National Library of Australia Cataloguing-in-Publication entry

Disclaimer While all reasonable efforts have been made to gather the most current and appropriate information, the Sustainable Tourism Cooperative Research Centre (STCRC) does not give any warranty as to the correctness, completeness or suitability of the information, and shall in no event be liable for any loss or damage that might be suffered as a result of reliance on this information. Please direct all enquiries to the STCRC contact details are on the back cover. National Library of Australia Cataloguing-in-Publication entry Indirect economic contribution of tourism to Australia and to Australian states and territories 2003-04 / Thiep Van Ho, Larry Dwyer...[et al.]. ISBNs: 9781921521195 (pbk), 9781921521201 (pdf). Notes: Includes index. Bibliography. Tourism Australia Statistics. Other Authors/Contributors: Daniel Pambudi, Ray Spurr, Peter Forsyth and Serajul Hoque. Cooperative Research Centre for Sustainable Tourism. 338.479194 Copyright CRC for Sustainable Tourism Pty Ltd 2008 All rights reserved. Apart from fair dealing for the purposes of study, research, criticism or review as permitted under the Copyright Act, no part of this book may be reproduced by any process without written permission from the publisher. Any enquiries should be directed to: General Manager, Communications and Industry Extension or Publishing Manager, info@crctourism.com.au First published in Australia in 2008 by CRC for Sustainable Tourism Pty Ltd Printed in Australia (Gold Coast, Queensland) Cover designed by Sin Design Acknowledgements The Sustainable Tourism Cooperative Research Centre, established and supported under the Australian Government s Cooperative Research Centres Program, funded this research. This document results from a research project undertaken by the STCRC, in conjunction with each Australian state and territory tourism authority. Qantas Airways Limited is a major supporter of the STCRC s Centre for Economics and Policy (CEP), through its sponsorship of the Qantas Chair in Travel and Tourism Economics at the University of New South Wales. Authors The research for this report was carried out by the STCRC s Centre for Tourism Economics and Policy (CEP). The following researchers contributed to the study: Thiep Van Ho Senior Economic Modeller, STCRC CEP, Monash University Larry Dwyer Qantas Professor of Travel and Tourism Economics at the University of New South Wales Daniel Pambudi Research Fellow, STCRC CEP, Monash University Ray Spurr Director of STCRC CEP, Senior STCRC Research Fellow, School of Marketing, University of New South Wales Peter Forsyth Professor of Economics and Deputy Director, Tourism Research Unit, Monash University Serajul Hoque Research Fellow, STCRC CEP, Monash University 2

CONTENTS Disclaimer 2 Acknowledgements 2 Authors 2 List of Figures 3 List of Tables 3 ABSTRACT 4 Introduction 4 Methodology 4 Results 4 Direct Contribution of Tourism 6 Indirect Contribution of Tourism 6 Total (Direct plus Indirect) Contribution of Tourism 7 Tourism Employment Value Added Ratios 13 Contribution of Tourism Consumption to Employment 14 Industry Results 16 Comparison with TRA and Access Economics Results 18 Conclusions 18 APPENDIX A: METHOD USED IN DERIVING INDIRECT ECONOMIC CONTRIBUTION OF TOURISM 19 APPENDIX B: DEFINITIONS OF SELECTED TERMS USED IN THIS REPORT* 20 REFERENCES 22 List of Figures Figure 1: Direct and Total (in parenthesis) Contribution of Tourism GVA, by State and Territory, 2003 04 7 Figure 2: Direct and Indirect Contribution of Tourism GVA, by State and Territory, 2003-04 8 Figure 3: Direct and Total Contribution of Net Taxes on Tourism Products, by State and Territory, 2003 04 8 Figure 4: Direct and Indirect Contribution of Net Taxes on Tourism Products, by State and Territory, 2003 04 9 Figure 5: Direct and Total (in parenthesis) Contribution of Tourism GSP, by State and Territory, 2003 04 9 Figure 6: Direct and Indirect Contribution of Tourism GSP, by State and Territory, 2003 04 10 Figure 7: Direct and Total (in parenthesis) Contribution of Tourism Employment, by State and Territory, 2003 04 10 Figure 8: Direct and Indirect Contribution of Tourism Employment by State and Territory, 2003 04 11 Figure 9: Share of Tourism GVA, by State and Territory, 2003 04 11 Figure 10: Share of Net Taxes on Tourism Products, by State and Territory, 2003 04 12 Figure 11: Share of Tourism GDP, by State and Territory, 2003 04 12 Figure 12: Share of Tourism Employment, by State and Territory, 2003 04 13 Figure 13: Tourism Employment Consumption Ratios, by State and Territory, 2003 04 15 List of Tables Table 1: Estimates of Direct, Indirect and Total Contribution of Tourism, by State and Territory, 2003 04 5 Table 2: State/Territory Shares of Direct Tourism GVA, GDP and Employment, for Australia, 2003-04 6 Table 3: State/Territory Shares of Indirect Tourism GVA, GDP and Employment, for Australia, 2003 04 6 Table 4: State/Territory Shares of Total (direct plus indirect) Tourism GVA, GDP and Employment, for Australia, 2003 04 7 Table 5: Tourism Employment Value Added Ratios, by State and Territory, 2003 04 13 Table 6: Tourism Employment Consumption Ratios, by State and Territory, 2003 04 14 Table 7: Tourism Direct and Indirect Output, by Industry, 2003 04, $M 16 Table 8: Distribution of Indirect Output, Non-Tourism Industries, 2003 04 17 Table 9: Direct, Indirect and Total Contribution of Tourism, Australia, 2003 04, STCRC 18 Table 10: Direct, Indirect and Total Contribution of Tourism, Australia, 2003 04, TRA 18 Table 11: Direct, Indirect and Total Contribution of Tourism, Australia, 2003 04, ACCESS ECONOMICS 18 3

ABSTRACT Tourism Satellite Accounts (TSA) 1 measure the economic contribution of tourism to gross value added (GVA), gross domestic product (GDP) or when applied at the state and territory level gross state product (GSP), and to employment. SA usually also include associated or derived information such tourism s contribution to consumption, output, exports and taxes. These estimates provide a basis for drawing comparisons between tourism and other sectors of the economy in terms of their contribution to the economy of the state or territory. A TSA covers only the direct economic contribution of tourism. However, to produce tourism output to satisfy tourism consumption also requires inputs and outputs from other non-tourism industries. This in turn generates additional indirect effects on GVA, GDP/GSP and on employment. In this report, we present results of a study of the indirect economic contribution of tourism to Australia and to the Australian states and territories for the period 2003 04. The methodology which was adopted is set out in Appendix A. Introduction In 2007, Sustainable Tourism Cooperative Research Centre (STCRC) released a comprehensive set of Tourism Satellite Accounts (TSA) for the six states and two territories of Australia for the year 2003 04 2. These reports were generated using the information from several sources including in particular the MMRF-Green 3 database developed by the Centre of Policy Studies (CoPS) at Monash University and two major national surveys, the International Visitor Survey (IVS) and the National Visitor Survey (NVS) from Tourism Research Australia (TRA). The results were reconciled to data for the same period from the Australian Bureau of Statistics (ABS) Australian Tourism Satellite Account (ATSA) 2005-06 released in May 2007 4. In its broadest form, the TSA is a comprehensive information system which collects and inter-relates statistics describing significant economic aspects of tourism. It is important to note that a TSA estimates only the economic activity which is directly attributable to tourist consumption. However, given inter-industry linkages, tourism also has indirect effects on those industries which supply commodities and services to enterprises serving visitors directly. With the aim of providing a total picture of tourism s contribution to each of the state and territory economies, the Sustainable Tourism Cooperative Research Centre s Centre for Economics and Policy (STCRC CEP) has estimated the indirect effects of tourism consumption in order to complement the previously published STCRC TSA estimates of tourism s direct effects 5. Methodology To calculate the indirect economic contribution of tourism an input-output model was employed. Details of the input-output model and the methodology for allocating the indirect economic contribution of tourism to states are provided in Appendix A. The input-output tables for the states and territories of Australia for the year 2003-04 were developed by the Centre of Policy Studies (CoPS) at Monash University, and are included in the MMRF model s database 6. Results The direct, indirect and combined total contribution of tourism to tourism industry gross value added (GVA), gross domestic product (GDP)/gross state product (GSP) and employment in Australia by state and territory for 2003 04 are summarised in Table 1. 1 Australian Bureau of Statistics (2007) 2 Spurr R. et al (2007) (1-8). Full reports were initially produced for all of the states and territories and released in April 2007. Following significant revisions of the national ATSA released by the Australian Bureau of Statistics in May 2007 these reports were revised and rereleased for all of the states and territories except the ACT in November 2007. The revised results and a report containing summary spreadsheet data, which includes results for the ACT as well, are available on the STCRC website at http://www.crctourism.com.au/ 3 Adams (2006) 4 Australian Bureau of Statistics (2007) 5 Spurr R., et al (2007) (1-8) 6 Adams (2006) 4

Table 1: Estimates of Direct, Indirect and Total Contribution of Tourism, by State and Territory, 2003 04 Direct contribution NSW VIC QLD SA WA TAS NT ACT AUS Tourism GVA ($m) 10352.1 6117.9 6633.5 1841.6 2586.3 783.6 615.7 435.3 29366.0 Tourism net taxes on products ($m) 1888.8 1160.8 1478.2 395.9 583.8 166.2 124.9 97.4 5896.0 Tourism GSP, GDP ($m) 12240.9 7278.7 8111.7 2237.5 3170.1 949.8 740.6 532.7 35262.0 Tourism employment ('000) 145.655 93.852 103.586 27.949 44.935 14.000 11.135 7.588 448.700 GVA ($m) 264554.1 190749.1 132355.2 51797.6 85669.4 13812.5 9135.7 16717.3 764791.0 Tourism share of GVA (%) 3.91 3.21 5.01 3.56 3.02 5.67 6.74 2.60 3.84 GSP, GDP ($m) 291540 211944 145418 57155 92445 14835 9445 17500 840282 Tourism share of GSP, GDP (%) 4.20 3.43 5.58 3.91 3.43 6.40 7.84 3.04 4.20 Employment ('000) 3156.4 2362.5 1842.5 713.9 972.8 209.1 95.2 175.7 9528.1 Tourism share of employment (%) 4.61 3.97 5.62 3.91 4.62 6.70 11.70 4.32 4.71 Indirect contribution NSW VIC QLD SA WA TAS NT ACT AUS Tourism GVA ($m) 8027.1 5779.8 5300.0 1883.9 2773.2 658.1 558.1 381.4 25361.6 Tourism net taxes on products ($m) 431.8 302.0 360.6 102.4 144.1 48.6 35.9 24.9 1450.4 Tourism GSP, GDP ($m) 8458.9 6081.8 5660.6 1986.3 2917.3 706.7 594.0 406.4 26812.0 Tourism employment ('000) 101.205 70.788 84.510 23.999 33.772 11.393 8.413 5.847 339.926 Total contribution NSW VIC QLD SA WA TAS NT ACT AUS Tourism GVA ($m) 18379.2 11897.7 11933.5 3725.5 5359.5 1441.7 1173.8 816.7 54727.6 Tourism net taxes on products ($m) 2320.6 1462.8 1838.8 498.3 727.9 214.8 160.8 122.3 7346.4 Tourism GSP, GDP ($m) 20699.8 13360.5 13772.3 4223.8 6087.4 1656.5 1334.6 939.1 62074.0 Tourism employment ('000) 246.860 164.640 188.095 51.948 78.707 25.393 19.548 13.435 788.626 Ratio of total to direct NSW VIC QLD SA WA TAS NT ACT AUS Tourism GVA 1.78 1.94 1.80 2.02 2.07 1.84 1.91 1.88 1.86 Tourism net taxes on products 1.23 1.26 1.24 1.26 1.25 1.29 1.29 1.26 1.25 Tourism GSP, GDP 1.69 1.84 1.70 1.89 1.92 1.74 1.8 1.76 1.76 Tourism employment 1.69 1.75 1.82 1.86 1.75 1.81 1.76 1.77 1.76 Share of indirect in total NSW VIC QLD SA WA TAS NT ACT AUS contribution (%) Tourism GVA 43.7 48.6 44.4 50.6 51.7 45.6 47.5 46.7 46.3 Tourism net taxes on products 18.6 20.6 19.6 20.5 19.8 22.6 22.3 20.4 19.7 Tourism GSP, GDP 40.9 45.5 41.1 47.0 47.9 42.7 44.5 43.3 43.2 Tourism employment 41.0 43.0 44.9 46.2 42.9 44.9 43.0 43.5 43.1 5

Direct Contribution of Tourism In 2003 04, total tourism consumption in Australia was $75.8 billion. In terms of direct economic contribution, this tourism consumption generated $65.6 billion of Australian industry output, $29.4 billion of industry gross value added, $35.3 billion of gross domestic product, and 449 thousand jobs 7. These direct contributions of tourism represent 3.8% of Australia s GVA, 4.2% of GDP, and 4.7% of total employment, as set out in Table 1. Table 2 indicates for each state and territory the share of Australian direct tourism industry GVA, GDP and employment. Table 2: State/Territory Shares of Direct Tourism GVA, GDP and Employment, for Australia, 2003-04 State/Territory Share of Tourism GVA % Share of Tourism GDP % Share of Tourism Employment % NSW 35.3 34.7 32.5 VIC 20.8 20.6 20.9 QLD 22.6 23.0 23.1 SA 6.3 6.3 6.2 WA 8.8 9.0 10.0 TAS 2.7 2.7 3.1 NT 2.1 2.1 2.5 ACT 1.5 1.5 1.7 AUS 100 100 100 More details on the direct contribution of tourism are given in the Tourism Satellite Account reports of STCRC 8. Indirect Contribution of Tourism In order to produce $65.6 billion of Australian industry output as required to satisfy the tourism consumption, the Australian industries use inputs from both tourism and non-tourism industries (see Appendix B for the definition of tourism and non-tourism industry). Via inter-industry linkages, this input demand generates an indirect effect on Australia s industry output, and hence on its value added, GDP and employment. Using an input-output model with some adjustments to assure consistency with our TSA results [more details are given in the appendix], it is estimated that tourism consumption in 2003 04 produced an indirect economic contribution of $25.4 billion on Australia s industry gross value added, $26.8 billion on its GDP, and 340 thousand jobs. For Australia, the indirect economic contribution of tourism on GVA, GDP and employment represents 46.3% of total (direct plus indirect) tourism GVA, 43.2% of total tourism GDP and 43.1% of total tourism employment. Table 3 indicates for each state and territory, the share of Australian indirect tourism industry GVA, GDP and employment. Table 3: State/Territory Shares of Indirect Tourism GVA, GDP and Employment, for Australia, 2003 04 State/Territory Share of Indirect Tourism GVA % Share of Indirect Tourism GDP % Share of Indirect Tourism Employment % NSW 31.7 31.5 29.8 VIC 22.8 22.7 20.8 QLD 20.9 21.1 24.9 SA 7.4 7.4 7.1 WA 10.9 10.9 9.9 TAS 2.6 2.6 3.4 NT 2.2 2.2 2.5 ACT 1.5 1.5 1.7 AUS 100 100 100 7 Australian Bureau of Statistics (2007) 8 Spurr et al (2007) (1-8) 6

Total (Direct plus Indirect) Contribution of Tourism Table 4 indicates for each state and territory, the share of Australian total (direct plus indirect) tourism industry GVA, GDP and employment. Table 4: State/Territory Shares of Total (direct plus indirect) Tourism GVA, GDP and Employment, for Australia, 2003 04 State/Territory Share of Total Tourism GVA % Share of Total Tourism GDP % Share of Total Tourism Employment % NSW 33.6 33.3 31.3 VIC 21.7 21.5 20.9 QLD 21.8 22.2 23.9 SA 6.8 6.8 6.6 WA 9.8 9.8 10.0 TAS 2.6 2.7 3.2 NT 2.1 2.1 2.5 ACT 1.5 1.5 1.7 AUS 100 100 100 WA $2586m ($5359m) NT $616m ($1174m) SA $1842m ($3726m) QLD $6634m ($11934m) NSW $10352m ($18379m) VIC $6118m ($11898m) ACT $435m ($817m) TAS $784m ($1442m) Figure 1: Direct and Total (in parenthesis) Contribution of Tourism GVA, by State and Territory, 2003 04, $M 7

DIRECT AND INDIRECT CONTRIBUTION OF TOURISM GVA GVA ($m) Figure 2: Direct and Indirect Contribution of Tourism GVA, by State and Territory, 2003-04, $M WA $584m ($728m) NT $125m ($161m) SA $396m ($498m) QLD $1478m ($1839m) NSW $1889m ($2321m) VIC $1161m ($1463m) ACT $97m ($122m) TAS $166m ($215m) Figure 3: Direct and Total (in parenthesis) Contribution of Net Taxes on Tourism Products, by State and Territory, 2003 04, $M 8

DIRECT AND INDIRECT CONTRIBUTION OF NET TAXES ON TOURISM PRODUCTS Net taxes on products ($m) Figure 4: Direct and Indirect Contribution of Net Taxes on Tourism Products, by State and Territory, 2003 04, $M WA $3170m ($6087m) NT $741m ($1335m) SA $2238m ($4224m) QLD $8112m ($13772m) NSW $12241m ($20700m) VIC $7279m ($13361m) ACT $533m ($939m) TAS $950m ($1657m) Figure 5: Direct and Total (in parenthesis) Contribution of Tourism GSP, by State and Territory, 2003 04, $M 9

DIRECT AND INDIRECT CONTRIBUTION OF TOURISM GSP GSP ($m) Figure 6: Direct and Indirect Contribution of Tourism GSP, by State and Territory, 2003 04 WA 44.935 (78.707) NT 11.135 (19.548) QLD 103.586 (188.095) SA 27.949 (51.948) NSW 145.655 (246.860) VIC 93.852 (164.640 ACT 7.588 (13.435) TAS 14.000 (25.393) Figure 7: Direct and Total (in parenthesis) Contribution of Tourism Employment, by State and Territory, 2003 04, '000 10

DIRECT AND INDIRECT CONTRIBUTION OF TOURISM EMPLOYMENT Figure 8: Direct and Indirect Contribution of Tourism Employment by State and Territory, 2003 04, '000 SHARE OF TOURISM GROSS VALUE ADDED Percent Percent Employed persons ('000) Figure 9: Share of Tourism GVA, by State and Territory, 2003 04 11

SHARE OF NET TAXES ON TOURISM PRODUCTS Figure 10: Share of Net Taxes on Tourism Products, by State and Territory, 2003 04 SHARE OF TOURISM GROSS DOMESTIC PRODUCT Percent Percent Figure 11: Share of Tourism GDP, by State and Territory, 2003 04 12

SHARE OF TOURISM EMPLOYMENT Percent Figure 12: Share of Tourism Employment, by State and Territory, 2003 04 Tourism Employment Value Added Ratios Table 5 provides estimates of tourism employment value added ratios for each state and territory. The ratios are defined as thousand jobs per million dollars of tourism value added. For example, in terms of direct contribution of tourism, the average direct tourism employment value added ratio for Australia is 0.015, which means that one million dollars of tourism value added in Australia generates 15 jobs. Comparison rows express the tourism employment value added ratios relative to the average tourism employment value added ratio. For Western Australia (WA), the figure 1.14 indicates that the tourism employment value added ratio in WA is 14 percent higher than the average ratio for the whole of Australia. This figure also implies that WA tourism is more labour intensive than the tourism industry generally in Australia. In contrast, the tourism employment value added ratio in New South Wales (NSW) is 0.014 showing that one million dollars of tourism value added in NSW generates 14 jobs. The ratio 0.014 corresponds to the figure 0.92 in the comparison row. This indicates that tourism employment in NSW is 8 per cent less labour intensive than national employment. Table 5: Tourism Employment Value Added Ratios, by State and Territory, 2003 04 Direct contribution NSW VIC QLD SA WA TAS NT ACT AUS Tourism employment value added ratio 0.014 0.015 0.016 0.015 0.017 0.018 0.018 0.017 0.015 Comparison 0.92 1.00 1.02 0.99 1.14 1.17 1.18 1.14 1.00 Indirect contribution NSW VIC QLD SA WA TAS NT ACT AUS Tourism employment value added ratio 0.0126 0.012 0.016 0.013 0.012 0.017 0.015 0.015 0.013 Comparison 0.94 0.91 1.19 0.95 0.91 1.29 1.12 1.14 1.00 Total contribution NSW VIC QLD SA WA TAS NT ACT AUS Tourism employment value added ratio 0.013 0.014 0.016 0.014 0.015 0.018 0.017 0.016 0.014 Comparison 0.93 0.96 1.09 0.97 1.02 1.22 1.16 1.14 1.00 The rows in Table 5 dealing with the indirect contribution of tourism show a tourism employment value added ratio for Australia as a whole of 0.013. This means that one million dollars of indirect tourism value added in Australia generates 13 jobs in tourism and non-tourism. In comparison, with the same amount of indirect tourism value added, Queensland (QLD), Tasmania (TAS), Northern Territory (NT) and the Australian Capital Territory (ACT) states generate more jobs relative to other states. 13

Taking into account both the direct and indirect contribution, the average tourism employment value added ratio for Australia is 0.014. This means that on average one million dollars of total direct and indirect tourism value added generates 14 jobs across Australia. In comparison, in terms of total contribution of tourism with the same amount of total tourism value added, QLD, WA, TAS, NT and the ACT generate more jobs relative to other states. Contribution of Tourism Consumption to Employment Table 6 summarises results for the contribution of tourism consumption to employment for the states and territories in Australia for 2003 04. In 2003-04, total tourism consumption in Australia was $75.8 billion. This generated 448,700 jobs for Australia. These represent the number of jobs in Australia required directly by tourism industries to satisfy tourism consumption. In terms of industry linkages, this tourism consumption also produced an indirect effect on employment, which generated a further 339,926 jobs in both tourism and nontourism industries. The total direct and indirect contribution of tourism consumption to employment was 788,626 jobs. In Table 6, rows 4, 7 and 10 provide information on the shares by Australia s states and territories of the employments generated by tourism consumption. Table 6: Tourism Employment Consumption Ratios, by State and Territory, 2003 04 NSW VIC QLD SA WA TAS NT ACT AUS Tourism consumption ($m) 24201.3 15421.1 19170.7 4592.9 7154.4 2181.7 1786.8 1284.1 75793.0 Share by state, % 31.9 20.3 25.3 6.1 9.4 2.9 2.4 1.7 100.0 Direct contribution NSW VIC QLD SA WA TAS NT ACT AUS Tourism employment ('000) 145.655 93.852 103.586 27.949 44.935 14.000 11.135 7.588 448.700 Share by state, % 32.5 20.9 23.1 6.2 10.0 3.1 2.5 1.7 100.0 Tourism employment consumption ratios 0.006 0.006 0.005 0.006 0.006 0.006 0.006 0.006 0.006 Indirect contribution NSW VIC QLD SA WA TAS NT ACT AUS Tourism employment ('000) 101.205 70.788 84.510 23.999 33.772 11.393 8.413 5.847 339.926 Share by state, % 29.8 20.8 24.9 7.1 9.9 3.4 2.5 1.7 100.0 Tourism employment consumption ratios 0.004 0.005 0.004 0.005 0.005 0.005 0.005 0.005 0.004 Total contribution NSW VIC QLD SA WA TAS NT ACT AUS Tourism employment ('000) 246.860 164.640 188.095 51.948 78.707 25.393 19.548 13.435 788.626 Share by state, % 31.3 20.9 23.9 6.6 10.0 3.2 2.5 1.7 100.0 Tourism employment consumption ratios 0.010 0.011 0.010 0.011 0.011 0.012 0.011 0.010 0.010 The tourism employment consumption ratios are defined as thousand of jobs per million dollars of tourism consumption. Direct, indirect and total tourism employment consumption ratios for Australia were 0.006, 0.004 and 0.010, respectively (see also Figure 13). This means that one million dollars of tourism consumption generated 10 jobs in terms of total contribution, which included six jobs from the direct and four jobs from the indirect contribution. The tourism employment consumption ratios derived for states and territories should be interpreted with care, since the tourism employment generated in each state/territory was not only generated by the tourism consumption in the state/territory but also from tourism consumption in other states and territories. This occurs where one state or territory exports goods and services to another state or territory where it is consumed by tourism. STCRC state and territory TSA reports for 2003 04 show that in terms of direct contribution, about 10.3% of tourism employment in NSW was generated by tourism demands from other states. 14

Table 6 shows that for NSW, the direct, indirect and total tourism employment consumption ratios were 0.006, 0.004 and 0.010, respectively. That is, one million dollars in tourism consumption in NSW is associated with production of 10 jobs for NSW in term of total contribution. This includes six jobs from direct contribution and four jobs from indirect contribution. This relationship does not necessarily hold for a one million dollar increase in tourism consumption. To accurately estimate the impact of a change in tourism consumption on aggregates such as GSP and employment requires the use of an economic model which can take account of a range of interactive effects across the economy. The STCRC CEP is currently developing a suite of Tourism Computable General Equilibrium which will be able to do this for the Australian states and territories. TOURISM EMPLOYMENT CONSUMPTION RATIOS Figure 13: Tourism Employment Consumption Ratios, by State and Territory, 2003 04 15

Industry Results Industries Table 7: Tourism Direct and Indirect Output, by Industry, 2003 04, $M Tourism direct and indirect output Tourism direct output Tourism indirect output Indirect output (non-tourism industries) Indirect output (non-tourism industries), % Agriculture, Forestry and Fishery 2675.7 0.0 2675.7 2675.7 21.1 Coal 33.0 0.0 33.0 33.0 0.3 Oil 770.0 0.0 770.0 770.0 6.1 Gas 279.5 0.0 279.5 279.5 2.2 Mining 323.1 0.0 323.1 323.1 2.6 Food 5011.6 3427.0 1584.6 0.0 0.0 Drink 2073.8 1560.0 513.8 0.0 0.0 TCF 1529.2 1266.6 262.6 0.0 0.0 Wood Products 220.4 49.8 170.6 0.0 0.0 Paper Products 1996.8 776.1 1220.6 0.0 0.0 Other Manufactures 673.2 0.0 673.2 673.2 5.3 Petrol Refinery 3153.2 1341.1 1812.2 0.0 0.0 Chemical Products 1055.1 466.7 588.4 0.0 0.0 Plastic Rubber Products 626.3 0.0 626.3 626.3 4.9 Non Metal Mineral Products 350.9 181.8 169.1 0.0 0.0 Cement 53.7 0.0 53.7 53.7 0.4 Iron Steel 340.1 0.0 340.1 340.1 2.7 Aluminum 73.8 0.0 73.8 73.8 0.6 Metal Products 833.6 0.0 833.6 833.6 6.6 Transport Equipments 1713.1 608.0 1105.1 0.0 0.0 Other Equipments 667.8 0.0 667.8 667.8 5.3 Electricity 1150.8 0.0 1150.8 1150.8 9.1 Gas Supply 135.6 0.0 135.6 135.6 1.1 Water Supply 364.7 0.0 364.7 364.7 2.9 Construction 405.9 0.0 405.9 405.9 3.2 Trade 14487.0 7074.0 7413.0 0.0 0.0 Hotels Cafes 18985.3 17757.0 1228.3 0.0 0.0 Road Transport 4062.9 2693.0 1369.9 0.0 0.0 Rail Transport 1186.6 885.0 301.6 0.0 0.0 Water Transport 211.1 149.8 61.3 0.0 0.0 Air Transport 11359.7 10855.2 504.5 0.0 0.0 Other Transport 4501.9 1962.0 2539.9 0.0 0.0 Communication 4990.2 2657.3 2332.8 0.0 0.0 Finance Services 3261.9 0.0 3261.9 3261.9 25.7 Owner Dwelling 2080.0 2080.0 0.0 0.0 0.0 Business Services 12331.6 856.0 11475.6 0.0 0.0 Government Administration and Defense 477.5 65.3 412.2 0.0 0.0 Education 2280.3 2159.0 121.3 0.0 0.0 Health 3650.2 3608.2 42.0 0.0 0.0 Other government and services 3987.3 3164.1 823.1 0.0 0.0 Total 114364.1 65643.0 48721.1 12668.5 100.0 % 100.0 57.4 42.6 11.1 16

Table 8: Distribution of Indirect Output, Non-Tourism Industries, 2003 04 Industries NSW VIC QLD SA WA TAS NT ACT Total Agriculture Forestry and Fishery 0.271 0.244 0.200 0.097 0.142 0.030 0.016 0.001 1.000 Coal 0.403 0.076 0.467 0.010 0.044 0.001 0.000 0.000 1.000 Oils 0.000 0.493 0.073 0.107 0.258 0.000 0.068 0.000 1.000 Gas 0.000 0.245 0.068 0.129 0.551 0.000 0.007 0.000 1.000 Mining 0.048 0.065 0.132 0.032 0.613 0.020 0.090 0.000 1.000 Other Manufactures 0.409 0.295 0.137 0.061 0.074 0.009 0.004 0.011 1.000 Plastic Rubber Products 0.321 0.448 0.070 0.095 0.061 0.005 0.000 0.000 1.000 Cement 0.307 0.206 0.264 0.064 0.096 0.029 0.022 0.011 1.000 Iron Steel 0.594 0.217 0.086 0.078 0.022 0.003 0.001 0.000 1.000 Aluminium 0.130 0.133 0.261 0.000 0.342 0.036 0.098 0.000 1.000 Metal Products 0.335 0.281 0.202 0.069 0.087 0.019 0.004 0.002 1.000 Other Equipments 0.382 0.334 0.114 0.093 0.062 0.006 0.006 0.004 1.000 Electricity Coal 0.383 0.260 0.281 0.023 0.053 0.000 0.000 0.000 1.000 Electricity Gas 0.077 0.075 0.112 0.307 0.340 0.000 0.089 0.000 1.000 Electricity Oil 0.000 0.000 0.186 0.080 0.534 0.003 0.196 0.000 1.000 Electricity Hydro 0.192 0.131 0.018 0.003 0.027 0.630 0.000 0.000 1.000 Electricity Biomass 0.185 0.417 0.215 0.038 0.099 0.046 0.000 0.000 1.000 Electricity Biogas 0.281 0.487 0.042 0.117 0.073 0.000 0.000 0.000 1.000 Electricity Wind 0.098 0.461 0.060 0.176 0.138 0.066 0.000 0.000 1.000 Electricity Supply 0.283 0.261 0.192 0.066 0.129 0.026 0.027 0.016 1.000 Gas Supply 0.194 0.514 0.046 0.127 0.082 0.000 0.015 0.022 1.000 Water Supply 0.393 0.248 0.121 0.087 0.130 0.012 0.001 0.008 1.000 Construction 0.349 0.223 0.210 0.067 0.106 0.015 0.009 0.020 1.000 Finance Services 0.439 0.273 0.145 0.058 0.056 0.013 0.006 0.011 1.000 Indirect output, non tourism industries, shares by states 0.317 0.284 0.154 0.078 0.129 0.016 0.016 0.006 1.000 As shown in Table 7, the indirect effect on non-tourism industries accounts for 11.1% of the total effect, or for 26.1% of the total indirect effect. We may expect that the states have a similar distribution of indirect effects for tourism industries as that for direct effects, but for indirect effects on non-tourism industries this may not be so. Depending on the distribution of industry output among states, and the existing inter-industry linkages, states are likely to differ in respect of the indirect effect of tourism consumption on the output of non-tourism industries. The results for indirect effects of tourism, when compared to those for the direct effects only, show an improvement in the economic contribution of tourism for three states: Victoria (VIC), South Australia (SA) and Western Australia (WA), relative to the national average as shown in Table 1. This can be explained by examining the distribution of indirect effects of tourism on non-tourism industries (see Table 8). From Table 8, it can be seen that these three states (NSW, VIC and QLD) benefit significantly from having a large Agriculture forestry and fishing industry (which account for 21.1% of the total indirect effects on non-tourism industries), Oil industry (6.1% of indirect effect on non-tourism industries), and Gas and Mining industries. VIC and WA also benefit from the relative size of their electricity supply industries (which account for 9.1% of the indirect effect on non-tourism industries). VIC also benefits from its plastic and rubber industry (4.9% of indirect effects on non-tourism industries). However, many of these non-tourism industries are capital intensive and these three states do not, therefore, gain as large an indirect effect on employment relative to the indirect effect they experience on gross value added and GSP. 17

Comparison with TRA and Access Economics Results Tables 9, 10, and 11 summarise the estimates of direct, indirect and total contribution of tourism to Australia for the year 2003 04, as presented by STCRC, TRA and Access Economics. In the work done by Access Economics, the values of direct effect of tourism GVA, GDP and tourism employment are based on the unrevised (pre-may 2007) version of the ABS TSA. The results presented in this report have used the later revised version of the ABS TSA 9. The tables below show that our results are, in general, similar to those estimated by TRA, which also used the revised TSA tables. However, in terms of the estimation of indirect effects on net taxes on products, our results are closer to those of Access Economics. Table 9: Direct, Indirect and Total Contribution of Tourism, Australia, 2003 04, STCRC Direct effect Indirect effect Total effect Ratio of total to direct Tourism GVA ($m) 29366.0 25361.6 54727.6 1.86 Tourism GDP ($m) 35262.0 26812.0 62074.0 1.76 Tourism net taxes on products ($m) 5896.0 1450.4 7346.4 1.25 Tourism employment ('000) 448.7 339.9 788.6 1.76 Tourism output ($m) 65642.0 48722.1 114364.1 1.74 Average tourism employment output ratio 0.007 0.007 0.007 Table 10: Direct, Indirect and Total Contribution of Tourism, Australia, 2003 04, TRA Direct effect Indirect effect Total effect Ratio of total to direct Tourism GVA ($m) 29365 25782 55147 1.88 Tourism GDP ($m) 35262 26378 61640 1.75 Tourism net taxes on products ($m) 5897 596 6493 1.10 Tourism employment ('000) 448.7 330.8 779.5 1.74 Source: Tourism s Contribution to the Australian Economy 1997-98 to 2005-06, Tourism Research Australia, December 2007 Table 11: Direct, Indirect and Total Contribution of Tourism, Australia, 2003 04, ACCESS ECONOMICS Direct effect Indirect effect Total effect Ratio of total to direct Tourism GVA ($m) 26016 23961 49977 1.92 Tourism GDP ($m) 31952 25222 57174 1.79 Tourism net taxes on products ($m) 5936 1261 7197 1.21 Tourism employment ('000) 536.6 267.0 803.6 1.50 Source: The economic contribution of tourism to the state of Victoria, Access Economics, September 2005 Conclusions In 2003 04, total tourism consumption in Australia generated $29.4 billion of direct tourism gross value added, $35.3 billion of direct tourism GDP and 448,700 jobs. In addition to its direct effect this tourism consumption also generated $25.4 billion of indirect tourism gross value added, $26.9 billion of indirect tourism GDP and indirect employment of 339,900 jobs. These results are based on an input-output model, which is subject to strong short run assumptions that allow no price effects on other sectors of the economy. The work, however, provides a foundation for estimating the contribution of tourism, which is useful in policy analysis in the short run. A more sophisticated tool, such as computable general equilibrium (CGE) modelling, should be used to examine the impacts of changes in tourism demand on state and territory economies. A Tourism CGE has been developed by the STCRC CEP for Australia and for the state of New South Wales; it is currently under development for the remaining Australian states and territories. 9 Australian Bureau of Statistics (2007) 18

APPENDIX A: METHOD USED IN DERIVING INDIRECT ECONOMIC CONTRIBUTION OF TOURISM To derive total direct and indirect effects of tourism on Australian goods and services, we employ an inputoutput model as follows X = B * Y Where X represents a vector of outputs of Australian goods and services, Y represents a vector of tourism output, and B is the Leontief inverse which is frequently referred to as the total requirements coefficients matrix. To examine the effects of tourism on Australian outputs only, we exclude imports from the B inverse. The B inverse is derived by using an Input-Output Table for Australia, as developed by the Centre of Policy Studies at Monash University and is given in its MMRF database. To allocate total direct and indirect effects of tourism to Australia s states and territories, our methodology is as follows: a) To be consistent with the TSA s results as produced by the STCRC, for tourism industries, the indirect effects of tourism on the tourism industries value added, GSP and employment will have similar characteristics as those for the direct effects. b) To derive the indirect effects of tourism on Australia s states and territories non-tourism industries, we employ the MMRF database. First, indirect non-tourism industry outputs are allocated to the states and territories by employing the distribution of production among the states and territories, as implied in the MMRF database. Second, to derive indirect effects on the industries valued added and employment, we use industries value-added output ratios and employment output ratios, as given in the MMRF Input-Output Tables for the states and territories. 19

APPENDIX B: DEFINITIONS OF SELECTED TERMS USED IN THIS REPORT* Tourism Output Tourism output is measured at basic prices, that is before any taxes on tourism product are added (or any subsidies on tourism products are deducted). Output consists of those goods and services that are produced within an establishment that become available for use outside that establishment, plus any goods and services produced for own final use. Tourism Gross Value Added Tourism gross value added measures the value of tourism gross output at basic prices by all industries which supply tourism products, less the value of the inputs used in producing these tourism products. Tourism gross value added is directly comparable with the value added of conventional industries such as mining and manufacturing and should also be used for comparisons across countries or regions. Tourism Gross Domestic Product (TGDP) or Tourism Gross State Product (TGSP) Tourism gross domestic product is tourism gross value added plus taxes paid less subsidies received on tourism related products as these are reflected in prices that visitors actually pay. Taxes on tourism products include the Goods and Services Tax (GST), wholesale taxes and excise duties on goods supplied to visitors. TGDP and TGSP will generally have a higher value than tourism value added. TGDP and TGSP are a satellite account construct to enable a direct comparison with the most widely recognised national accounting aggregates, GDP at the national level, and GSP at the state or territory level. While it can be useful in this context, tourism gross value added is normally used when making comparisons with other industries or between countries or regions. Direct Impacts of Tourism The estimates of tourism consumption, output, value added and gross domestic product/gross state product (GDP/GSP) presented in the national and state and territory TSA are recorded at current prices, that is the prices prevailing in the period to which the observation relates. The estimates relate to the direct impact of tourism only. A direct impact occurs where there is a direct relationship (physical and economic) between the visitor and producer of the good or service. Indirect Impacts of Tourism The estimates of downstream effect of tourism consumption, output, value added and gross domestic (state) product (GDP/GSP). For example, when a visitor buys a meal, indirect tourism demand is generated for the food manufacturer, the transporter, the electricity company etc., that provide the necessary inputs required to make the meal. To fully measure indirect effects, account should also be taken of the effect of changes in incomes which feed through further changes in tourism demand. Tourism and Non-Tourism Industry A tourism industry, as defined in the Australian Tourism Satellite Account (ATSA) is an industry that is generated by visitors and the supply of tourism products by domestic producers. ATSA classifies the tourism industry as comprising the following tourism characteristic and tourism connected industries. Tourism characteristic industries Travel agency and tour operator services Taxi transport Air and water transport Motor vehicle hiring Accommodation Cafés, restaurants and food outlets 20

Tourism connected industries Clubs, pubs, taverns and bars Other road transport Rail transport Food manufacturing Beverage manufacturing Transport equipment manufacturing Other manufacturing Retail trade Casinos and other gambling services Libraries, museums and arts Other entertainment services Education Ownership of dwellings All other industries are classified as non-tourism industries. Since this study utilises the MMRF model s database in calculating the indirect economic contribution of tourism, for operational convenience the set of tourism industries above has been converted and mapped to follow the industry classification of the MMRF model s database as appears in Tables 7 and 8. * These definitions are based on the Explanatory Notes to ABS Tourism Satellite Account, Australian National Account, 5249.0, 2005/06, with adjustment where necessary to reflect the state/territory focus of this report. 21

REFERENCES Access Economics (2005). The Economic Contribution of Tourism to the State of Victoria: An Updated Tourism Satellite Account-Based Analysis For 2003 04, a report commissioned by Tourism Victoria. Adams, P.D. (2006). MMRF Database 2003 2004, Centre of Policy Studies, Monash University, Australia. Australian Bureau of Statistics (2007). Australian National Accounts Tourism Satellite Account 2005 06, (Cat. No. 5249.0), Canberra, http://www.abs.gov.au Spurr, R., Ho, T. V., Forsyth, P., Dwyer, L., Pambudi, D. and Hoque, S. (2007) (1). Tourism Satellite Accounts 2000 04 Summary Spreadsheets, Sustainable Tourism Cooperative Research Centre, Gold Coast, Queensland, http://www.crctourism.com.au/ Spurr R., Ho, T. V., Forsyth, P., Dwyer, L., Pambudi, D. and Hoque, S., (2007) (2). Tourism Satellite Account New South Wales, Sustainable Tourism Cooperative Research Centre, Gold Coast, Queensland, http://www.crctourism.com.au/ Spurr R., Ho, T. V., Forsyth, P., Dwyer, L., Pambudi, D. and Hoque, S., (2007) (3). Tourism Satellite Account Victoria, Sustainable Tourism Cooperative Research Centre, Gold Coast, Queensland, http://www.crctourism.com.au/ Spurr R., Ho, T. V., Forsyth, P., Dwyer, L., Pambudi, D. and Hoque, S., (2007) (4). Tourism Satellite Account Queensland, Sustainable Tourism Cooperative Research Centre, Gold Coast, Queensland, http://www.crctourism.com.au/ Spurr R., Ho, T. V., Forsyth, P., Dwyer, L., Pambudi, D. and Hoque, S., (2007) (5). Tourism Satellite Account South Australia, Sustainable Tourism Cooperative Research Centre, Gold Coast, Queensland, http://www.crctourism.com.au/ Spurr R., Ho, T. V., Forsyth, P., Dwyer, L., Pambudi, D. and Hoque, S., (2007) (6). Tourism Satellite Account Western Australia, Sustainable Tourism Cooperative Research Centre, Gold Coast, Queensland, http://www.crctourism.com.au/ Spurr R., Ho, T. V., Forsyth, P., Dwyer, L., Pambudi, D. and Hoque, S., (2007) (7). Tourism Satellite Account Tasmania, Sustainable Tourism Cooperative Research Centre, Gold Coast, Queensland, http://www.crctourism.com.au/ Spurr R., Ho, T. V., Forsyth, P., Dwyer, L., Pambudi, D. and Hoque, S., (2007) (8). Tourism Satellite Account Northern Territory, Sustainable Tourism Cooperative Research Centre, Gold Coast, Queensland, http://www.crctourism.com.au/ Tourism Research Australia (2007). Tourism s Contribution to the Australian Economy 1997-98 to 2005-06, Tourism Research Australia, Canberra. 22

LIST OF ABBREVIATIONS ABS ACT AUS CEP CGE CoPS GDP GSP GVA NSW IVS NT NVS QLD SA STCRC TAS TGDP TGSP TRA TSA VIC WA Australian Bureau of Statistics Australian Capital Territory Australia STCRC Centre for Economics and Policy Computable General Equilibrium Centre of Policy Studies Gross Domestic Product Gross State Product Gross Value Added New South Wales International Visitor Survey Northern Territory National Visitor Survey Queensland South Australia Sustainable Tourism Cooperative Research Centre Tasmania Tourism Gross Domestic Product Tourism Gross State Product Tourism Research Australia Tourism Satellite Account Victoria Western Australia 23

Travel and tourism industry Academic researchers Government policy makers N RESEARCH AND DEVELOPMENT TI INDUSTRY P ARTNERS EDUCATION AND TRAINING ON INN COLLABORATION OVA O I T A C O M NIC M U COMMERCIALISE UTILISE New products, services and technologies Uptake of research finding by business, government and academe Improved business productivity Industry-ready post-graduate students Public good benefits for tourism destinations UNIVERSITY P ARTNERS C O M M E R C I A L I S AT I O N EC3, a wholly-owned commercialisation company, takes the outcomes from the relevant STCRC research; develops them for market; and delivers them to industry as products and services. EC3 delivers significant benefits to the STCRC through the provision of a wide range of business services both nationally and internationally. KEY EC3PRODUCTS TOURISM NT NORTHERN TERRITORY AUSTRALIA Chairman: Stephen Gregg Chief Executive: Ian Kean Director of Research: Prof. David Simmons CRC For Sustainable Tourism Pty Ltd Gold Coast Campus Griffith University Queensland 4222 Australia ABN 53 077 407 286 Telephone: +61 7 5552 8172 Facsimile: +61 7 5552 8171 Website: www.crctourism.com.au Bookshop: www.crctourism.com.au/bookshop Email: info@crctourism.com.au

8.4% 14.2% 12.7% 10.8% Leading the world in sustainable tourism research, commercialisation, extension and education. CRC for Sustainable Tourism Pty Ltd ABN 53 077 407 286 Gold Coast Campus Griffith University QLD 4222 Australia Telephone: +61 7 5552 8172 Facsimile: +61 7 5552 8171 *11125 Website: Bookshop: Email: www.crctourism.com.au www.crctourism.com.au/bookshop info@crctourism.com.au