No Josh, home tourism is not booming

Data from the Treasury Department shows that coronavirus-induced restrictions on international travel have boosted the Australian economy.

According to the Treasury Department, domestic tourism added $ 7.5 billion to the economy in the December quarter, roughly 1.5% of GDP, as Australians vacationed at home and spent their money locally.

This resulted in one optimistic assessment from Treasurer Josh Frydenberg:

“Although there are some sectors of the economy that continue to struggle, it is important to note that Australians tend to spend more abroad than foreign tourists in Australia.”

“As a result, the cost of international border restrictions on tourism exports has been offset by Australians who did not travel overseas and instead spent domestically for the entire economy. The Treasury Department announced that this is expected to add $ 7.5 billion to GDP in the December quarter. “

In all respects, domestic tourism should be booming. Australian households are full of cash:

Australian households saved a record $ 187 billion in 2020 as they cut spending and incentivized.

Additionally, Aussies have traditionally made more overseas trips than foreigners in Australia. With the international border closed and Australians no longer allowed to travel overseas, they should spend this money locally instead.

However, the theory is different from the reality. I am currently working part time while vacationing on the Gold Coast. The Easter holidays are traditionally one of the busiest times of the year, but it’s unusually quiet here.

Recently Deloitte data confirmed that the tourism industry continues to grapple with “international and interstate travel falling 81% and 65% respectively in 2020”:

These decreases correspond to 7.6 million fewer international arrivals, 45 million fewer domestic nights and 84 fewer day trips in 2020 compared to 2019. This translates into a total loss of approximately $ 85 billion in visitor spending, including a loss of $ 40 billion. Dollars in international spending and a loss of $ 45 billion in domestic spending.

The Australian tourism industry is suffering from the decline in travel.

The problem is that many Australians lack the confidence to book travel as they run the risk of closing borders and / or enforcing isolation if the virus hits the community.

As such, a form of “state risk” has crept into the travel and tourism industries.

Much of the blame must lie with the Morrison administration. However, lifting responsibility for quarantine against states in unsuitable city hotels instead of regional facilities guarantees that in Australia COVID-19 is constantly entering the community, leading to further rapid border closings and more pain for travelers and tourism businesses. It also botched the vaccine rollout.

Josh Frydenberg’s latest Spruik is a neat microcosm of the Morrison government’s marketing spin: pretending tourism is booming while it is actually failing and doing nothing to meet underlying political needs.

Leith van Onselen is chief economist at MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith previously worked for the Australian Treasury, Victorian Treasury and Goldman Sachs.

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