Visitor Economy exports worth $45 billion in 2015-16

22 Dec 2016

Tags

  • Tim Quinn
  • Australian Economy
  • International Trade
  • Visitor Economy

Growth in education and tourism exports has been strong in recent years, driven by rising incomes, improved competitiveness, expanding capacity, and a well-recognised product. Considered together these sectors form Australia’s Visitor Economy, our second largest export earner ahead of coal.[1]

Today’s release of the 2015-16 Tourism Satellite Account from the Australian Bureau of Statistics shows tourism exports increased 11.1 per cent over the year to $34.2 billion. The TSA is an important statistical collection used to gauge the health of tourism activity.[2] [3] It is also necessary to accurately estimate the value of Australia’s Visitor Economy. Refer to ABS and TRA for further analysis on the TSA.

In an earlier post I commented on the value of education travel-related exports, up 9.4 per cent to $19.9 billion in 2015-16. Education‑related travel exports represent 29 per cent of Australian services exports and 6.4 per cent of total exports.[4]

In valuing Visitor Economy exports we could simply aggregate tourism and education exports and conclude it to be worth $54.1 billion. However, this approach contains double counting of approximately $9.3 billion.[5] Our more accurate approach instead estimates Visitor Economy exports to be worth $44.8 billion in 2015-16, up 8.1 per cent and 2.3 percentage points above the long‑term average.[6] Over the ten year period to 2015-16, average annual growth in Visitor Economy exports were 0.7 percentage points higher than total service exports and one percentage point higher than total exports. Considering the discretionary nature of Visitor Economy services, this is certainly respectable performance given a collapse in education demand, the trade weighted index rising to a level not seen in forty years, and various economic crises.

Table 1: Trade in goods and services, 2014-15 to 2015-16

2014-15

(A$bn)

2014-15

(A$bn)

Annual

change (per cent)

Average annual growth (per cent)

Total exports

318.3

312.3

-1.9

4.8

Goods exports

255.6

244.0

-4.5

4.7

Services exports

62.7

68.3

9.0

5.1

Visitor Economy exports

41.4

44.8

8.1

5.8

  • Tourism (non-education)

23.6

24.9

7.1

4.4

  • Education (short-term)

7.5

9.3

23.2

9.9

  • Education (long-term)

10.6

10.6

-0.4

6.1

Source: Data from the ABS and TRA, Austrade Economics calculations

20161222_VE_Exports 

The ‘short-duration’ student sector grew sharply, up 23.2 per cent to $7.5 billion. Fees exports increased by $0.5 billion while goods and services (non-fees) exports rose 38.4 per cent, to $4.5 billion. ‘Short’ duration student expenditure on goods and services is now almost comparable to ‘Short’ duration fees ‘exports’: $4.8 billion to $4.5 billion. Over the last six years, non-fee expenditure has more than doubled (to $4.5 billion) demonstrating the sector’s broader economic contribution and potential, and it is likely growth will continue at a solid rate, driven by income growth, access, competiveness, and alumni and supporting further diversification of Australia’s Visitor Economy.

Strong growth in volumes has supported overall Visitor Economy exports growth. In 2015-16, the number of short-term students rose 14.4 per cent while non-education visitors rose 10.3 per cent. Average expenditure for students rose 7.7 per cent to $19,600, significantly higher than the average for non‑education visitors which rose 1.3 per cent (to $4,260).[7]

The Visitor Economy is Australia’s second largest export earner, ahead of coal ($35 billion) and behind iron ore ($48 billion). Essential to growing exports for both Visitor Economy sectors will be managing volumes. The education and tourism sectors are expected to grow at a rate of between six and seven per cent over the next decade and with both sectors relying on many of the same industries a continued focus on capacity increases will be essential. In 2015-16, aviation capacity rose 6.2 per cent; of the 580,200 workers reported in the TSA (up 1.2 per cent with 45,300 employed in the Education and training sector)[8], productive capacity increased 6.9 per cent (compared to the all‑industries average of 1.0 per cent. However, accessible accommodation, for both tourism and education, in some metropolitan areas will be required to maintain the momentum in onshore exports growth.


[1] This Trade and Investment Note estimated Visitor Economy exports to be worth $41.1 billion in 2014-15.

[2] Tourism is defined as travel that is for less than one year in duration. It can be for the purpose of business, conference and convention, holiday, visiting friends and relatives, education, or employment. Education‑related travel is defined as travel for higher education, vocational education and training (VET), English Language Intensive Courses for Overseas Students (ELICOS), schools and the non-award sector.

[3] International students are recognised in the Tourism Satellite Account. The approach adopted in the Australian TSA is to include all international students as visitors undertaking short term courses with an actual length of stay of less than one year. If a student stays longer than one year (ignoring short-term interruptions to their stay, for example at vacation break), their usual environment is deemed to be the school or university, and they do not fit the definition of a visitor. However, if they travel outside their usual environment, they are considered a visitor.

[4] This is derived by the ABS using the internationally-recognised Balance of Payments approach which has subtle differences to the Tourism Satellite Account.

[5] Double counting in both collections such as fees, consumption of leisure-based goods and services by students, and payments of fees by friends and relatives.

[6] In order to measure Australia’s Visitor Economy in a more accurate and consistent manner, Austrade has developed the Visitor Economy measure which combines TSA and BoP-reported travel-related exports. The estimate provides a more accurate estimate of tourism and education exports by: 1. itemising individual TSA and BoP items; 2. removing any double counting generated in various statistical collections for either tourism or education; and 3. aggregating non-overlapping line items derived from both collections.

[7] Derived by Austrade using TRA’s International Visitor Survey for June 2016.

[8] Deloitte estimates international education exports supports over 130,000 full-time equivalent positions economy-wide.