Possible Cuts to Tourism Australia’s Marketing Budget and Product Development Funding

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The Australian National Commission of Audit has issued a major report in to all aspect of Australian Government activity with the aim of cutting back on public spending.  Their apparent immunity to the global recession has turned out to be more a deferred reaction than an escape from it. Within the report there is a recommendation that Tourism Australia, the main promotional body for the country, has its marketing funding reduced by 50%.  In addition current funding for such things as quality assurance activity and grant aid to the industry in Australia would cease.  Not unsurprisingly this eye watering headline has been picked up internationally and has started to be discussed here in the UK.

At this stage it’s worth noting that the report is just a report and the eventual outcome(s) can’t be accurately predicted, although it is probably safe to assume that with recommendations of this magnitude cuts of a relatively severe nature in tourism support will almost certainly follow. Equally given the sheer magnitude of the report’s over all coverage “eventually” might well be some time off.

It is worth noting that the report appears to draw conclusions from experience elsewhere in the world, including the UK and worth speculating that in time any outcomes in Australia could in their turn be seen as setting “new international precedence”; probably for reduced national engagement and for less central national funding for tourism. You could also speculate that there is a real danger that the assumed outcomes may well start impacting in much the same way, well before anything is actually decided in Australia; potentially setting off (maintaining?) an international tourism policy merry-go-round.  Cutting back may well be the right thing to do but let us do the right thing, for right reasons and not simple because: “we have, so they are, so perhaps we should……..”

One would hope major Government’s policy direction on something so important as tourism was somewhat more sophisticated than this, but just in case not, we in the tourism industry have a role to play in ensuring that the rational for action by our international competitors is properly analysed and discussed in its full and proper context.  The recommendation for Tourism Australia is just one tiny part of major reappraisal of the Australian Government’s entire fiscal policy covering every single aspect of Australia’s centrally funded activity from defence through international aid to social housing policies. In reality this proposal isn’t actually about tourism but a much larger rebalancing of Australia’s finances. The real question for the Australian Government and anyone looking in should be: in saving X millions of dollars on tourism now, is there a danger that it will cost the Country much more in lost tourism revenues in future years?  It is to be hoped that they have had that debate; unfortunately the report gives only a flavour of the rational and the stark conclusion but not necessarily all the detail that lead them to conclude they can safely reduce marketing spend by 50% and cease support for other product development activities entirely.

The relevant section of the Government of Australia’s National Audit Commission reports reads:

“Approximately AUD $185 million (c£101.5m) of Commonwealth funding is directed towards tourism initiatives and management. Most of this funding is for Tourism Australia, although other programmes now administered by Austrade include ‘Tourism Quality’ grants and the Tourism Industry Regional Development Fund. The Department of Foreign Affairs and Trade is responsible for tourism policy.

Nearly two thirds of Tourism Australia’s budget is directed to advertising and other promotional activities. While tourism is one of Australia’s main exports, most of the benefits of tourism accrue to the tourism operators. There is no clear reason why significant funding should be provided to tourism above other Australian export industries. …Tourism assistance can also be seen as aiming to address market failures within the tourism industry.

The States already provide a marketing budget for tourism. However, it is arguable that marketing Australia as a destination for international tourists should be undertaken at a Commonwealth level rather than on a State-by-State level. The Commission proposes that grant funding for the tourism industry be ceased, and funding for Tourism Australia be reduced by 50 per cent, to focus on international marketing, with the function incorporated into a commercial arm of the Department of Foreign Affairs and Trade”.

(The full series of National Commission of Audit reports are accessible at  http://www.ncoa.gov.au/ )

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