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Economic ignorance defeats Abbott's and Baird's Tourism 2020 targets

By Robert Gibbons - posted Wednesday, 15 July 2015


There is a growing realisation that the national and NSW promises in 2011-13 to achieve a doubling of the "visitor economy" by 2020 are failing. Trend analyses at State and regional levels show no sign of a doubling, in fact the reverse might be true in those regions which lack economic plans as the Blue Mountains, an internationally renowned "destination", suffers. The local tourism body has imploded and Destination NSW is wondering what to do – but there is no foundation for any reasonable plinth.

The "oligopolistic" regime in the Mountains and its cohorts control tourism budgets and are diametrically opposed to the basis of Newcastle's revival in the 1990s which in turn is parallel with Brookings/JPMorgan Chase's 10 Lessons of Global Trade and Investment Planning in US Metro Areas and others in their metro innovation series. Oligopoly – the domination of a market by a few corporates – is also decried by the UK's localism reformist ResPublica.

The doubling had a central focus on "visitor nights" reflecting the need to move from "visits" to "stays". Only one indicator of success in the visitor economy is too simple and movements in it have been found to be inconsistent with other indicators'. Also the practice has been a focus on "events" rather than regional economics; while the already known gaps in industry statistics (needed by governments, observers and investors) have been exacerbated by Federal budget cuts. The industry has called for better decision-making information but has not used what is already available.

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To cut to the chase, as a local business leader summarised:

It is a very sad example here of mediocrity. It is a widespread phenomenon in Australia these days but the Blue Mountains stands out as a case study of under-achievement. "Tourist Town" pettiness and jealousies don't help. Particularly with a divided culture...the lower Mountains being suburbia and the Upper Mountains a decayed tourist attraction governed by inadequate people with vested interests.

This might be alright but only if the Mountains region's interests are protected. No - the consequences of systemic industry policy and planning failures include:

  • The number of rooms available within significant accommodation providers (15 or more rooms) has fallen by 9% and associated employment by 12% over about 5 years
  • There are adverse trends in visitor economy indicators including, in the last three or so years (with no effect from bushfires):-
    • Domestic day expenditure fell by 20%
    • Domestic night expenditure fell by 25%
    • Total tourism expenditure fell by 14%
    • Businesses on the ratebase fell by 6%
  • The number of empty shops in Katoomba's mainstreet has grown from 25 to over 35 in two years
  • Accommodation takings were about equal in the Illawarra and Mountains in 2002 but by 2010 Illawarra was about 30% higher.
  • The Mountains' various business chambers represent a small proportion of businesses and lack economic and campaign nous as seen in poor municipal outcomes
  • Positive theatre ideas were rejected – with a refusal to even talk - while ineffectual ones were pursued, all defeated by a council that eschews strategic planning frameworks. The NSW Government has approved a new opera event, not a revival strategy based on small and medium enterprises as well as majors, with an almost exclusive focus on events rather than mainstreet and regional economics
  • Governments have subsidised one restaurant development (associated with a corporate interest) by $350,000 for a beer vat, tables and chairs, glassware and cutlery etc, to compete with nearby non-subsidised venues, and that venue trashed heritage items without corrective action.

This reinforces a "two speed" economy. The Grattan Institute's "Game Changers – economic reform priorities for Australia" (2012) pointed out that oligopolistic markets innovate less; and in the Mountains such lack of innovation is represented by falling accommodation capacity and exclusion of business conferencing in site refurbishments.

There are five main industry lobbying streams which is too many; none are resourced in the way the Hunter's and Illawarra's are; and their membership base is mere hundreds of the 6,600 or so "active businesses". The corporate cabal in the 5-star establishments influence even State-level lobbying directions, adversely, as seen recently in rejection of the only available rate-reduction analysis (Revive's) that was praised by the State executive but had funding refused by the few local members, illogically. This was the tail wagging the dog. The regional lobbies are resentful of outsiders as indicated in the following direct quotes and the locals insist the state bodies reject reform:

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I will not get involved in bringing anyone 'to task' be it Council or any individual ... (the chamber) will not bite the hand that helps feed it ... I am not able to nor interested in raising the money ...

...while I do recognise the need for improved economic sustainability throughout the Mountains, I'm afraid that what you are asking me to commit to is impossible .... I think it best to part ways as I cannot see any mutual beneficial outcomes arising from an association.

I know exactly what you're talking about but I can't help you

...we have been advised by associate bodies that due to the sensitive nature of your information, we should cease any further dealings with you and ask that you do not draw any of the [...] committee into further discussions. Committee members have requested that you not contact any of them into the future.

These attitudes produced an unreasonably punitive series of rating increases and a land planning instrument that prevents sensible employment and housing growth – and neglect of the interests of their broad members as businesses and families. In short, the effects on regional outcomes are seen to include the following unsurprising elements:

  • Collusive market conduct leads to higher prices to consumers and deterioration of mainstreet shopping strips, there is an economic nexus between real estate agents keeping rents high (gaining higher fees) and oligopolists whose competition is reduced when shops are empty
  • Individual entrepreneurs influence industry-level lobbies to resist local reforms, illogically
  • Policy proposals on rating and land use planning matters are not done by professional policy analysts.
  • Low standards and poor behaviours are tolerated with fear of antagonising inspection and approval officials in the local governance sectors, leading to high taxes, low delivery standards (assets, planning, engagement, employment, housing etc), and distorted building and planning outcomes
  • Corporates submit DAs which reflect their views but not the region's needs nor the objectives of LEP 2005 which the Council failed to implement in Katoomba town centre.
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About the Author

Robert Gibbons started urban studies at Sydney University in 1971 and has done major studies of Sydney, Chicago, world cities' performance indicators, regional infrastructure financing, and urban history. He has published major pieces on the failure of trams in Sydney, on the "improvement generation" in Sydney, and has two books in readiness for publication, Thank God for the Plague, Sydney 1900 to 1912 and Sydney's Stumbles. He has been Exec Director Planning in NSW DOT, General Manager of Newcastle City, director of AIUS NSW and advisor to several premiers and senior ministers.

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