14 May, 2015

Budget breakdown: The not so good

While industry bodies welcomed the $36.7 million budget top up for Tourism Australia, tax hikes and increases in visa fees are a concern as a potential to negatively put the breaks on growth in the industry.

Under new measures, all visas applied offshore will be slugged with additional costs to see the government raising $437.1 million over four years.

Visitors from China will see fees increase from $130 to $135, with that market alone footing a $5 million bill, while working holiday makers will be paying an additional $5 million as their application fees increase from $420 to $440.

ATEC managing director, Peter Shelley said the increase could render Australia less competitive in growing market share.

“Today’s traveller is highly discerning and price sensitive, and visa fee hikes present an added barrier which can work against even the best marketing effort.”

In addition, the government will remove the tax-free threshold of $18,000 for holiday visa makers forcing them to pay tax from the first dollar they earn. The move is likely to affect around 200,000 youth travellers to Australia each year, which spend an average $13,000 during their stay.

“While many working holiday visa visitors do not register for the tax free threshold, promotion of additional costs for the application fee and in-country, will likely have a detrimental effect on Australia’s desirability as a destination for these visitors and many others,” Shelley said.

Instead, the government is expected to rake in more than $540 million over the next four years, and coupled with the tenth consecutive increase in application fees for working holiday makers, industry bodies argue many will reconsider their travel plans to Australia.

“Ripping more than half a billion dollars from the visitor economy with a new ‘backpacker tax’ is simply ridiculous,” TTF chief executive officer, Margy Osmond said.

“With more than a billion global travellers now deciding on their next destination, Australian needs to ensure it is competitively positioned to maximise its share of the lucrative international travel dollar,” Shelley added.

The Budget also hit the tourism industry with $600 million in new taxes and charges, but Osmond argues with higher fees and “no new money for tourism marketing, Australia is fighting with one hand tied behind its back”.

“The tourism industry has argued that its vital Australia should be reducing the costs of visas from key markets, like China, to increase our appeal in the face of proactive visa reform by many of our major competitors.”

“Despite raking in more taxes than ever from visitors, including the Passenger Movement Charge which will collect $1 billion in revenue for the government in 2015-16, funding for tourism marketing has failed again to increase and is falling further behind in real terms.

“If this trend continues, Australia will be overtaken by countries hungry to support their tourism industries,” Osmond said.

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