TNQ Tourism Recovery Fund

Briefing Note Summary

• Tropical North Queensland (TNQ) is one of Australia’s most international regional economies, with tourism contributing $1bn to the region’s economy.

• The region’s international tourism sector was decimated by Covid-19 and SMEs need to rebuild partnerships with distributors and sales partners in offshore markets. This will complement the recovery in aviation capacity by stimulating demand.

• Austrade run the EMDG program which facilitates trade development. Many of the TEQ tourism operators exceed the 8-year term limit for funding. Advance Cairns is seeking a waiver of the EMDG term limit to enable SMEs to receive a further 3 years of support, which will play an important role in the region’s international recovery.

The Issue

Tropical North Queensland (TNQ) is a significant tourism destination for both domestic and international visitors, with tourism underpinning the region’s international air access which further supports liveability, investment attraction and exports. International tourism represents $1bn of spending which is 7.4% (1) of the local economy. International connectivity further supports the region’s agriculture and aquaculture industries, and our international air access remains one of the most impacted from the COVID-19 pandemic.

Loss of international flights, both in seat capacity and freight capacity, means many international tourism operators and exportoriented sectors in the region have yet to see more than 25% of their pre-pandemic export value return. Re-establishing trade connections post-pandemic will require more than the removal of travel restrictions; many of the international trade partners have changed their businesses also and global markets have changed permanently. For many tourism/ export businesses in the region this will mean starting again with trade relationships, new airline partners, new markets, new countries, and new staff to educate on the products and experiences on offer.

As one of the country’s most internationally connected regional economies, many of the export-oriented businesses have either exceeded their eight (8) year Export Market Development Grant (EMDG) eligibility period or have suffered significant losses over nearly three years and have limited cash reserves to support taking international trade missions.

While the regional tourism organisation, Tourism Tropical North Queensland, has been committed $15m by the Federal Government to support the region’s international tourism recovery – this is not able to be used to support operators where programs such as the EMDG already exist.

An increase in the support for internationally focused regions, such as Tropical North Queensland, through the EMDG including a three-year waiver of the eight (8) year eligibility period would help to drive international exports from Cairns and underpin sustainable aviation routes over the next decade.

Background

Prior to the pandemic, the region’s international tourism expenditure generated more than $1bn in spending per annum which is 7.4% of the local economy. Today, that is estimated to be just $144m (14%) based on the year-end September 2022 International Visitor Survey. For Queensland, the current spend is estimated to be 22% of 2019 international visitor spend, showing that the closure of international borders impacted TNQ disproportionately. International recovery is not expected to fully recover until 2024/25. Tourism operators will need to be active in international markets to assist in the recovery.

TNQ stretches from Cardwell to the Torres Strait and west to the Northern Territory border. Pre-COVID-19, TNQ received nearly one million international visitors annually, spending over $1bn per annum. During the past decade, the number of businesses eligible for the EMDG has stagnated and our freight capacity has not kept pace with the increased level of competition both in Australia and globally.

Cairns Airport is the nation’s seventh busiest in terms of combined international and domestic passenger movements. It has historically handled around 130,000 aircraft and more than 5.2m passenger movements per year. The airport is widely recognised as one of the most significant economic drivers in the TNQ region and its facilities are critical pieces of economic infrastructure. To ensure international flights return to Cairns, there is an immediate need to drive demand to ensure these services are sustained and new services can open in passengers and in freight, beyond simply leisure visitors.

Next Steps

To drive the recovery of the TNQ export industries and the wider regional economy, it is vital that there is investment in targeted support that will drive measurable outcomes. The TNQ tourism/export supply chain has been severely damaged as a result of COVID-19, and 20 years of investment in destination marketing and export relationship have been disrupted. Rebuilding the supply chain – including sourcing new products and suppliers, attracting new international airline partners, restarting the direct international agriculture and aquaculture export markets, and developing new international source markets –will require significant investment in destination marketing and relationship building.

A three-year investment in the region’s exporters includes:

• A regional waiver from Austrade of the eligibility criteria for three years to allow successful businesses already established in the international market to access the EMDG, to enable them to access new markets and re-engage with new suppliers in a changed business world.

• An increase in the amount exporters can claim to give the region the kick-start it needs to restart our international exports.

Our Recommendation

• That the Federal Government commits to extend and waive the eligibility for the Export Market Development Grants to TNQ export businesses that have exceeded their timeframe for eligibility, to ensure international trade activities can restart and drive the recovery of the region’s international export market.

Source

1. Tourism Research Australia, 2022