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Despite stalled growth in China, Brazil and Russia, a wave of newly middle-class travelers from the BRICs and beyond will start visiting international destinations in the coming decades — dwarfing the numbers we’ve seen thus far.
This is a blow to national tourism marketing organizations worldwide — including our own BrandUSA — and could spur a rethink worldwide on how to fund tourism promotion.
Tourism Australia, the main tourism promotion body for Australia and one of the most creative and progressive of national tourism boards anywhere in the world, is in danger of losing half its funding and could even cease to exist, if a sweeping report from the country’s Commission of Audit, which was charged with bringing national spending under control, comes into effect.
The main sections of the report call for selling assets and cutting public spending to rein in Australia’s debt burden. As part of that the report proposes huge cuts to the federal public services including the abolition of seven bodies and the merging of 35 others. Tourism Australia is part of that, which gets about AUD $130 million (USD $121 million) in yearly funding, and total tourism funding in the country is about AUD $185 million.
Tourism Australia promotes awareness of Australian travel destinations to domestic and international travelers, conducts and reports on research into travel trends, and communicates to the Australian community the contribution of the tourism industry as part of its work.
We’ve extracted relevant portions of the report below, which will give a sense of how drastic these changes could be.
Approximately AUD $185 million 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.
Austrade, EFIC and Tourism Australia are intended to support Australian businesses in exploiting commercial opportunities by assisting them in addressing market failures. In the time since these organisations were founded, there have been significant changes in the international environment, the availability of information (notably through the internet), the maturity of the financial services sector and the accessibility of professional services firms on a global basis. National Commission of Audit Appendix Volume 2
Many of these arrangements have their origins 40 years ago or longer. The economy has changed significantly since then, undermining the case for intervention to promote exports.
Meanwhile, the Australian tourism industry bodies have reacted with shock against these recommendations, and this statement below from Tourism Accommodation Australia is typical of it, defending TA and the work it does, and why a national tourism organization still makes sense.