It is a great pleasure to be here this afternoon.
I have just flown in from Australia to participate over the next few days in the G’Day USA program and unfortunately I just caught the end of Thomas Frey’s contribution.
But I suspect that perhaps the revelation of the two-day tourism summit was that we will be travelling between Sydney and LA or Australia and LA in two hours in ten years’ time.
I can’t sum up the summit because I haven’t had the privilege of being here, but what I would like to do is do my best to give you a sense of the new Government in Australia, elected last September. To give you some sense of our priorities and where we see the tourism opportunities and where we are hoping to help to drive some of those opportunities in Australia.
As the Minister for Trade and Investment, I am also the Minister for Tourism, and it was a very deliberate decision by the new Government to include tourism within the trade and investment portfolio because in the coming years and decades from our perspective it is very clear that tourism will play a very big part in driving trade and investment for Australia. The opportunities are really of great consequence.
And it means that this further raises the significance of this summit as part of the G’Day USA program and I think it is also significant to bring together industry like this program has done and will continue to do hopefully in the years ahead. It does build relationships and it shares ideas which will facilitate a much stronger industry, certainly from the Australian perspective.
And as we know in life, life is about trust; it is about understanding. Putting yourself in the shoes of those that you are looking to work with, deal with, invest with – you name it.
And this is the process that we have gone through in the last two days and will continue to. G’day USA is now going to turn into a continuous program through the year with a particular focal point around this time.
But it does mean that that I think we can build the trust and the understanding and the realisation of opportunities that are there for us to share, and in many ways, these opportunities will come from the phenomena that is happening on the doorstop in Australia and in the region around us – the emergence of the middle class.
In many ways, we are an avenue for a lot of that tourism, and potential tourism, but also to build that tourism we are going to desperately need experienced tourist investors to come and share that journey with us in Australia over the next few decades.
Ladies and gentleman, while in these remarks today, I am going to focus heavily of course on our tourism industry; it should not be seen in isolation. It is one aspect of what, since the negotiation nearly ten years ago by the Howard Government of the US-Australia Free Trade Agreement, has occurred. It is one aspect of a deepening mutual economic engagement between our two countries.
You may be our fourth biggest source of tourists, but you are by a massive margin our biggest foreign investor. Directly, and indirectly, you invest ten times more in us than you do in China. On the other side of the ledger, our investment in you is increasing at an even greater rate. We, as President Obama acknowledged recently, are now in your top ten – and we invest twenty times in you what we invest in China.
Yet while we have a strong and traditional tourism relationship with the US, one of our challenges is to make the tourism statistics match these investment statistics.
Principles to support the Australian Tourism Industry
Could I just talk about the context in which the new government in Australia is approaching industry generally and tourism in particular. Over the last three years – we’ve been in opposition. We have been there for six years which is a soul destroying experience.
But we had been preparing very strongly for the last three years – if we got the privilege of government at the recent election – and a lot of our motivation has been to see how we would best position Australia to take advantage of what I said earlier, the phenomena in the region around us.
We now have some 600 million people in the middle class from India through to China and all the countries in between. And it is expected that within 15 years – 15 to 20 years – not 2050 not 2100 but in 15 to 20 years something in excess of 3 billion people. So from 600 million to 3 billion people will be in the middle class in the Asian region.
Now you can see the implications, you can smell the implications. You know the implications of that. And already we are starting to see some very significant changes and developments, especially in trade and investment, as a consequence.
To best position Australia, from our point of view, as far as government can do that or facilitate that, we have worked to four principles which are driving all of our policy development, or did drive, and certainly is driving our response to issues and will do for the next three to six years or however long the public supports our government.
The four principles are very simply:
One, that we will, as a government, seek to live within our means.
In other words, we are unapologetically and aggressively looking to get the budget back in surplus which it has not been for nearly six years.
Secondly, we have had a major program of seeking to deregulate what we have seen as a firestorm of regulation that has emerged over the last few years so that we can get the cost of business down.
If we have not got a lot of government money to spend, the best thing we can do is to lower business costs to fire up the private sector, including the tourism sector.
The third one is to restore a culture of personal responsibility through many areas of government policy.
And finally and importantly to back our strengths.
And this is again something that is obvious to business people but often for many governments certainly some of our experience is that some of the great strengths we have got as a country are not fully realised.
Governments often focus on weaknesses rather than strengths because that is where squeaky wheel is. But we have to keep an eye is what is going to drive growth, trade and investment.
And in that regard resources and energy and all of the sectors and services and high-end manufacturing that sit around that, and also agriculture. It is the century of food and water security, in our view.
And again all of the high-end, high-value services and technology that sits around that.
Education – we are one of the biggest educators of international students in the world.
Health and medical research. We are among the leaders in medical research.
Services – services and the legal services, engineering services, accounting services, health services, educational services and services that sit around all of the high-end manufacturing.
And last but not least, tourism and hospitality.
They are the five areas in Australia that are going to, in our view, drive our economy fundamentally.
All of those of things that sit around those sectors and that is the sort of framework, if you like, that we are imposing across our policy response no matter what issue emerges.
In tourism in particular we have settled on four priorities within that framework that will guide government action.
Firstly, to focus very heavily on continuing to move our tourism sector into the high quality end of the market. We are a high cost country and we always will be relative to many other countries and we need to be at the high value, high margin end to get a return which is going to justify significant investment.
And that means being in the high quality end of tourism experiences.
Secondly, substantial deregulation.
Thirdly, quality marketing programs and, finally, strong growth in quality infrastructure.
So a high-quality sector, deregulation, quality marketing and growth in infrastructure.
We want to achieve an increase in overnight visitor expenditure to between $115 and $140 billion by the year 2020. We are currently at about $80 billion. But we are on track since we set that objective of getting to that expectation.
Australian Tourism Experiences
We have to ensure the highest quality tourism product to achieve those 2020 goals and, as I said, we are a high-cost country.
So rather than try and compete in the mass markets in all that space we want to continue to drive the quality focus and to underpin that whilst Australia ranks 43rd in the world in terms of visitor arrivals, it is telling that we are ranked 10th in terms of visitor spend.
People who are coming to Australia are paying significantly – they are putting on the table significant amounts of money when they get there. They are well cashed individuals or couples coming to Australia for a tourism experience.
Our tourism assets are first class. That’s why visitors are attracted. We really have got many features in our country which are the envy of many others – stunning beaches, rainforests, and a unique outback.
A bit of a hidden secret – the food and wine in Australia, which you will hear a lot more about in the months and years ahead, again is equal to any and better than most. We have our international cities and the oldest living culture on Earth. All of those, and more, give us plenty of raw material, if you like, to really capture that wonderful and high-value tourism experience.
Tourism Australia has packaged some of these experiences together – The best of golf, best winery experiences, the best walking holidays, the best of nature and luxury lodges around Australia and in all sorts of other situations.
These experiences are regarded as the highest quality by international standards – and we have put them on this ‘best of’ pedestal to emphasise the importance of high-value, high-quality tourism products.
Improving the Visitor Experience
The second priority, as I said, to drive growth is to deregulate industry to lower the cost of doing business by limiting tax and to reduce the red tape burden.
Things such as planning issues, reporting requirements and the time taken to gain approval for major investments. These sorts of things have added in different sectors across the country, in some cases, tens and tens of millions of dollars – especially the delays in approval processes.
And we have got a strong focus on creating better visa processes. I think we have got arguably the best visa process in the world, as it is told to us by others, but we do know that we can do even better.
And we have got quite a program as a new government looking at how we can, especially with an eye to that growing market around us, introduce online lodgement for visitor visas or further online lodgement and working towards multiple entry visas to encourage repeat visitations.
We’re even considering trialling a premium visa processing system for the country.
And of course we have, as a government, frozen the Passenger Movement Charge for the next few years as a way of trying to encourage that tourism opportunity.
In our first week in Parliament as a new government, just to underline this priority or to show that we are trying to match words with actions, in our first week of parliament, the first four pieces of legislation that we moved involved:
Firstly, repeal of the carbon tax – which over the last 12 months has added $115 million to the cost of being involved in the tourism sector.
The second piece of legislation was repeal of the mining tax. Both of those involved enormous amounts of paperwork and red tape and all the rest.
So it’s not just the immediate cost of the tax. It’s all the associated paperwork.
The streamlining of environmental approvals. We can look at up to two year’s reduction by the steps that we have sought to implement in the approval process for some major projects.
Finally the fourth piece of legislation was the restoration of the Australian Building and Construction Commission which is a body which has in the past and will again control rogue union action and see dramatic improvements in productivity in construction which again is very important if we have got an ambition for high level and significant growth in major infrastructure. For tourism, it is very important that we have the cooperation of all parts of that industry to maximise the productivity that we can hope to expect.
Thirdly, we recognise the need for developing effective, coordinated marketing campaigns to drive international demand for Australia.
And that’s why we strongly support Tourism Australia and the events such as G’Day USA and Australia Week in China.
And in addition to these more traditional and very important approaches I do think we are seeing quite extraordinary results – amazing results in fact – from many of the Tourism Australia highly creative and collaborative campaigns and we have seen dramatic increases following some of these creative and most cost effective campaigns.
And finally and very importantly we will work with industry to support the development of quality tourism infrastructure that can drive demand –particularly demand for high-quality tourism experiences.
On infrastructure, we’ve already approved, since October when we took office, a backlog of approvals for major projects in all sorts of sectors which add up to the value of $400 billion worth of investment. So in the last three months there has approval been given on environmental grounds and others, studies had all been done, but they had been sat on. $400 billion dollars’ worth of new projects across many sectors has been approved in the last three months.
And it is a very important part of putting the words into action.
And during this visit I will be meeting – and I have already met since I got here late this morning – with potential investors.
It is with these four tenets: high quality, deregulation, powerful marketing and growing our quality infrastructure that we think we can reach real heights by 2020.
Worth of Australian Tourism Industry
And we are on track.
Tourism generates more than $100 billion in expenditure every year, directly employs more than half a million Australians and is our largest services export, worth some $26 billion in export income.
And as a new government we are determined to show, in regard to tourism and every other area of business, that we are open for business. And our international tourism industry is a key part of winning that business.
North America market
In this regard, the North America market – of both the US and Canada – is critical.
The latest arrival figures show that in the year ending October 2013, arrivals from the US increased by 5.6%.
Now that’s back to equal the record 2000 Sydney Olympic year figures and it is built on sustainable and very strong activity.
It is a great result from the US. It is one of our traditional markets and whilst there are lots of opportunities in the emerging markets – quite extraordinary opportunities, a lot of it will be built off the foundation that is provided by our traditional markets and the investment that that will then encourage.
Again, getting to know one another, understanding the strengths and weaknesses of our industries in both countries, knowing where the opportunities are and trusting people is an important part of investment and business.
And if there a lot happening around us in the next 15-20 years we going to need, desperately need, the investment support and the experience that resides in the United States.
Australia is seeing big growth in arrivals from Asia, with China increasing 17.3% and India increasing 11.8% in the year ending October 2013.
These are great figures in Asia.
And they are somewhat unsurprising given the huge growth that I mentioned earlier but we are only at that growth.
Five hundred has gone to six hundred – another few to get to the $3.2 billion by 2030.
Like Greater China, we believe the North America market will be worth over $5 billion in visitor spend to Australian tourism by 2020 – making North America a priority market for us.
Our traditional markets remain a key part of a balanced portfolio approach, as I mentioned.
Tourism Australia will continue to partner with airlines and retailers and others in the US tourism industry to produce targeted, coordinated and effective marketing campaigns to attract US visitors to Australian shores.
And very importantly, in addition, to attract US investment into the sector in Australia.
In this regard, G’Day USA is also providing the opportunity to meet with key airlines. Of course they are fundamental – access to markets through airlines is fundamental until we get to chew with no friction, I think from Thomas.
Tourism Australia partners with 24 airlines in its marketing activities – it is a key strategy not only to entice visitation but to facilitate it.
With most of Australia’s visitors coming by air, this is a crucial element of the future success of our tourism industry.
To that end we have committed to finalising a decision on a second Sydney Airport site in our first term of office.
Investment in Australian tourism
Ladies and gentlemen, let me finish on our final priority – securing investment in the infrastructure of Australia’s tourism industry that can drive demand for high-quality tourism products.
There are great investments to be made in Australia.
In Sydney we will soon be able to capitalise on one of the world’s best development sites – within a stone’s throw of the Opera House, Barangaroo, it is called. It is a former port site with spectacular proposals in prospect. It is going to give a further massive injection, I think, into the industry, the tourism sector in Sydney, our most international city.
Regionally, Hayman Island is refurbishing luxury properties to open during 2014. It is just the most wonderful situation at Hayman.
Great Keppel Island is undergoing a $600 million redevelopment, including a 250 berth marina, 750 resort villas and 300 apartments, a hotel and an 18 hole golf course.
Crown Australia has just spent $2.5 billion refurbishing Crown in Melbourne and Crown in Western Australia. A $2.5 billion refurbishment.
These are the sorts of quality investments that are really starting to present some of the best quality experiences in the world.
Since coming to office just over three months ago, I have already had 10 investment roundtables in five countries, including one here but I’ll have had another two by the end of these few days. I have had five in China alone, with numerous investors interested in significant high-grade tourism infrastructure in Australia.
Every one of those 10 roundtables of eight or nine or 10 people has involved – at least a third of them – have been people with strong tourism interests.
And I am incredibly pleased that G’Day USA is another opportunity to discuss investment in Australian tourism with some of the world’s biggest players in the industry.
And I have got a great program over the next few days of bilateral meetings with so many very important players in this industry here in the United States.
It is an exciting time for Australian tourism.
The opportunities are immense.
They are almost hard to conceive when you think what is going on if you have spent any time across some of those markets across Asia. And it’s not just China. I mean China is the focal point but you go to Vietnam, you go to Indonesia – Indonesia will be bigger than Germany in terms of its economy within 10 years. Nearly 300 million people and a middle class now going something close to 60 million people. India has got a middle class of 140 million people and they have got 1.2 billion people in their country.
These sorts of things that are happening are in Malaysia. The markets are just, as I say, almost incomprehensible what is going on there.
And it is a matter of positioning ourselves and we see the partnership with the United States as fundamental to being able to capitalise on those opportunities – that will present opportunities for people here and businesses here as well as for Australia.
So if we do, in our view, follow that set of priorities: high quality experiences, seriously reducing regulation, producing coordinated marketing campaigns and developing high quality infrastructure, we do see Australian tourism continuing to be as good as anyone and better than most on the global tourism stage.
And if we build on our traditional partnerships with countries like the United States and exploit the natural advantages we have as a gateway to the hugely expanding Asian markets.
I just say to you, having run a company out of the US at one stage, out of Arkansas of all places, and travelling for 29 hours to get there and three different airports and all the rest and then running a company into Asia and not getting up at 2am three nights of the week to take conference calls with head office in Arkansas, there is no comparison. That time frame, Australia will be a major focal point, I’m telling you, for high-quality … We will be the shortest long-haul experience out of places like China and Japan and India and other markets.
And it will present enormous opportunities. And not only that – they are in the same timeframe. You don’t have the jet lag; you get back in touch with family within a three-hour time frame. From one end to the other.
These things are never talked about much but they are fundamental to the quality of life and the nature of the experience. So there are real opportunities and Australia will anchor, in many ways, a lot of important opportunities in the year ahead.
I hope the last two days will give you a sense of some of that and will generate a lot of opportunities for you all.
Thank you for your participation in G’Day USA for 2014. Thank you to all of those who have made this possible, all of those who have contributed over the last couple of days. I understand there have been some outstanding presentations. I thank all of those involved.
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