2018 STATE - VTIC€¦ · The 2018 State Budget presents an opportunity for the Victorian Government to unlock the true potential of the visitor economy and achieve the ambitious

2018 STATE

BUDGET

SUBMISSION

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VTIC 2018 STATE BUDGET SUBMISSION

The Victoria Tourism Industry Council

The Victoria Tourism Industry Council (VTIC) is the peak body and leading advocate for Victoria’s

tourism and events industry. Our vision is for a globally competitive visitor economy, where Victoria is

the leading destination for domestic and international visitors, with must-see attractions, must-do

experiences, and an unrivalled calendar of major and business events.

VTIC works to develop and support a professional, profitable and sustainable visitor economy. By

improving the business environment, we make it easier for our industry to deliver high quality

experiences, products and services to all visitors to Victoria.

VTIC’s role is to provide leadership for the tourism and events industry and support our members

through:

• Policy development, advocacy and representation;

• Industry development initiatives; and

• Business Development and support services.

VTIC’s key objectives are to:

• Be recognised as Victoria’s leading independent advocate, policy influencer and representative

body for the tourism and events industry;

• Grow a diverse and strong membership base that represents all sectors of the industry;

• Support VTIC’s members through valued and relevant business and industry development

services; and

• Operate as a financially sustainable and a well-governed organisation with a best practice work

environment.

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VTIC 2018 STATE BUDGET SUBMISSION

Executive Summary

The 2018 State Budget presents an opportunity for the Victorian Government to unlock the true

potential of the visitor economy and achieve the ambitious targets set out in the Visitor Economy

Strategy of $36.5 billion in expenditure and 320 000 jobs by 2024/25.1

Tourism has the potential to be Victoria’s most important and profitable industry. Our geographical

proximity to Asia, economic stability and geopolitical stability ideally position our State to capitalise on a

national tourism industry that is forecast to grow to $151 billion in overnight spend and 15 million

international visitors by 2026-27.2

However, we will miss our share of this opportunity without action and investment. This Budget

Submission presents a framework of investment for the Victorian Government to achieve its visitor

economy targets by focussing on the following key pillars:

• Marketing for campaigns to attract international, interstate and intrastate visitors

• Leisure and Business Events for Melbourne and regional Victoria

• Investment in Infrastructure and Product Development

• Investment in Tourism and Hospitality Workforce and Skills Development

• Regulation and Red-Tape Reduction for the Victorian visitor economy

It is important to highlight that these facets of Victoria’s visitor economy are inextricably linked. Each

requires concerted, individual focus but overall, these elements work together to create broader,

connected outcomes for the visitor economy. Both international and domestic visitation to Victoria are

contingent upon our ability to market the State effectively however visitation will not translate to

economic output or regional dispersal for Victoria if the spend opportunity is missing due to inadequate

investment in infrastructure. Equally, the spend opportunity will go unrealised if the workforce is not

equipped with the appropriate skills to service a demanding market. These factors are overlayed by the

fact that innovation and supply in the industry will only grow if new entrants to the industry are

encouraged by the ease of doing business and their investment is ‘enabled’ by Government support.

Investment based on the framework presented in this Budget Submission provides long-term benefits

to the whole of the visitor economy and will provide a pathway to achieving the targets outlined in the

Government’s Visitor Economy Strategy.

1 Victorian Visitor Economy Strategy 2 Tourism Research Australia - Tourism Forecasts 2026-27

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Summary of Recommendations

VTIC is calling for the Victorian Government to allocate funding in the 2018 State Budget for the

following priorities to support the growth of the visitor economy.

• 1. $160 million over four years for Visit Victoria to maintain its scope of activity across:

International marketing;Interstate marketing;Intrastate marketing; andContinued support for the Regional Tourism Boards and Destination Melbourne

Marketing funding for Visit Victoria

• 2. Maintain funding for attraction of Major Events to Victoria.

• 3. $40 million over four years for the Melbourne Convention Bureau (MCB).

• 4. $3 million over four years for Business Events Victoria to attract business events to regional Victoria.

Major Events and Business Events

• 5. $150 million for Stage Two of the Shipwreck Coast Masterplan.

• 6. $28 million over four years for Phase One of Puffing Billy Railway.

• 7. $3 million to support the design phase of the Falls to Hotham Alpine Crossing and Coastal Wilderness Walk.

• 8. Support for the $150 million Geelong Convention & Exhibition Centre.

• 9. $30 million for the development of the Cowes-Stony Point Ferry Project.

• 10.$5 million for the development of the Queenscliff-Sorrento Ferry Terminals Project.

• 11. Support for the $300 million Etihad Stadium entertainment precinct.

• 12. $200 million over four years for the Regional Tourism Infrastructure Fund (RTIF)

Standalone Infrastructure Priorities and RTIF

• 13.Commit to establishing a Tourism & Hospitality Workforce Taskforce and provide $5 million over three years for the development of a State-wide Campaign to promote tourism and hospitality career attractiveness.

• 14. Increase Victorian Government student subsidy rate for full qualifications for the Diploma and Advanced Diploma of Tourism & Travel Management.

Workforce Skills and Training

• 15. Commit to funding the recommendations outlined in the 2nd Small Business Regulatory Review – Visitor Economy Impact Statement.

Small Business Regulation

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The Budget Context

Tourism is a top-five growth sector for Australia

Travel and Tourism as a global industry has outpaced the growth of the world economy for six years in

a row. Australia was one of six countries in the G20 in which travel and tourism performed better than

the overall economy.3 Additional to economic attractiveness, Australia has been ranked in the top ten in

the world as enabling an environment for Travel and Tourism by promoting our natural and cultural

heritage and ensuring rewarding and unforgettable experiences for our visitors. Australia was also

ranked as one of the safest countries for travel, an important strength that must be leveraged by

Victoria as its continuity cannot be assumed.4

The Australian economy is in a state of transition. As Australia transitions towards a more diverse

services-based economy, tourism has been identified in Australia’s “next wave of prosperity” as one of

our top five sectors of growth in the economy and has the potential to become Australia’s fastest

growing industry. Tourism Gross Domestic Product in 2015-16 has grown at 7.4%, well ahead of the

rest of the economy.5 Our proximity to Asia, safety and language advantages, beautiful natural assets,

aviation capability and reputation of our education sector have been identified as the drivers of growth

for the tourism sector. This outlook presents a unique opportunity for Victoria that through strong

investment decision-making, the visitor economy can be a driver of growth for Victoria’s overall

economy.6

Victoria’s Visitor Economy Strategy – A Step in the Right Direction

VTIC acknowledges the important contribution the Victorian Government has made to strengthen the

Victorian visitor economy. Melbourne continues a strong presence across leisure and business events

securing various sporting, cultural and corporate events that will deliver sizeable economic benefits for

Victoria. Our aviation footprint grew with expansion of direct air connectivity to international destinations

including China, Canada and Chile. Melbourne was once again named the World’s most liveable city

and two of the World’s top 50 restaurants featured in Victoria.

VTIC also acknowledges the ambitious targets set out in the Victorian Government’s Visitor Economy

Strategy in increasing visitor spending in Victoria from $23.1 billion to $36.5 billion and increasing

tourism jobs from 210 000 to 320 000 by 2024/25. Whilst our success is positive, it will not continue

without investment and the targets will not be met at current growth rates.

3 World Travel & Tourism Council - Travel & Tourism Economic Impact 2017 4 World Economic Forum - Travel & Tourism Competitiveness Report 2017 5 Tourism Research Australia - Tourism Forecasts 2026-27 6 Deloitte - Positioning for Prosperity "Catching the next wave"

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Risks to the Growth of Victoria’s Visitor Economy

Victoria’s visitor economy is not impervious to risk factors stemming from the external environment.

There are multiple causes, which are outlined below that could impact or worse, stagnate our growth. It

is important to remember that expenditure within the visitor economy is a discretionary form of spend.

Visitors will continue to be influenced by a variety of external factors which will weigh on choice of

destination, quality of experience and quantum of spend.

Highly Competitive Domestic and International Landscape

Victoria is operating in a highly competitive environment to attract visitors from overseas and interstate.

The announcement of the recent 2019 New Zealand-China Year of Tourism illustrates that other nations

with comparable economic, geographic and political strengths to Australia have recognised the

opportunity tourism presents to their respective economies. Nationally, events such as the 2018 Gold

Coast Commonwealth Games could also adversely affect visitor numbers to Victoria. However, the

Games could also provide opportunities for Victoria if our marketing is strategic and targeted.

Rising Traveller Expectations

Traveller expectations have grown exponentially in recent years. The proliferation of social media

outlets, sophisticated technology and innovative content have all become expectations and factors in a

visitor’s decision-making process. Visitors are increasingly using digital technology to conceptualise,

plan and share their travel experiences. These factors will naturally create pressure for businesses in

Victoria’s visitor economy. The portability and ease with which users can research and book travel

creates demand for 24-7 access to “frictionless purchasing”.

The Growth in the Sharing Economy

Over two-thirds of Australians now spend and earn money through the sharing economy, which is now

worth over $15 billion of the Australian economy.7 In Victoria, pioneering peer-to-peer sharing platform,

Airbnb is now responsible for over 1.1 million nights (2nd highest in Australia behind New South Wales)

across Melbourne and regional Victoria and supports over 4000 full time jobs.8 The Sharing Economy as

an industry disruptor is fast becoming an important economic contributor for Victoria and will continue to

impact both the supply and demand side of the visitor economy.

Major Infrastructure Works in Melbourne

The Victorian Government is embarking on a large-scale infrastructure program, one example being the

Melbourne Metro Rail Project (MMRP), a once-in-a-generation transformational project for Victoria. VTIC

recognises the positive long-term impact in the context of Melbourne’s forecast population growth.

However, we must also recognise that we are on the precipice of a disruptive period for the visitor

economy. Large-scale construction, noise pollution and increase in industrial heavy vehicle flow will all

potentially cause disruption to many businesses spread throughout key tourist hubs such as Swanston

St, Domain Parklands/St Kilda Road and the Collins Street core retail and entertainment precinct.

7 RateSetter Sharing Economy Trust Index 2016 8 Deloitte - Economic effects of Airbnb in Victoria

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Recommendations for Government

Marketing Investment for Victoria

Context: Long-term Investment is needed for sustainable growth

Visit Victoria was formed as a single entity to bring tourism and major events under one umbrella so

that it would be one unified voice to take a strategic approach to marketing and attraction efforts. It is

imperative that such strategic intent be supported by an equally strategic approach to funding. The

value in this consolidation exercise of predecessor organisations will only be realised if Visit Victoria is

supported through a clear long-term mandate to deliver Victoria’s growth objectives.

The Government’s Visitor Economy Strategy has set a target of $36.5 billion in tourism economic spend

by 2024/25. It is important to highlight that each of our International, Interstate and Intrastate traveller

markets contributes approximately one-third of economic value to the State. On this basis, Visit Victoria

must be funded to apportion equal focus to each of these markets.

Recommendation 1: $160 million in funding over four years for Visit Victoria to maintain its

focus across:

• International marketing;

• Interstate marketing;

• Intrastate marketing; and

• Continued support for the Regional Tourism Boards and Destination Melbourne

Victoria has benefited from good growth in both domestic and international visitation for year ending

June 2017. Whilst these results are positive, our market position within a national and international

competitive context is not sustainable without direct investment into visitor attraction. For year ending

June 2017, Victoria experienced 7.7% growth in international visitor numbers. However, Western

Australia (8.8%), New South Wales (9.9%) and Tasmania (13%) all outperformed Victoria in the same

period.9 Our success is by no means a foregone conclusion as other States are clearly investing in

attracting new visitors to their respective States.

Moreover, as per Victoria’s latest domestic tourism performance, 69% of our domestic visitor numbers

and 48% of domestic visitation spend are in the intrastate category (that is Victorian residents).

International visitor spend in Melbourne represents 92% of total international overnight expenditure in

Victoria. These statistics point to some key lessons.10

9 Tourism Research Australia - International Visitor Survey June 2017 10 Tourism Research Australia - Domestic Visitor Survey June 2017

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Regional Victoria is heavily reliant on Victorian and Melbourne resident visitation, which points to a lost

opportunity in attracting interstate visitors to Victoria. Our capital city is our gateway destination to

Victoria and will always retain majority share however marketing must work to stimulate dispersal of

international and interstate visitors to other regions in Victoria.

The Victorian Government has acknowledged the important role that Regional Tourism Boards and

Destination Melbourne play in destination management, industry and product development and

marketing through the allocation of responsibilities to these organisations in the Visitor Economy

Strategy. Continued support of funding the Regional Tourism Boards and Destination Melbourne is

required to ensure they are effective.

Major Events and Business Events

Context: Growing from our strength in a highly competitive environment

Victoria and Melbourne are recognised respectively as the leading State and capital city in Australia for

events. Our world-class reputation for events is a key pillar of our visitor economy’s success and must

be maintained. Events whether for leisure or business are a highly competitive international and

national environment which requires long-term planning, targeting and lobbying. Our representative

bodies must be resourced to effectively compete and demonstrate value to the marketplace. Hosting a

leisure or business event in Melbourne and Victoria must continue to offer value greater than that

offered by our competitor destinations.

Recommendation 2: Maintain funding for attraction of Major Events to Victoria

Major Events generate approximately $1.8 billion in economic benefit to our State and the broader

events industry provides almost 5000 full-time equivalent jobs.11 The Melbourne and Regional Victoria

Events Calendar is an enviable hallmark of our visitor economy. However, in a similar vein to Victoria’s

State marketing environment, other States are becoming competitive and our market position cannot be

taken for granted.

Recommendation 3: $40 million in funding over four years for Melbourne Convention Bureau

(MCB) to attract business events to Melbourne

Business Events are the highest yielding sector of the visitor economy delivering $9.8 billion and

65,000 jobs annually to Victoria.12 A globally competitive attraction capability for MCB therefore must be

11 Victorian Parliament - Public Accounts and Estimates Committee 2015-16 12 MCB Annual Report 2016/17

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a key priority. In FY 2016/17, MCB secured 194 national and international business events with a

forecast impact on the Victorian economy of over $320 million.13 Increasing globalisation of business

has not only led to an increasing appetite for corporate development events but importantly for the

Visitor Economy, it creates a platform which generates leisure visitation and spend. Recent wins such

as the Lions Club Conference in 2022 and the World Ophthalmology Conference in 2024 are positive

but are an outcome of the present-day landscape and aptly illustrate the lapse between competitive

bidding and the realisation of economic benefit. Therefore, funding over the next four years will enable

competition and securing events over a 10 to 15 year timeframe. Ongoing funding for MCB will also

maximise the Government’s investment in the expansion of the Melbourne Convention and Exhibition

Centre.

Recommendation 4: $3 million in funding over four years to Business Events Victoria (BEV)

for regional Business Events

The business events sector is particularly important to regional Victoria and plays a key role in creating

stimulation for regional economies. As with business events to Melbourne, it is a high-value sector of

the visitor economy with one in five dollars spent by international visitors in Australia attributed to

international visitors attending some form of business event. Delegates spend on average 21% more

than other international visitors over the course of their trip. In 2016, business events were worth an

estimated $475 million to regional Victoria and supported over 3000 jobs annually.14 We must continue

to challenge our value proposition and through Business Events Victoria, invest in regional Victoria’s

attractiveness as a leading business events destination. This can then become an important platform

for leisure visitation. It is estimated that the proposed increase in funding of $3 million over four years

for BEV will deliver an additional $73 million in total economic impact over four years and support a

further 57 full-time jobs per year.15

World-Class Infrastructure to complement Victoria’s natural assets

Context: More investment is needed to grow Victorian Nature-based Tourism

Chinese and Indian residents of Victoria now represent two of the top three categories of Victorians

born outside of Australia (the UK being the other).16 This statistic is important in the context of Victoria’s

competitive advantage in the “Visiting Friends and Relatives” travel market. This market represents

almost one-quarter of total international overnight visitors and has experienced average annual growth

of 8.6%, above the national average growth of 6.8%.17 The research also highlighted that international

visitors in this market agreed that Victoria had a range of “natural, interesting landscapes and wildlife”.

13 IBID 14 Monitor Events – Business Events Victoria Quarterly Business Events Survey: Jan 2016 – Dec 2016 15 Urban Enterprises – Business Events Victoria – Economic Impact Assessment October 2017 16 ABS Census 2016 Victoria: Country of Birth (outside Australia) 17 Tourism Research Australia: VFR Market Victoria June 2017

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Victoria’s nature-based tourism offering is one of its most attractive drawcards. The experience and

economic value of visitation should therefore be commensurate to the natural beauty and targeted

investment in tourism infrastructure is vital to achieving this.

Recent research further revealed that in FY 2016/17 in Australia, there were 204 projects in the tourism

investment pipeline valued at a total $37.8 billion. Nights spent in hotels, motels and serviced

apartments are up 21% from 2011/12 to 2016/17. Inbound passengers on airlines are up 36%,

passengers on domestic flights are up 7.8% and tourism spend in Australia is up 29% over the same

time. However, what is of concern is that Victoria’s share of the tourism investment pipeline is

14% which is below that of New South Wales (36%), Western Australia (17%) and Queensland

(20%).18

Recommendation 5: $150 million for the implementation of Stage Two of the Shipwreck

Coast Masterplan

The Great Ocean Road as a part of the Shipwreck Coast is Victoria’s single biggest tourism attraction

and our number one tourism infrastructure priority. The Great Ocean Road region attracts over five

million visitors per year and contributes directly or indirectly towards 11 000 jobs. However, in 2016, of

the region’s total visitation, only 4% (202 000) were international overnight visitors.19 An important

economic opportunity in capitalising on the spend potential from visitation to the region is being missed

due to lack of development of the Shipwreck Coast. This Masterplan expands the visitor experience

beyond the Twelve Apostles and provides a compelling reason for visitors to not only visit but spend

and stay.

Recommendation 6: $28 million over four years for Phase One of the redevelopment of

Puffing Billy Railway

Puffing Billy Railway is another Victorian icon and has grown into a major Victorian tourism enterprise

generating almost half a million visitors in 2016/17 and delivering $10.23 million in value-added

economic activity and over 100 jobs (direct and indirect). Demand is projected to grow to over 700,000

visitors annually and given the Railway is currently operating at full capacity, without investment, a

potential 2.3 million visitors would be denied visitation over the next ten years. Full investment in phase

one of the project would support the capture of $19 million in additional economic value and the

creation of an additional 210 indirect jobs in the region.20

18 Tourism Research Australia: Tourism Investment Monitor 2017 19 Great Ocean Road Region Visitor Economy 2015-2025 Master Plan 20 Deloitte – Emerald Tourist Railway Board Business Case 2017

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Recommendation 7: $2 million for detailed design of the Falls to Hotham Alpine Crossing and

$1 million to commence the design process for the Croajingolong National Park Coastal

Wilderness Walk

Victoria is fast becoming Australia’s premier bushwalking and hiking destination but further investment

is needed to fully capitalise on this unique nature-based tourism opportunity. The “Walk Victoria Icons”

is an important strategy that showcases Victoria’s natural landscapes, wildlife and cultural values and

generates tourism dollars for the State by providing further avenues for visitor spending. The Falls to

Hotham Alpine Crossing and Coastal Wilderness Walk are the two remaining “Iconic” walks of Victoria

that need Government support to provide a significant boost for Victoria’s High Country and Gippsland

regions. In supporting these projects, the Government will also enable Visit Victoria to market Victoria’s

Iconic Walks as a complete proposition more effectively to our international and local visitors.

Recommendation 8: State Government support for the $150 million Geelong Convention &

Exhibition Centre

The Geelong Convention and Exhibition Centre will position the region as a viable, well-located option

that complements Melbourne and stamps the Greater Geelong region as a global and national

competitor for business events. It is estimated to provide a direct and indirect economic impact of $350

million to the regional economy during construction phase, an annual $50 million direct and indirect

economic impact to the regional economy once operational and support 600 jobs during the peak

construction period.21

Recommendation 9: $30 million for the development of the Cowes to Stony Point Ferry

Infrastructure

The Cowes to Stony Point Ferry would deliver benefits that extend beyond a point-to-point

transportation source. It will enable the creation of an iconic touring rote from Wilsons Promontory to

the Great Ocean Road and present a significant opportunity for Victoria to generate further spend from

visitation. Ferry transport infrastructure would allow Phillip Island to become part of a broader visitor

experience and open new markets for tourism. Visitors will become able to plan multi-day round trips

from Phillip Island to the Mornington Peninsula to the Bellarine Peninsula through to the Great Ocean

Road providing flow-on visitor overnight and day spend opportunities for each of these regions.

21 Geelong Regional Alliance - Convention & Exhibition Centre

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Recommendation 10: $5 million for the development of the Queenscliff-Sorrento Ferry

Terminals Project

The Queenscliff-Sorrento ferry is the busiest passenger and car ferry service in Australia. Over the next

13 years, there is projected to be an extra 3.7 million people visiting the Mornington Peninsula region

every year. The ferry docks currently suffer from inadequate facilities, shelter and traffic congestion.

The redevelopment will facilitate important upgrades to both the Queenscliff and Sorrento terminals and

generate a joint $48 million economic impact, creating 193 jobs during the construction phase.22

Recommendation 11: State Government support for the $300 million redevelopment of the

Etihad Stadium entertainment precinct

Melbourne’s Etihad Stadium precinct is a cornerstone of the city’s infrastructure and in recent years has

transformed into a world-class sporting venue. This investment will capitalise on the stadium’s success

and unique location and transform it into a multi-purpose entertainment precinct providing a much-

needed refresh to the Docklands district. This proposal will feature an upgrade to the façade of Etihad

Stadium and new entertainment, dining and recreational facilities that will transform the precinct into a

365 day-a-year destination. A precinct of this magnitude and variety which integrates Docklands, the

waterfront and the Melbourne CBD will drive visitation and tourism spend, and further enhance

Melbourne’s attractiveness as the leading Australia city for major events.

Recommendation 12: $200 million over four years for the Regional Tourism Infrastructure Fund

(RTIF)

The Government’s intent in establishing the Regional Tourism Infrastructure Fund (RTIF) was a

“pathway to accelerate delivery of regional Victoria’s high value tourism projects identified through a

regional tourism pipeline”. Many vital infrastructure projects in regional Victoria are at various stages in

terms of their maturity and readiness for development. A competitive allocation fund of this nature will

continue to provide an ongoing avenue of funding for projects that will become ready for

implementation at a future date. The fund will also support a strong ongoing regional tourism pipeline

and encourage private sector innovation and infrastructure investment. This fund will play a critical role

in funding regional tourism infrastructure priorities to ensure that visitors to regional areas will have

more reasons to stay longer and spend more. There is significant demand for this fund.

22 Searoad Ferries Queenscliff - Sorrento Fact Sheet

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Visitor Economy Workforce Attractiveness and Skills

Context: Growing Service and Skill Expectations of the Visitor Economy

Victoria’s visitor economy can only benefit from continued visitation if the labour market is appropriately

skilled to deliver on the service and experience expectations of our visitors. Almost 60% of Victorian

tourism businesses experienced difficulty in recruitment of staff, over 40% experienced difficulty in

retention of staff and above 70% in skills deficiency. Looking towards 2020, Victoria’s projected growth

in labour demand will be 3.3% which is misaligned to the projected shortage of skilled labour workforce

for Victoria which is 5.8% This shortage is comparatively the highest across all States in Australia.23

Our industry has repeatedly pointed to career attractiveness and skills shortages as being major factors

underpinning this issue.

Recommendation 13: Commit to establishing a Tourism & Hospitality Workforce Taskforce and

provide $5 million over three years for the development of a State-wide Campaign to promote

tourism and hospitality career attractiveness to various segments of the labour market.

The tourism and hospitality industry suffers from an endemic perception as being a transitory career

choice. Seasonality and uncertainty of job security, uncompetitive remuneration and a distorted work-

life balance are all factors which impact an individual’s decision making and these factors are

particularly relevant to tourism and hospitality. A State-wide marketing campaign including case studies

across industries, the conceptualisation of a career path and availability of support mechanisms as

available with other industry career choices must be a priority for the Government to build long-term

skill capability in the sector.

Recommendation 14: Increase the student subsidy rate for the Diploma and Advanced Diploma

in Tourism and Travel Management

The transitional nature of the tourism and hospitality workforce is in part attributable to fewer students

seeking full qualifications in Diploma and Advanced Diploma programs due to cost. The voracious

demand for employee labour and the attractiveness for students to enter the workforce with partial

Certificate level qualifications creates a structural inefficiency of which the outcome is a critical lack of

skills in the tourism and hospitality sector. Moreover, subsidisation and loan facilities for associate

degree and degree programs provided by Federal Government create a greater outlay of cost to a

student to undertake a Vocational path than a University path. Prospective students must be

incentivised to invest in skill development and not premature entry into the workforce as this impacts

the sector’s longer-term capability to service growing visitor needs visitors. In the skills context, it is

important to consider the changing expectations of both our international and domestic visitor markets.

23 Deloitte Australian Tourism Labour Force Report 2015-2020

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More than 75% of China’s urban population will be considered “middle-class” by 2022. Growth in

Chinese urbanisation will result in growing levels of sophistication and expectations of the “visitor

experience”.24 Food and Fibre has been identified as a “Future Industry” of growth in Victoria which is

closely connected to the “Agri-Tourism” opportunity. The shift from high volume to high-value food

productions will transition productivity based workforces to skills-based workforces in the tourism and

hospitality sector, particularly in regional Victoria.25

Innovation and Ease of Doing Business in the Visitor Economy

Context: Encouraging industry participation and private sector investment

Around 96% of tourism and other visitor-focused businesses in Victoria employ less than 20 people.26

These proprietors (often in regional Victoria) enter industry with little or no knowledge of the regulatory,

legal and compliance framework which underpins the establishment and operations of a business.

Regulation is important in so far that it protects the consumer and mitigates risks borne by the

consumer.

The burden of red-tape and disproportionate regulation on Victoria’s tourism sector cannot be

underestimated. It creates misallocation of investment and discourages new entrants into marketplaces

that require urgent product refreshment. We must take a coordinated approach throughout the various

levels of Government and private sector in creating regulatory certainty, efficiency and responsiveness.

We must challenge duplication and overlap which creates costs to industry participants and

discourages entrepreneurship and innovation.

Recommendation 15: The Victorian Government to commit to funding in full the

recommendations from the 2nd Small Business Regulation Review – Visitor Economy Action

Statement focussing on:

- Licensing processes for tour operators and other visitor services providers

- Wine industry regulatory burdens that have an impact on tourism

- Regulations that have an impact on Small Events and Festivals including Health & Safety

- Food Handing regulations for Small Accommodation Providers

- Barriers to establishing innovative new ventures

The sheer breadth and variety of visitor experiences on offer both domestically and internationally is an

important demand-side factor from a consumer choice point of view. It then becomes vital from a

supply-side perspective for industry to continuously refresh and revitalise its product. The industry will

invest in new product and redevelopment of existing product if the operating and regulatory

environment is efficient and easy to navigate.

24 McKinsey & Company "Mapping China's Middle Class" 25 Victoria Government "Building Victoria's Future Industries" 26 Small Business Regulation Review (Visitor Economy) Fact Sheet