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This article has been contributed by Umme Salma, of the Bureau of Tourism Research (BTR). It was first published in BTR’s Tourism Research Report, Volume 4, Number 2, Spring 2002.
F1.1 TOURISM'S SHARE OF THE TOTAL ECONOMY 2000-01
(a) Including percentage shares of the respective national aggregates. Tourism gross value added and tourism GDP are in current prices.
(b) Estimates for 1997-98 were revised after obtaining new data from the ABS and they differ very slightly from the published estimates in BTR’s Research Report No. 6.
Source: Direct effects are from Australian National Accounts: Tourism Satellite Account, 2000-01 (cat. no. 5249.0). Indirect effects are from BTR’s economic contribution model.
On the other hand, indirect tourism GDP consistently accounted for a lower share of national GDP compared to direct tourism GDP over the four years considered. The difference between GVA and GDP is explained by net taxes on product. The higher share of direct tourism GDP in the national aggregate is a reflection of relatively higher taxes on tourism consumption compared to non-tourism consumption, and also of relatively higher net product taxes on consumption than on intermediate inputs.(2)
Direct and indirect tourism GVA and indirect tourism GDP grew at an average annual rate of 5% between 1997-98 and 2000-01, and direct tourism GDP grew at a rate of 8%. The higher growth in the latter is largely due to price increases in tourism goods and services following the introduction of GST in 2000-01.
Although GST brought about a larger share of national GDP for the direct tourism sector, this did not apply to indirect tourism GDP, again largely because of changes associated with the introduction of GST. The introduction of GST was accompanied by the abolition of wholesale taxes. Industries previously paying most of the wholesale taxes, and now also being generally exempt from paying the GST, have a lower level of net taxes on product compared to the pre-GST period. As indirect tourism GDP is accrued from business activities providing inputs to the tourism industry, the lower tax level on businesses has generated a lower share of indirect tourism GDP in the national aggregate.
Not only did the share of tourism GDP change during 1997-98 and 2000-01, its composition also changed, as is evident from table F1.3. In 1997-98, domestic tourism contributed 79% of directly created tourism GDP with business and government visitors and household visitors accounting for 11% and 66% respectively. In 2000-01, compared to 1997-98, domestic tourism became relatively less important accounting for 76% of direct tourism GDP, with both of its components exhibiting a decline in their respective shares.
Source: Direct effects are from Australian National Accounts: Tourism Satellite Account, 1997-98 and 2000-01 (cat. no. 5249.0). Indirect effects for 1997-98 are from Salma (2001) and for later years, the present study.
In terms of its contribution to indirect tourism GDP, domestic tourism’s share has dropped from 77% in 1997-98 to 75% in 2000-01. During this period there has been a shift in favour of business and government visitors and away from household visitors.
The decline in the relative importance of domestic tourism has been matched by a commensurate improvement in the role played by international visitors. For both direct and indirect tourism GDP, international visitors’ contribution increased over the years, and the rise was more marked in the case of direct GDP.
There were two reasons behind the change in the tourism GDP shares of different types of visitor: variation in the growth of their tourism expenditure, and a compositional change in their consumption basket.(3)
Aggregate tourism expenditure by international visitors increased by 26% between 1997-98 and 2000-01, compared to a 14% increase for domestic visitors, resulting in an increased share of international visitors in direct GDP contribution.
The increased share of international visitors in indirect tourism GDP is more an outcome of relative changes in the composition of consumption baskets of domestic and international visitors. In 2000-01, the composition of the consumption basket of international visitors has moved relatively more towards items produced by industries with output multiplier values higher than the average tourism multiplier of 1.96.(4) Examples are food and drinks, accommodation, and air and water transport.
In contrast, domestic visitors spent, in dollar terms, proportionately more on items such as petroleum products, transport equipment, property and business services, and retail trade; all of which are produced by industries with relatively lower output multiplier values.
Indirectly created tourism employment grew from 341,000 jobs in 1997-98 to 397,000 jobs in 2000-01, indicating an annual growth of 5%. Compared to this, directly created tourism jobs grew by only 2% per annum, from 513,000 in 1997-98 to 551,000 in 2000-01. The overall share of employment created directly and indirectly by tourism has grown, from 10% in 1997-98 to 10.4% in 2000-01, resulting in an overall growth rate of 3.6% in all tourism jobs.
The relatively higher growth in indirectly created jobs than in directly created ones, is as before, largely due to changes in the composition of aggregate tourism demand over these years. Taking all visitors together, consumption shares have gone down for items such as retail and repairs, accommodation services, community, health and personal services. For a given level of expenditure, these industries created more jobs directly than the number of jobs created through their flow-on effects. Hence, a decrease in their consumption has caused relatively more loss of direct jobs than indirect jobs.
The negative impact on direct job creation was reinforced by the fact that over the years considered, consumption share increased for items such as petroleum products and ownership of dwellings, which created more jobs through flow-on effects than through direct effects. Although expenditure share increased for items such as education and recreational services, which have higher direct employment multiplier values, the overall effect acted relatively more in favour of indirect job creation.
Tables of detailed assessment of direct and indirect tourism employment over the last four years can be purchased from the BTR.(5) As expected, industries such as Accommodation, cafes and restaurants and Retail trade, which produce items on which tourists usually spend money, contributed the bulk share of employment directly created. On the other hand, the non-tourism industries grouped together as “All other industries” were the main source of indirect job creation in tourism.
Within the All other industries group, Property and business services contributed the most throughout the years, followed by Agriculture, forestry and fishing, Wholesale trade, and Repairs.
When direct and indirect employment effects are combined the Accommodation, cafes and restaurants industry topped the list, followed by Retail trade, and Manufacturing.(6)
Following release of the TSA, BTR’s estimates of indirect economic contribution of tourism provide a comprehensive picture of tourism’s worth over the last four years.
The study shows that although tourism’s direct contribution maintains the same shares in national employment, the share of indirect employment has gone up from 4.0% in 1997-98 to 4.3% in 2000-01. The shares of both direct and indirect GVA have remained the same with an increased share of direct tourism GDP, which is largely due to the introduction of GST.
The entire analysis was undertaken with reference to 2000-01, a year in which substantial changes were introduced in fiscal measures, affecting all industries. As the ABS will revise its estimates for this particular year, the BTR intends to do so for its indirect estimates. Hence, the above conclusions are subject to revision.
(1) A part of national accounts which provides detailed information about the supply and demand of commodities in the economy, and about the structure of and interrelationships between industries.
(2) See Salma (2001), pp10-11.
(3) The tables detailing consumption shares by type of visitors can be purchased electronically from the BTR. Contact: 02 6213 6940.
(4) See Salma (2001) for aggregate tourism output and employment multiplier values and industry specific multiplier values.
(5) Tables detailing employment and value added by industry, directly and indirectly created, for every year from 1997-98 to 2000-01.
(6) All manufacturing industries are grouped together as the TSA (ABS 2002) did not provide any breakdown of employment in this industry group.
Australian Bureau of Statistics 2000, Australian National Accounts: Tourism Satellite Account, 1997-98, cat. no. 5249.0, ABS, Canberra.
Australian Bureau of Statistics 2002, Australian National Accounts: Tourism Satellite Account, 2000-01, cat. no. 5249.0, ABS, Canberra.
Salma, U. 2001, BTR Research Paper No. 6, Tourism’s Indirect Economic Effects 1997-98, BTR, Canberra.
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