TNQ Tourism Recovery Fund

Briefing Note Summary

Tropical North Queensland (TNQ) is world renowned as a leading tourism destination.

The visitor economy supports one in six jobs directly and indirectly, and pre-COVID the tourism sector paid more than $1bn in State and Federal taxes per annum.

To date, the regional economy has lost $5.3bn due to COVID-19 border closures.

The region’s international recovery program needs to commence immediately, including the $15m budget commitment and extension of the eligibility for the Export Market Development Grant (EMDG).

The Issue

Maximising opportunities for TNQ

Tropical North Queensland (TNQ) is a significant tourism destination for both domestic and international visitors, with the region being the gateway to unique World Heritage assets. With a tourism industry accounting for 17% of the regional economy, and international tourism representing 7.4%1, the local economy was the most impacted regional tourism economy in the early stages of the COVID-19 pandemic.

COVID-19 has devastated the TNQ tourism industry, and to date the regional economy has lost $5.3bn in Gross Regional Product (GRP) due to border closures. Domestic lockdowns and no international visitors have led to the region losing on average $7m a day, as well as more than 9000 jobs lost. This was one of the primary reasons the labour force in the Cairns SA4 region slumped by 4400* (or -4.9%) people in work in 2021. This contrasts starkly with other QLD regions like the Gold Coast (+51,600* or 14.2%), Townsville (+8100* or 4.5%), and the Sunshine Coast (+2200* or 0.6%). Prior to COVID-19, annual tourism expenditure in the region was predicted to reach $5bn by 2029.

Prior to the pandemic the region’s tourism businesses paid over $1bn in tax per annum.  Pre-COVID figures showed more than 850,000 international tourists visited the region each year, staying nearly seven million nights and spending $1.1bn annually. This meant that closure of international borders impacted TNQ disproportionately. The international recovery in the region has been slower than predicted, and the re-introduction of international aviation capacity in the region is likely to be slow without a funding boost. Tourism Tropical North Queensland (TTNQ) gained commitment in the March Federal budget to a $15m international recovery commitment. This now needs to be rolled out for the region to thrive – this investment is forecast to generate in excess of $100m in additional visitor spend from 95,000 extra international visitors, supporting close to 1000 new jobs in our region. 

Background

Rebuilding international tourism

TNQ stretches from Cardwell to the Torres Strait and west to the Northern Territory border. Pre-COVID-19, TNQ received nearly three million domestic and international visitors annually. This equated to an estimated $3.5bn in annual visitor spend in the year ended March 20201 generating $1bn of tax revenue annually. Two-thirds of the region’s visitor nights are domestic travellers, and one-third international. The visitor economy, made up of holiday, visiting friends and relatives, business events, major events, and education visitors, contributes over 17% of GRP in the region, supporting one in six jobs directly and indirectly.

Over the past decade, the funds available for tourism marketing in the state have not kept pace with the increased level of competition both in Australia and globally, and the impact of global travel restrictions from COVID-19 has seen the visitor economy come to a virtual standstill since March 2020.

A $10m investment in the region’s domestic marketing efforts through the Recovery for the Regions program has generated immediate results.  TTNQ has been able to invest these funds to generate over $300m of additional visitor expenditure and $75m in business events leads – flowing through to see the region exceed its 2019 domestic visitor spend by more than $700m. 

A $15m investment was committed in the March 2022 Federal Budget to deliver three priority programs – supporting new aviation routes with demand driving, trade and market re-engagement, and lifting the global profile of the Great Barrier Reef. 

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 Tropical North Queensland (TNQ) region and its facilities are critical pieces of economic infrastructure. With international flights returning to Cairns, there is an immediate need to drive demand to ensure these services are sustained and new services can open. 

Next Steps

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

Finally, development of an accelerated reopening pathway with timeframes would allow the industry to be able to plan for the future and give confidence to travellers and the TNQ tourism sector.

The result will be a framework for more sustainable, affordable, and efficient growth, enabling the region to influence population trends rather than respond to them. The strategy will also provide input to the state population plan, complement the Federal Government’s Thrive 2030 visitor economy aspirations and programs to drive new migrants to regional cities, and inform the Queensland Government’s delivery of the National Partnership on the Skilling Australians Fund.

Our Recommendation

  • That the Federal Government immediately enter into an agreement with Tourism Tropical North Queensland (TTNQ) to invest $15m over three years for destination marketing and trade activities to rebuild and source international markets to market the secured aviation routes into the region and boost demand.
  • That the State and Federal Governments commit to extend or reset programs, such as the Export Market Development Grants and international trade subsidies, to businesses that have exceeded their timeframe for eligibility, to ensure international trade activities restart and drive the recovery of the region’s $1bn international market.

Source

  1. Tourism Research Australia, 2021