Talking Point

with Simon Thomsen

Tourism goose will be cooked without funding

Venice, one of the most famous cities in the world, is not much bigger than Lismore. Some 400 years after the plague killed a third of the population, reducing it to 100,000, that figure has fallen by more than a third again, with just 60,000 people living in the centre of the city, the majority of them over 50. That figure continues to fall.

Meanwhile, more than 20 million tourists stream through the city every year.

For the Venetians, the simple truth is they can no longer afford to live in the town of their birth, and besides, the city, especially the shops, are no longer geared towards people who simply want to live there. The residents have become actors in a faux-Disneyland.

Growing up in the Sydney beachside suburb of Manly, I watched the main shopping strip, the Corso, change from a place where you could shop for clothes, hardware and those everyday living items, into a fast food strip catering for the daily hordes who arrived from further afield to visit the suburb's famous beach. Residents had to travel to neighbouring suburbs to shop as the amenity of daily life subsided to the economic pressures of catering for tourism. They too became goldfish in a fishbowl of endless visitors.

These circumstances are worth contemplating in light of recent proposals from the National Sea Change Task Force (NSCTF - a consortium of 70 Australian coastal councils from tourism hot spots) to tax tourists to pay for desperately needed local infrastructure as councils struggle under the sheer weight and impact of their popularity. For many years, governments and the tourism industry have sold tourism as the panacea to regional economic ills, but neither side has expressed any great interest in picking up the tab for the work required to cope with such an influx of visitors. There's an estimated $5 billion shortfall in infrastructure funding nationwide over the next 15 years.

The Federal Government expects tourism to become our leading export earner within two years, but the NSCTF argues that, unlike other export industries, such as agriculture, government doesn't subsidise tourism infrastructure.

Despite massive increases in the values of coastal property in recent years - someone out there is making money - councils don't benefit from this windfall, because the size of the rates pie is capped. On top of that, rate increases, which are controlled by the NSW Government, barely manage to keep up with inflation and councils are already behind in maintaining existing infrastructure, like roads, as both the federal and state governments hand them more responsibilities without the funding to pay for it.

Of course the local relevance of this debate is Byron Bay, a member of the taskforce, which has already acknowledged it is unable to cope with its current popularity. But it's a timely warning for Ballina, and even small coastal villages like Evans Head, which are courting tourists and are likely to have to deal with similar issues in the coming decades. The challenge is to not only cater for tourists, but to maintain the amenity of the area for the people who live there every day of the year, not just for a week of holidays.

Faced with these pressures, the NSCTF turned to economic consultant Brian Haratsis, who prepared a report into ways of funding infrastructure. He proposed a $200 airport entry tax for international visitors, with the money going directly to the councils, but they rejected it and blocked it from even appearing in the report.

Haratsis also suggested developers pay a $20,000 to $50,000 surcharge on every block of land for the same purpose.

His report to the NSCTF recommends a 50 per cent surcharge on rates for holiday homes and lobbying state and federal governments for a two per cent share of the $3.1 billion they earn from tourism.

"Because there's no national or government structure for tourism and visitation, all the problems manifest themselves in local communities," Haratsis says. "What we've got to work out is who benefits, who pays, what's socially responsible: because I don't want to get to 2025 and have our coast loved to death... so our greatest export industry begins to actually go backwards."

While those lucky enough to own a holiday house will no doubt see the 50 per cent rate surcharge as yet another slug on top of recent state government tax changes on investment properties, there is some merit in exploring the proposal among those who rent out their property. Given that people are paying around $2000 to $5000 on average for a holiday house in Byron Bay over the Christmas period, an absentee landlord would be hard-pressed to cry poor in finding an extra $500 per year in rates - and even then, those additional costs could easily be passed on to the visitors, who would hardly notice an extra $50 per week on such extravagant rents.

There is also much merit in government recognising the windfall revenues tourism is generating and acknowledge they have a role to play in supporting councils to deal with it. Projects such as the Ballina bypass should be viewed as a tourism project along with its other merits.

Predictably, the tourism industry immediately goes into Chicken Little mode over the idea of new taxes, with the likes of the Australian Tourism Export Council claiming that tourism, from backpackers to conventions, would be "devastated" - or to put it another way, it might bite into their lucrative profitability of an industry that enjoys extraordinary government largesse, courtesy of taxpayer-funded tourism marketing.

But the issue of funding investment in more than advertising campaigns needs to be dealt with sooner rather than later, since proper infrastructure planning takes decades, if not generations. The Tourism Export Council says the taxes could "kill the goose that laid the golden egg". What they ignore is that it's already being slowly strangled by a lack of infrastructure.