Australia’s misdirected COVID tourism relief package

The Australian government's $1.2 billion tourism recovery package looks more like a gift to airlines than a support package for a smashed tourism industry.

COVID ravaged Sydney tourism business? Scomo’s got nothing for you….
© Mark Bowyer Six Degrees Asia

Australia’s tourism relief package, announced in early March, provided $1.2 billion in Federal Government support. The centrepiece of the announcement was the provision of 800,000 half-price airfares to a list of destinations handpicked by the government. The rest of the industry was expected to sit back and hope that the travel induced by the discounted flights would benefit them - assuming they were in a destination blessed by the government’s selection process. It was a big hope.

To be effective, a package of government relief for the tourism industry needs to be targeted at the most severely impacted businesses and destinations. And it needs to contain protections to ensure minimal waste and rorting.

The Morrison government's $1.2 billion tourism and aviation recovery package missed these objectives. Like other government cash splashes, political priorities have trumped economic and national priorities. Big business - in this case the airlines - seem to be the only sure winners. Crumbs might fall to some small tourism businesses.

Qantas and the airlines are not the travel industry. They have overlapping and divergent interests. If the airlines were deserving of a cash injection, that should have been a policy discussion in its own right.

Hotels, travel companies, restaurants and other tourism-dependent businesses - mostly small businesses and big local employers - need their own rescue package, designed with their targeted needs in mind. Forcing them onto the back of an airline package was always going to be messy and leave out deserving businesses.

For a government that endlessly rails against top-down government intervention, this government has proven very partial to central planning. This package is further evidence of the problem.

Why not give a special tourism credit to be spent with any eligible business - like a beefed up version of the NSW government’s tourism and hospitality vouchers - with a separate programme for disadvantaged regions?

50% off what? What’s an airfare?

There are many other silly things in the design of the package.

Its key offering, 50% off airfares, implies there is such a thing as a set airfare. 50% off what? How much is an airfare?

Airlines use demand-driven dynamic pricing to determine fares. Published fares are long gone. That means that there is no objective "fare" on any given route. I have searched for evidence of airline compliance requirements to minimise airline waste or abuse in the package, and have found nothing.

It means that once again, COVID stimulus is likely to miss the most disadvantaged tourism businesses while being unaccountably lavished on the airline big end of town.

Then there is the bad idea of putting airlines at the centre of tourism.

One of the positives of the COVID crisis has been that we have supported and celebrated our local businesses - including tourism businesses. This is an idea worth holding on to post-COVID. It has many enduring benefits - including making us care more about cultivating the places we live.

It makes tourism more aware and protective of the immediate environment. And it can help us to transition to a less environmentally harmful and carbon intensive tourism economy. These are lessons the government missed.

The scheme should give special attention to some destinations, like Cairns and the Northern Territory, that have been inordinately impacted by the collapse of international tourism. But many remote destinations to benefit from the package have experienced normal or better trading through the pandemic - most notably in Western Australia.

The notion that a downtown tourism business or hotel is less deserving of COVID support than those in some remote destinations handpicked by team Scomo, is incomprehensibly stupid.

At the end of this particular misdirected dose of stimulus, airlines will be pleased - especially by the seeming lack of governance in the package. Some tourism businesses will derive a secondary benefit from airlines. Many tourism businesses will remain teetering on the edge. And Australia's bungled vaccine rollout looks set to further prolong the wait for better times.