my view that this industry, more than many, fully appreciates the importance of the international marketplace and of the effort required to promote our products overseas.

Challenging times for tourism

There is no doubt that these are tough and challenging times for the Australian tourism industry. It has been one of the earliest and hardest hit by the East Asian economic crisis, with all East Asian markets except Singapore and China showing falls in short term arrivals in the four months to April 1998, compared with the same period in 1997. Japan, our largest tourism market, is a particular concern given its slowdown in growth and the significant depreciation of the yen. Short term arrivals from Japan fell by nearly 6 per cent in the four months to April 1998.

On a brighter note, however I am pleased that the Tourism Forecasting Council has recently estimated that inbound tourism to Australia will increase at an average annual rate of six per cent over the next decade, significantly faster than the economy as a whole.

Also arrivals for April 1998 from East Asia actually increased compared to March 1998, the first monthly increase since January - though caution should, of course, be exercised in reading too much into month-on-month variations.

The devaluation of the Australian dollar against North American and European currencies has also helped tourist numbers from those destinations increase. In the four months to April 1998, arrivals from the UK increased by 19 per cent and from the USA by over 16 per cent, compared with the same period in 1997.

We should also begin to see the results of the preferred destination status the Government gained from China earlier this year. While it will take some time for the increase in tourist numbers to work itself through, we should see a rise of possibly around 25 per cent in arrivals from China.

Where to for Asia?

I have no doubt that like the Government, you are keenly watching developments in Asia.

In the medium to long term, the key to recovery for affected Asian tourism markets is general economic recovery. We need to be realistic, however, about the region's prospects - just as views about Asia's prospects two years ago were far too rosy, there is a danger of now of being far too gloomy. The great economic assets of East Asia - like high savings rates and a skilled and educated workforce - have not disappeared. Asia's long term prospects are still strong.

That doesn't mean we are complacent about the region's immediate future. The Government continues to monitor carefully those issues that could lead to further problems - such as the progress of economic reform in Japan, potential pressure on China to devalue its currency, and the impact Asia's troubles has on the US economy.

Japan is clearly an important part of the regional economic equation, including for tourism. The change in leadership in Japan last week, and the likely confirmation of Mr Keizo Obuchi as Prime Minister later this week, provides Japan with an opportunity to strengthen its resolve to stimulate domestic demand and to continue with urgent structural reform. These reforms are essential if the Japanese economy is to return to strong growth, with commensurate benefits flowing through to Australian exporters and the tourism industry.

Recognising the benefits that will flow from an early recovery for the region, the Australian Government has been at the forefront of international efforts to assist. Australia has played a key role by making major contributions to the IMF packages. I am confident that the reforms introduced with the IMF packages will pay dividends over the coming year. Korea and Thailand are already showing signs of improvement.

The Department of Foreign Affairs and Trade has also been active to ensure that pressure is maintained on market liberalisation on all fronts - bilaterally, regionally in APEC, and globally through the WTO. We will be working to ensure there is no winding back of commitments to more open markets for Australian goods and services.

Some good news for tourism

And the Government has not been resting on its laurels in creating the right domestic environment in which the tourism industry can prosper. You will no doubt be aware that my colleague Andrew Thompson, Minister for Sport and Tourism, recently released the Government's National Action Plan for Tourism - Tourism: A Ticket to the 21st Century.

The National Action Plan has been endorsed by Cabinet with a view to providing a whole of Government approach to the development of the tourism industry. It contains a range of strategic actions - such as reducing impediments to tourism growth and to boost international competitiveness - that will help the industry to grow and continue to play a vital role in Australia's future economic and social development.

The National Action Plan will also complement the extra $50 million over four years announced in this year's budget for increased tourism and development. $40 million of that money is to help target high-yield markets such as Europe the United States, and new markets like India and China. The remainder will go towards strategies to take advantage of the opportunities that will come out of the Olympics.

Conclusion - Staying the distance, and diversifying markets

So the news is not all bad on the tourism front, though these are undeniably challenging times. The Australian tourism industry is, I am pleased to say, reacting well to the significant challenges posed by the regional economic crisis. The strategies it has adopted mirror those of many other businesses in Australia.

First, we have sought alternative markets - the growth in business with the United States and Europe which you have seen has been repeated across Australia, in any number of industries. The need for Australia to look for markets across the globe has been a particular focus of the Government's trade message since our election in 1996, and I am pleased to say that it is bearing fruit.

Second, we have been sticking with our markets in East Asia - adjusting realistically to changed economic circumstances, but recognising also that we need to be in for the long haul. Our commitment to the region and its markets must be a long-term one, for when this crisis passes - as it inevitably will - we must ensure that our market presence has not been eroded.

The Australian tourism industry is to be applauded for the efforts it has put in during these tough times. For its part, the Government will continue to do what it can to consolidate those efforts.