A tourism lobby group has renewed calls for the government to create more incentive for entrepreneurs to invest in tourist facilities, amidst the high local dollar and a $7.2 billion deficit.
Yesterday, the Australian dollar rose to a six-month high after the Reserve Bank’s shock decision to leave interest rates on hold at 4.25%, despite predictions of a 25 basis point cut.
It would have been the third consecutive rate cut from the RBA board, following 25 basis point reductions in November and December.
After the RBA’s announcement to hold rates steady, the Australian dollar jumped by around 0.7% to 108.12 US cents, its highest level since August.
At 6.30am this morning, the local unit was trading at 107.87 US cents, down from 107.99 US cents on Tuesday afternoon.
But economists say the dollar could rise past its record high of 110.81 US cents, set in July last year, if the RBA’s announcement is followed by positive developments in Europe’s debt crisis.
The news comes as a blow to Australia’s already-embattled tourism sector, which continues to suffer as the high dollar prompts more people to venture overseas rather than travel domestically.
According to new figures released by the Australian Bureau of Statistics, Australia ran a record $7.2 billion tourism deficit in the 2010-11 financial year.
More than 7.8 million Australians headed overseas last year, but Australia welcomed only 5.9 million tourists to its shores, which is 10,000 fewer than in 2010.
John Lee, chief executive of the Tourism and Transport Forum, says a record 1.4 million Australians travelled to Thailand or Indonesia last year, at the expense of local tourism operators.
“With the dollar likely to remain strong for some time and investment in new resorts in South East Asia, many leisure tourism operators in Australia are facing an uncertain future,” Lee says.
Based on ABS data over the past decade, the deficit is expected to reach $8.6 billion for the 2012 financial year.
The TTF is calling for government funding for tourism marketing agencies and infrastructure, and for the government to create more incentive for entrepreneurs to invest in tourist facilities.
According to Tourism Australia managing director Andrew McEvoy, the tourism industry is “really a story of two different worlds”.
“The region we live in is doing well – inbounds from China, India and Indonesia are all going great, with China arrivals up 20%,” McEvoy told The Australian Financial Review.
“Even New Zealand is going up… However, outbound travel has generally slowed from the United Kingdom, Europe and the Americas.”
McEvoy said the travel industry is worth about $94 billion in spending and, traditionally, that is split around 62% Australian tourists spending at home and 38% international spending.
“We believe that ratio will shift to 50-50 over the next decade on the back of Asian growth and the return of long-haul Western markets,” he said.