The minister will not be moved

Author: Lisa Allen
Date: 19/12/2009
Publication: Australian Financial Review

The tourist industry may be in trouble but Martin Ferguson is fed up with watching them cut their own throats.

Woe is the tourism industry.  Not only is it in financial trouble, it's in political trouble.  And the man who could back a big government handout is in no mood to help out.  Martin Ferguson, federal Tourism Minister is, in short, fed up with the way industry lobbies the government.  Ten thousand jobs may have been lost in the past year and 25 per cent of Gold Coast hotels may be seriously struggling, but Ferguson is unmoved.

Ferguson's gripe is that he gets lobbied by many tourism groups, all with different wish lists and all jealously competing with each other.  He wants them to speak with one voice.  "Tourism occupies far more of my attention at times than the resources sector," he says.  "[I'm] trying to force individual lobby groups to act in a co-operative manner at an industry round table, rather than competing with one another and cutting one another's throats."

So when Christopher Brown, managing director of the Tourism & Transport Forum - one of the industry lobby groups – rustled up an impressive 70 top hoteliers, fund managers, airlines and tourism executives to sign a letter asking for an extra $80 million marketing funding to help stem job losses, he was ignored.

"The $80 million will not be forthcoming," says Ferguson. "As I said in launching the longer-term tourism strategy, there is already $539 million available each year."

His critics say the minister concentrates too much on his other portfolio, the resources sector. But critics of the $90 billion tourism sector point out that, unlike the car industry which gets a $6 billion subsidy, it cannot agree on anything and has been unable to develop a cohesive marketing strategy and stick with it. The most savage critics say it's an industry full of whingers.

There’s no doubt the whingers can have a good whine, given the statistics. Australia's global tourism share has declined 13 per cent since the mid-1990s, Ferguson admitted this week.

After the 10,000 lobs lost in the past year, another 17 per cent of tourism businesses expect more staff will be laid off in the next few months, according to lobby group surveys.  A 5 per cent drop in hotel occupancy and 12 per cent decline in revenues will see hoteliers shut whole floors, airlines curb flights and restaurants reduce trading hours as inbound arrivals from key markets such as Japan continue to decline.

Ferguson won’t budge.

In an exclusive interview with The Weekend Australian Financial Review, he says he "understands I will have detractors in the industry because I have stood my ground on a range of tough issues.

"In terms of workload and pressure on me making progress and pulling the tourism sector together, this has been far more challenging at times than my energy and resources portfolio, including the difficult debate about the carbon pollution reduction scheme.

"People underestimate the complexity of the tourism sector."

But industry representatives and analysts believe the problems are more serious than Ferguson acknowledges.

"I think the extent of the problems that are going to emerge [in the tourism industry] are going to be much deeper and will last much longer." says PPB director, Tony Sims. "We at PPB want to see significant federal government assistance to ensure the long-term sustainability of the industry.'

PPB, a financial strategy adviser, says at least a quarter of the Gold Coast’s 351 hotels are being financially monitored, given the lack of tourists, the declining corporate market and the plethora of real estate built in Queensland during the boom.

Professor Larry Dwyer, Qantas professor of tourism and travel economics at the Australian School of Business, says the government could be tightening purse strings because of the poor tourism campaigns Australia has produced, which he labels "unfocused and inconsistent.

"A lot of the problem [also] lies with the state tourism offices,” he says.  "They are very competitive in contrast to a country like New Zealand.  All over New Zealand people see it as advantageous to collaborate and see win-wins.  [Here] state governments get very precious about sharing information and they are very territorial.  I think that is a major problem and many in the industry would agree with that.”

Cruise ship operator Carnival Australia chief executive, Ann Sherry, agrees: "The federal government talks a lot about connected government.  [But] tourism suffers more from a lack of connected government than other industries because it is reliant on a number of other parts of government to work effectively."

Others blame inaction by the federal government and particularly Ferguson.

"He has been missing in action," says Cairns-based adventure tourism operator Fred Ariel, who has been forced to lay off hundreds of staff from his Raging Thunder business. "What do those two portfolios, tourism and resources, have in common?  One's about fun and excitement, the other’s about dirt.

"Tourism is a major employer and should be treated as a major employer," he says. "And it's the second-biggest revenue earner for the Australian economy. Why haven’t we got a senior minister in charge of tourism?  Both major political parties are guilty."

Ferguson believes the industry will be taken more seriously in government circles if, like other industry groups, it unites. At present, he says, the tourism sector can't make a strong case for government money.

While some marketing campaigns had been a success, others like "Where the Bloody Hell Are You" had been a 'dismal failure” in markets like Japan.

However, if you compare the fall in visitation to Australia with some of our competitors we have done quite well. For the first eight months of 2009, visitor arrivals to Europe were down 8 per cent compared with international arrivals to Australia dropping 2 per cent.  "The biggest problem we have both domestically and internationally has been the spend on business travel," says Ferguson.

"It's fallen dramatically, not only in Australia but globally, because of the global financial crisis.

"Holiday travel has fared much better.  Day trips have increased 2 per cent but any tourism minister, state or federal, has had to accept there is very little he could have done about business travel.  The GFC killed it.

“Talk to Qantas.  They took out first class travel on long haul, the empty seats were crippling them financially.  Virgin was doing it very tough earlier in the year but they have both briefed me in recent months that things are starting to turn around."

Ferguson says he will treat each lobby group in a consistent way but “more importantly I want them at the one table working together”.  Yet while he wants the industry to speak with one voice, he seems happy to tolerate the competition between the state government tourism bureaucracies.

“We need a single industry voice, which has been wanting for far too long,” he says.  “Competition between the state tourism offices is good because it puts pressure on them to improve their performance.”  Still, he does want them to agree when Australia is pitching for a big sporting or business event.

Hotel consultant, Dean Dransfield, director of Dransfield Hotels & Resorts, complains there is not enough marketing money to go around.  “Ferguson has not been missing in action but I think he has had a blinkered view on what is being done,” he says.

“He believes we should be spending our money more cleverly and it’s been poorly focused in the past.  That may also be true, but the reality is we have not spent enough money marketing.

“To get people to understand and buy your product you have to present it,” he says.  “And we are simply not presenting it often enough in enough places for it to be heard.”

Christopher Brown said: ‘[Ferguson’s] view was the government should not be putting money into tourism to prop up regions and employment.

“TTF believes this industry has been left behind in Australia’s economic recovery and we had greater expectations that we would get support from our minister around the cabinet table in putting our industry’s case forward.

“Why was the car industry able to get $6 billion yet the tourism industry got zero – despite the fact that auto manufacturing employs about 5,000 people and tourism employs 500,000?

“Ferguson is a highly respected resources minister who is very popular in the resources industry.  We just have not been able to get him as publicly supportive of tourism,” says Brown.

“We want him to be as famous for his tourism achievements as he is for Gorgon – what an incredible deal that was.”

Not all tourism executives agree with the TTF.  They argue, off the record, that the tourism industry should shoulder a lot of the blame.  “As an industry we need to do better forward planning,” says one tourism executive.

“We need to de-risk some of the components of the industry, like going after only one group of inbound tourists when the whole sector falls over.  There needs to be more forward planning.

“New Zealand is sucking Australians over there to pick up on their shortfall of international tourists.  We have not done anything.  We have said, ‘Give us money’.  That is why the government is not convinced we have made a great case.”

Meanwhile in Cairns, once one of Australia’s major tourism drawcards, Mayor Val Schier, together with local businesses, has been forced to come up with initiatives to stimulate the local economy that has been badly battered by the lack of tourists.

She is asking state and federal governments for a reprieve on payroll tax and GST payments.

Schier says that in the past five years the number of international tourists using Brisbane Airport has shot up 57 per cent.  But in that time the number of international visitors using Cairns local hub has increased just 5.7 per cent.