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Tourism - Export Success for Australia

SPEECH by Australian Minister for Trade, Mark Vaile
to the Tourism Leaders Forum, Canberra


It is a great pleasure to meet again with representatives of Australia’s tourism industry, an industry that contributes so much to our nation. As Minister for Trade, I am very conscious of the fact that tourism generated export earnings of over $17 billion in 1999. That’s nearly 15 per cent of our total export earnings, and over 60 per cent of our services export earnings.

You certainly have a vital role to play in Australia’s economic future. And I know that your industry, more than many others, appreciates the importance of export markets to our national well-being, and the need to put in the hard yards to promote Australian products overseas.


I want to begin my speech with a few observations about Australia’s trade outlook.

In general, prospects for expanding Australia's exports are good. Global demand for Australia's exports is currently robust, helped by continuing growth in the US economy, strengthening growth in Europe, and a recovering Japanese economy. Global economic growth in 2000 is forecast by the International Monetary Fund at 4.2 per cent, and Australia's export volumes are expected to grow around 7 percent this financial year, following an estimated 9 per cent growth in 1999-2000.

In our own neighbourhood, East Asia's economic rebound in 1999 exceeded expectations, although this was supported by a number of one-off post-crisis technical factors. All economies in the region returned to positive GDP growth on the back of governments' expansionary fiscal policies, rising industrial production, stronger domestic demand and exports. Korea's recovery has been striking, and there have also been strong rebounds in Singapore, Thailand and Malaysia.

All East Asian economies are forecast to grow this year. Growth in 2000 will depend to a large extent on whether demand for the region's exports to the US, Japan and the EU remains firm. While the outlook of the US economy looms as the greatest risk, many see a slowdown being compensated by the solid outlook in Europe and potential improvement in Japan’s economic performance. Within regional economies, there remains a pressing need to progress financial restructuring both to sustain growth and to nurture financial market confidence. And political uncertainty in Indonesia is limiting the immediate growth outlook.

However, regional economic reforms, such as the abandonment of most currency pegs, and improved economic management in East Asia since the 1997-98 economic crisis have significantly reduced the region's susceptibility to external shocks. The much stronger reserves in most economies and the lower absolute levels of short-term debt are also positives. Consequently, while financial markets’ short-term outlook for ASEAN economies is for variable growth, most analysts assign a low probability to a repeat of the acute balance of payments crisis of 1997-98.


We can see something of our global trade environment reflected in the most recent inbound tourism figures.

The release last week of the June arrivals data shows that we are on line to deliver a record year for Australian tourism. The ABS figures indicate an increase of 9.2 per cent in international visitor numbers for the first half of this year, when compared with the same period in 1999.

The arrivals figures for financial year 1999-2000 are also bright. As you would expect, with continued economic strength in Europe and North America, we’ve had solid growth in arrivals from traditional markets:

> New Zealand increased 7.5 per cent on 1998-99;
> the UK by 14.8 per cent;
> the rest of Europe by 15.1 per cent;and
> the United States which increased by 10.8 per cent.

But the recovery in East Asia also shows up in the figures:
> Korea increased 57.6 per cent on 1998-99;
> China by 29.5 per cent;
> Singapore by 13.4 per cent;and
> Malaysia by 14.2 per cent.

Even in the figures for Japan, there is reason for encouragement, with the number of Japanese visitors for June 2000 5.4 per cent higher than for the same month last year. It is also worth remembering that Japan remains the second largest source of visitors by number (705,400 for 1999-2000, exceeded only by New Zealand with 772,500).

What makes these figures even more remarkable is that they have yet to reflect the expected surge from the Olympic and Paralympic Games. I know many observers predicted that visitor numbers would be rather flat in the months before September, as people may have been expected to delay trips until the Games. Clearly, that is not the case. Not only can we anticipate a big increase in visitor numbers in the coming month or two, I am sure that the intense international exposure Australia will receive during the Olympics will give our industry an enormous boost in the following months.

The Tourism Forecasting Council predicts that export earnings generated by tourism will increase at an average annual rate of 7.3 per cent over the decade from 1998 to 2008. That represents a remarkable level of growth, and one likely to be significantly higher than that of our economy as a whole. And if operators continue to perform at the levels we have seen in the first half of 2000, that target is likely to be comfortably met.

Let me conclude this brief statistical review by reminding you of the Australian Tourism Satellite Account, which will be released by the Australian Bureau of Statistics on 16 October. The Federal Government has developed the Tourism Satellite Account at a cost of nearly $1 million to improve the measurement of economic activity generated by tourism. Better statistics will be of great benefit to both the industry and government.


I want to now turn to the work being done in the trade portfolio to benefit the Australian tourism industry. A good starting point is our Government’s major focus on the trade front over the coming months — the negotiation of a new WTO round.

I would like to emphasise here the vital interests that Australia has at stake in the WTO services negotiations. I appreciate that you know already that the services sector accounts for more than eight out of every ten Australian jobs in Australia, more than two thirds of our GDP, and a quarter of our exports. The services industries play a central role in the development of these interests.

The WTO's Seattle Ministerial Meeting may have failed to launch a new trade round, but mandated negotiations on services and agriculture have already begun. In the case of services, not only are another round of negotiations already authorised and agreed, but the essential objective of these negotiations - which is to achieve further liberalisation of trade in services - is already included in the text of the General Agreement on Trade in Services (GATS).

Australia wants comprehensive services negotiations that cover all services industries and achieve improved market access and the removal of discriminatory barriers. That’s an ambitious goal, but we’ve already generated substantial support for our proposals. We want to achieve real outcomes from the services negotiations, in advance of a wider trade round. That makes our job much harder, but we are not prepared to mark time while the world catches up with us.

To ensure the services negotiations reap benefits for Australian business, we will need your help. We are compiling a comprehensive list of barriers to market access in other countries based on contributions from industry and business. Industry input on market access issues is imperative to these negotiations.

For our part, we are committed to continual improvement in the way we interact with business. We are committed to a partnership. We need to do our thinking and planning together, and for that, we need to talk — and listen — to each other all of the time - so that we can achieve better outcomes together.

The material on our Web site has been substantially expanded and up-graded. We have also commenced a monthly e-mail report on progress in the WTO services negotiations and other current services issues.

Our WTO efforts are supported and strengthened by the work we are doing on services regionally, through APEC, and bilaterally. The Darwin APEC Trade Ministers' meeting I recently chaired provided an excellent opportunity to build on the trade liberalisation messages issued by APEC leaders in Auckland last year. Our bilateral negotiations on China's accession to the WTO gave us an invaluable opportunity to increase access to China's markets for services; goals I pursued in my visit to China earlier this year. And we are examining the increased regional interest in Free Trade Agreements very carefully to determine where we can achieve better access in services trade.


Of course, our strategy in the WTO to reduce trade barriers helps all Australian exporters, but I want to focus on how we benefit tourism in that forum.

112 WTO Members have made commitments in tourism under the GATS. This number is greater than for any other industry, and indicates the desire of most members to expand their tourism industries and to increase investment. In the view of the World Tourism Organisation, the tourism sector was already highly liberalised before the Uruguay Round negotiations - few major obstacles remain. However, there is still scope for further liberalisation in important services such as transport, finance and communications, which provide the infrastructure for a successful tourism industry.

Therefore the current challenge facing tourism and travel related services is the recognition that the GATS employs a narrow definition of the tourism industry. The industry is divided into four subsectors: hotels and restaurants (including catering); travel agencies and tour operators; tourist guide services; and other. It is for this reason that proposals have been put forward to broaden the WTO’s definition of tourism services, either with the addition of an annex, or to take what is referred to as a "cluster approach". In principle, and after preliminary consultation with industry, we agree that this issue should be given further attention.

Not only in tourism, but in all industries subject to the services negotiations, we will be protecting and promoting the interests of Australia's increasingly successful services exporters and the interests of Australians. Australia will therefore accord a high priority to our engagement and active participation in the WTO services negotiations. Only agreed, binding rules, consistently applied by trading partners and subject to the WTO's dispute settlement procedures, can give us a solid base for the continued expansion of services trade.


I would like to turn now to the revolutionary impact of electronic commerce on tourism.

Revolutionary because, firstly, through the internet, potential clients on the furthest corners of the earth can interact with suppliers, and design custom made solutions instantly and conveniently. Clients no longer need to settle for one size fits all products and the tourism industry has risen to the challenge of providing customised solutions as a source of competitive advantage. Online travel is now the leading B2C revenue generator and the market is expected to be worth $25 billion by 2003.

Secondly, it has revolutionised supply management systems by increasing the efficiency of suppliers’ and retailers’ relationships. Through so-called B2B platforms, retailers can purchase from suppliers in an integrated and efficient system.

Thirdly, it has also revolutionised the way firms organise their themselves internally, their productivity and their ability to communicate with their stakeholders and government instantly and easily.

For these reasons, Austrade is currently conducting its series of workshops called "E-commerce for Exporting" throughout Australia. The 3-hour workshops and handbook provide firms with practical help with the best e-commerce tools, internet marketing and accessing the best markets for their business.


Finally, I would like to remind you all of the assistance available to tourism operators through the Export Market Development Grants scheme, administered by Austrade. It is designed to encourage small to medium sized Australian businesses to export, by reimbursing a proportion of eligible export marketing expenses.

Tourism has featured prominently in the scheme. In the 1999-2000 financial year, the tourism sector received $23 million in grants, which represented 18 per cent of total funds paid. The 510 tourism industry grant recipients generated $845 million in audited export sales.

The scheme has had some notable success stories. Australian Pinnacle Tours in Western Australia was able to use its EMDG funds to participate in key international travel trade exhibitions, and to recoup some of the costs associated with gaining export business. The company saw its total annual earnings increase by almost 50 per cent last year.

South Australian operator Proud Australia Holidays, which operates the ‘Proud Mary’ paddle steamer, was able to use the EMDG program to venture into the international market for the first time. The company now estimates that up to 80 per cent of its business will be sourced internationally by the year 2004.

And the operators of the Skyway Rainforest Cableway near Cairns have also used the scheme to expand into the international market. The company, which employs 100 people, now derives about 50 per cent of its revenue from overseas tourists.

Of course, it was the Coalition Government that expanded access to the full EMDGs to the tourism industry in 1996. And has included e-commerce such as website design, maintenance and advertising as eligible expenses.

The EMDG scheme is particularly suited to an industry like tourism, where small and medium businesses play such a prominent role. I urge you all to take a closer look at how you might benefit from involvement in the scheme — or, indeed, through any of the other programs on offer at Austrade. More detail can be obtained by contacting my office, Austrade, or by visiting the Austrade web site.


The Australian tourism industry has risen to meet the significant challenges posed by the economic storms in our region over the past few years. You have buckled down to the task of keeping your businesses going in tough times, and your efforts are now paying off. I salute the industry for its achievements, and look forward to even greater things as the Olympics allows us all to show the world what Australia has to offer.

For my part, I can assure you that our Government will press ahead with our efforts to help you do what you do best: win export dollars for Australia. Whether it is through our work in the WTO or the EMDG scheme, we want to build on tourism’s success. I look forward to working with you to do just that.

[17 August 2000]

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