Speech by The Hon Lindsay Tanner MP
Minister for Finance and Deregulation
Canberra
Tuesday 8 September 2009
It’s a pleasure to be here this morning and be part of what I understand is a big program over the next two days. It is testament to the importance of the tourism and transport industries in Australia that you have secured key players from the Government, the Opposition, the public service and media to participate in this summit.
As the Finance Minister, and as Wayne Swan is currently out of the country, the acting Treasurer, I see my role in this line-up as giving you an economic overview and an update on how the Government is handling the job of recovery from the global recession.
Travel is one of the first items people tend to cut back on in difficult financial times so I have no doubt that that the transport and tourism industries are waiting as anxiously as anyone for normal growth to return to the Australian economy.
The second part of my title as Minister for Finance and Deregulation often gets brushed over, but to many of you in the room I suspect it is of considerable interest. The Government has an ambitious deregulation agenda designed to reduce regulatory burden on business, which I will provide you with an overview of this morning.
The tourism industry is a significant driver of the Australia economy, contributing in excess of $40 billion to Australia’s GDP in 2007-08. In the same year it supported close to half a million jobs and provided more than $23.6 billion in export income.
On the surface they are impressive figures but I know that underneath it has been an extremely challenging 18 months for the tourism and transport industries.
There is a tendency amongst some commentators, and the Federal Opposition, to question the seriousness of the global financial crisis, but I think those of you here, particularly those involved in international transport and tourism, have a better understanding of the severity of the situation than most.
What has occurred in the past 18 months, and is continuing to occur, is the most severe global downturn since the Great Depression. The economies of advanced countries around the world have, with the exception of Australia, all experienced negative growth in the past year, and many at record levels.
These are the economies of the countries from which a significant majority of tourists come to Australia from and the impact of the economic downturn on the willingness of people from these countries to travel abroad is obvious.
To date at least, Australia has fared comparatively well. Last week, the national accounts figures for the June quarter were released, showing the Australian economy grew by 0.6 per cent in the quarter.
That result means that we are the fastest growing advanced economy over the past year, and as I said, the only advanced economy to have recorded positive growth. The contribution of the Government’s stimulus packages in these figures should not be underestimated.
I note that in the Tourism and Transport Forum Mastercard Sentiment Survey report of July this year, data showed that businesses in some sectors of the tourism and transport industries have actually been holding up well over the past year and a half.
The relatively strong performance of these tourism and transport businesses is undoubtedly linked to the Government’s stimulus packages and specifically, the additional cash that Australian’s have had in their pockets from the Government’s cash stimulus payments.
The proliferation of $900 deals being offered by airlines, travel agents and tourism operators earlier this year was evidence of the public’s willingness to spend the cash handouts on travel.
What has become evident since this money went out into the community though, and what in my opinion has become a key component of the success of these payments, is the impact they have had had on consumer confidence.
In July this year, Westpac’s Chief Economist, Bill Evans, in referring to the increase in the Westpac Melbourne Institute Consumer Sentiment Index stated "the stand out force (for driving consumer confidence) must be the huge financial handouts introduced by the Government to counter the global financial crisis."
I mention this increase in consumer confidence not to push a political message, but because of what that confidence increase in consumer confidence means for your industries.
I know that uncertainty continues to exist about how future developments in the economy will impact on tourism and travel in Australia. The outlook is positive for some sectors while others are concerned about what the next period will bring, but what is certain is that for the industries that the people in this room represent, consumer confidence is the absolute key.
As I said in the beginning, when times are tough and confidence is down, travel is one of the first items individuals and organisations alike cut back on.
The travel and tourism industries are of course not unique in this, businesses across Australia have been adversely impacted by a fall in consumer confidence since the beginning of the global recession and that is why the Government considers restoring confidence to consumers as one of our key short-term challenges.
As is inevitable when an occurrence the magnitude of the current global recession transpires, considerable focus is placed on the short-term responses. People invariably want to know what the Government is going to do now to address the situation.
What is vitally important though is that a focus on the immediate challenges does not come at the expense of longer term reform. It is a difficult balance, but it is one that we must get right to ensure the Budget gets back into a sustainable surplus.
This sustainable surplus is our ultimate goal and means overcoming three key challenges.
This final challenge is one of the central themes underpinning the independent review into Australia’s future tax system, the Henry Review.
The Henry Review is a comprehensive review of Australia’s tax and transfer systems that will consider measures to harmonise and simplify taxes, to reduce inefficient taxes and to boost productivity.
The task of the review is to look beyond the immediate downturn and to redesign our tax-transfer system to meet the profound demographic, social, economic and environmental challenges of the coming decades. The review will deliver a long-term blueprint for a tax-transfer system that is focused on sustainable prosperity for Australia.
I understand the Tourism and Transport Forum has made a submission to the review and congratulate you on that. When stakeholders rich in experience and expertise, such as the Tourism and Transport Forum, invest the effort to provide valuable input there can be no doubt that policy development benefits.
Of specific interest to the industries represented at this summit is the review’s consideration of opportunities to use taxes and charges to make transport networks more efficient. Research has been commissioned on the potential to replace existing taxes and charges with more efficient and targeted pricing systems to reduce the social costs of motor vehicle use.
As you may be aware, this research paper, which was undertaken by Professor Harry Clarke and Dr David Prentice, and titled A conceptual framework for the reform of taxes related to roads and transport, was recently released by the review and the issues it raised have received some media attention.
It is important to note that the views expressed in that paper are the authors and the Review will consider them, along with views provided through other consultation activities, in forming its recommendations.
As I said earlier, although at times I am referred to simply as the Minister for Finance, the deregulation component of my portfolio is something that I extremely focused on.
Business has long indicated concerns with regulatory compliance costs and obstacles to competitiveness generated by inconsistent and duplicative regulatory regimes across the Commonwealth, states and territories.
To combat the mounting red-tape and reduce regulatory burden for business the Council of Australian Governments committed $550 million to a National Partnership Agreement to Deliver a Seamless National Economy.
The agreement commits the Commonwealth, states and territories to implement 27 deregulation priorities, eight competition reforms and a commitment to implement ongoing regulatory reforms.
I note in the Summit discussion paper on the National Long-term Tourism Strategy that there is reference to inclusion of additional tourism-specific items onto the COAG Business Regulation and Competition Working Group’s agenda.
For those of you unfamiliar with this Group, it is a group I co-chair with the previous speaker, Minister Emerson and one that is responsible for driving the Government’s deregulation agenda.
While the COAG working group currently has a full agenda, and as such I would not be inclined to add an additional industry specific item at this time, I would encourage TTF and its members to engage with the relevant Commonwealth and state agencies carrying forward each of the existing reform areas and alert us if there are areas of specific concern.
The items currently on the group’s agenda are those that were identified as impacting a broad range of businesses and there are a number that will have direct and significant effect on those of you here today and the industries you represent. Those items include:
At a meeting in July, COAG also agreed to progress work in implementing national regulation for maritime safety, rail safety and heavy vehicles.
I realise that for those of you with specific interests in this area that these proposals are not new but the strict monitoring and reporting of the COAG Reform Council will mean it is unlikely governments will be let off the hook in progressing reforms.
Although this deregulation agenda was committed to long before the global recession began, the global economic stresses we are now facing remind us of the importance of delivering micro-economic reform efforts that enhance productivity. A sustained commitment to better regulation is central to that.
The Australian economy has taken a massive hit in recent times, there is absolutely no debating that, and businesses across the country have borne a fair portion of the brunt of those global pressures.
But in the face of that, the Australian economy and Australian businesses have stood up well. Although a bumpy road still exists ahead, I am cautiously optimistic about what the future brings.
I hope this summit provides you with the opportunity to gather ideas and information that you can away and utilise to drive the next period of growth for the transport and tourism industries.
Thankyou.
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