Industry Reforms in Tourism: Impact on GDP and Unemployment in Australia

This essay discusses the impact of industry reforms in tourism on GDP and unemployment in Australia. It analyzes the economic growth of the country, the contribution of tourism to GDP, and the employment rate in the tourism sector. It also examines the government policies and schemes to reduce unemployment and enhance the tourism industry.

Running Head: ECONOMIES FOR BUSINESS 1
Economies for Business

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Introduction
Tourism is one of the most attractive industries in the nation because it generates rapid
employment and entrepreneurial opportunities. It contributes to the development of country’s
economy and growth of its Gross Domestic Product (GDP). About this industry, it can be stated
that it is an engine of growth and a main foreign exchange earner in several developed nations.
Australia is one of them where tourism industry has been recognized as one of the significant
component of the country’s economy. As one of the largest economic sectors in Australia, Travel
and Tourism industry drives exports, creates jobs and develops prosperity all over the country.
Despite strong increase in the number of visitors travelling to Australia during past two decades,
the international market for foreign visitors is heavily challenged. International visitors to
Australia travelled a record 8 million- up 11% (Statista, 2018). This figure is continuously
increasing the country and this growth has positive impact on the growth of country’s GDP and
employment. In addition to this, the government in the country is making additional efforts to
improve its economy through tourism industry. This industry also contributes to the earning of
foreign exchange in the nation.
This essay includes the discussion about the chosen topic i.e. “industry reforms in tourism”. In
Australia, tourism industry is one of the major contributors to its economic growth. So the essay
discusses about the GDP and economic growth in Australia in last 5 years. The reform in tourism
industry can be understood by considering the unemployment during past 5 years and its impact
on Australian economy. Additionally, the paper discusses about the government policy which the
country is using towards decreasing the rate of unemployment. Furthermore, the essay includes
the fiscal and NBN policy of the country in context of tourism industry.
Industry reforms in Tourism
With a viable 9.5% contribution to the global Gross Domestic Product (GDP), Travel and
Tourism is not only outperforming the wider economy but it is also growing quicker than other
major sectors like manufacturing, transportation, business and finance services (Harvie and Van
Hoa, 2016). In a country, tourism is the most enticing sector that increases the employment and
extensive business opportunities. In addition to this, it contributes to the overall growth of
country’s economy and increase in its Gross Domestic Product (GDP). To analyse the economic
performance, it is very important to consider the GDP growth of the country. Australia is also

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one of those nations which are enhancing their economies through the growth of travel and
tourism sector. There are some economic indicators which show the growth or decline in the
economy of a country. The major indicators are Gross Domestic Product (GDP) and employment
rate in that country (Standing and Vasudavan, 2010). In Australia, both are the crucial
components which support its economic development.
Gross Domestic Product (GDP) of Australia is the total market value of all the products and
services which are manufactured in the country in a fixed period of time (Konchitchki and
Patatoukas, 2014). The economy of this country is highly developed and it is one of the largest
mixed market economies all over the world with the GDP of AUD$1.69 trillion as of the year
2017. The economic growth of country indicates that it is the second richest country after
Switzerland. For more than 5 years, the World Travel and Tourism Council have been giving the
evidence, measuring the employment and economic impact of travel and tourism industry.
According to the report of Australian Bureau of Statistics, economy of Australia is dominated by
the country’s service sector, covering 61.1% of the GDP and including 79.2% of the workforce
in the year 2016. The data indicates that there is a continuous increase in the gross domestic
product of the nation. In the year 2017, the GDP of country has grown by about 2.27% on the
previous year (Statista, 2018). The below-given graph shows the GDP and economic growth of
Australia in last few years:
Figure 1: GDP Growth in Australia

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(Source: Statista, 2018)
As mentioned above, this economic growth is majorly supported by the growth in service sectors
of country like tourism, media, finance services, education and logistics. Tourism sector plays a
vital role in the growth of Australian economy. As per the report of Australian Bureau of
Statistics, Australian tourism sector has contributed 3% of the total GDP of Australlian economy
adding AD$47.5 billion in the year 2015 (Abs.gov.au, 2016). Domestic tourism is a major part of
the tourism sector and it is responsible for 73% of total direct tourism GDP. Current years saw a
record number of foreign arrivals with the increase in the short-term traveler arrivaals in the
country. In the year 2016, the direct contribution of travel sector to GDP was AU$49.7 billion
i.e. 2.9% of GDP. In 2017, it is increased by 4.0% i.e. to AUD51.7 billion (Statista, 2018).
Figure 2: Contribution of Tourism in Australia's GDP
(Source: World Travel and Tourism Council, 2017)
It majorly shows the economic activity produced by the sectors like travel agents, hotels, airports
and other transportation services. In addition to this, the practices of leisure and restaurant
industries are also directly supported by tourists. The economic growth in the country is
supported by the spending of different types of travellers. In 2016, leisure travel spending
generated 83.5% of the direct tourism GDP in comparison to 16.5% spending by business
travellers. In the year 2017, leisure travel spending is grown by 3% and business travel spending

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is increased by 9.4. Additionally, the economic growth of the country is assisted by the domestic
spending on tourism (Statista, 2018).
Furthermore, the tourism industry of Australia has considerably contributed to the
unemployment state by offereing employement to Australian population. In a country,
unemployment occur when people are jobless or without any work (Shahiduzzaman, and Alam,
2014). The country calculates unemploymen rate by dividing the number of jobless people by all
the individuals in the workforce. The below-given graph shows that 5.6% of the Australian
people had been employed in the year 2017 that indicates a slight decrease as compared to the
previous year (World Travel and Tourism Council, 2017). The increasing rate of Australian
unemployment and slowdown in employment causes a great challenge for the Australian
administration.
Figure 3: Unemployment Rate in Australia
(Source: Statista, 2018)
Likewise Gross Domestic Product, Australian tourism industry also supported this economic
indicator in the country. This industry has significantly contributed to the rate of emplopyment
by offering employment to several people. During the year 2014-15, it provided employments or
jobs to 558,000 people that was 5% of its total workforce (World Travel and Tourism Council,
2017). In 2016, this industry employed 545,000 people directly that is the 4.6% of the total
workforce in Australia. The rate of employment has been decreasing with the passage of time. It
is forecasted to fall by 3.8% in the year 2017 i.e. 524,000. This industry is providing

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employment via travel agents, hotels, airlines and other transportation systems. By 2027, the
tourism sector is expecting to provide 574,000 jobs in Australia (Statista, 2018).
Figure 4: Contribution of Tourism Sector in Unemployment Rate
(Source: World Travel and Tourism Council, 2017)
Unemployment rate in Australia is very serious problem as it has large impact on its economic
growth. In the country, unemployed youth and long-term unemployment may have an adverse
impact on the productivity and it will place the pressure on the welfare system, health and public
services in the future. Increased unemployment rate unavoidably leads to the poor standards of
living and poverty that is why it is something that need to handled effectively (Cooper, Lacy, and
Jago, 2004).
In order to reduce unemployment rate in the country, the government develops various policies
and schemes which can increase employment. These policies are such as fiscal policy, monetary
policy, OECD job strategy, welfare policies and other micro-economic factors. Australian
government has applied OFCD job startegy that focuses on the factors which drive economic and
employment growth (Gregory and Smith, 2016). The major components of this employment
policy are to enhance the flexibility of labour costs and time, reform security provisions of
employment, conduct effective and active labour market programs, enhance competencies andd
skills and reform enemployent benefits. In addition to this, Australian government can give
funding for the programs to train the llong term unemployed. These policies can also fund the
young job seekers to decrease the sunemployment among youth (Hartwell, 2017).

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Moreover, the government in Australian has employed the monetray policy that include cutting
the interest rates. Lower interest rates decreases the borrowing costs and inspire the people to
make spending and investment. It increases the agreegate demand and assists to enhnace Gross
Domestic Product. Evenetually, it reduces the deficient unemployment in the country. The
government in the country has introduced the policies like apprenticeship schemes that aim
provide the unemployed people with the new compencies and skills to get new and fresh
employment. It can enhnace the incentives to get the work (Alonso, and Northcote, 2010).
Welfare policies also have a huge impact on the well-being of people, communities and their
households. The country can boost the employment rate by lowering the employment taxes. It
will increase the labour demands. By implementing these policies and schemes, the government
in Australia is making efforts to reduce the unemployment in the country.
As mentioned above, Fiscal policy of a country can also support it to reduce the country’s
unemployment rate. Fiscal policy is the way through which a government adapts its levels of
spending and tax rates to control and impact the economy of that nation (McCombie and
Thirlwall, 2016). This policy is related to the monetary policy by which central bank affects the
money supply of that nation. the government of Australia has developed an effective fiscal
policy that plays an important role in providing a policy barrier to safegaurd Australia from
major economic tremors. The fiscal policy of Australian government is to attain budget surpluses
over the economic cycle. Under its current fiscal policy, the government’s budget emphasizes on
appliying its plan for jobs and growth. The governent is making huge investment to reform and
enhnace the tourism of country. Australian government is making investment of $70 billion in
infrastructure from the year 2014 to 2020 (Budget 2017-18, 2018).
Currently, there are more than 100 projects which involve planning works, geotechnical
assessments, procurement, land clearning and environmental assessments. In the national
economic plan of Australia government, the investment on transportation and infrastructure is
crucial part (Budget 2017-18, 2018). It uses a combination of loans, equity investments and grant
funding. The government’s decision on infrastructure and transportation investment will enhnace
attract more tourist arrival to the country. Ultimately, it will enhance the long-term productivity
and economic growth of Australia. The investment of Australian government in infrastructure
includes the funding for communications, transporatation and water infrastructure. There are

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over 1000 projects started in Australia which include airports, roads and rail. In the future, these
projects will decrease the overcrowding, enhance the living standards of cities, connect the local
communities, attract more tourist arrival and develop new employment opportunities in the
country. It is providing affordable and record levels of financial support to assist the schools and
hospitals, with the funds connected to reforms that emphasize on enhancing quality and patient
safety in hospitals. It will supoport the student arrival to the Australian cities (Thorpe and Leitão,
2014).
In this way, current fiscal policy of Australia is good for the future reforms in the tourism
industry. The government is planning to make investment in the things which improve tourism
activities and increase arrival of more tourists in the country.
The National Broadband Network (NBN) is a policy that is an Australian national open access
data network project. This policy fives the Australian population to access the faster internet
services. It has wired and radio communication elements which are revolved and run by NBN
Co. Limited. Internet service providers contract with the NBN Co. Ltd. to use the network and
provide fixed access to internet for end users (Parliament of Australia, 2018). In its current
policy, Australian Governement is providing affordable and fast broadband services by investing
$29.5 billion in a loan and equity on commercial terms of up to $19.5 billion to NBN Ltd. The
network is targeting to complete the project by the year 2020 and it will reach more than 12
million businesses and homes. In Australia, this policy was announced in the year 2009 by
labour governnment. This policy aims to address the broadband perfromance and availability of
Australia and to improve the structural seperation of Telstra by offering an optic fiber option to
its copper accessed network.
Unreliable phone and internet services are stifling growth in Australian tourism sector. The
government realized that it is holding tourism and economic development of the country back.
The use of NBN has a large impact on the growth of Australian tourism industry as the
government can promote its tourist destinations by using broadband services (Ruhanen, Whitford
and McLennan, 2015). It has improved the tourism operations and people can operate the
websites without any interruption. It assisted to enhance operations like phone lines, online
booking systems and payment machines. In addition to this, the tourists can use the maps to
explore different tourist destinations. Internet and modern techologies have encouraged tourism

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operators to make investment in advertising and promotion. It has proved to be a beneficial
medium of tourism sales and promotion. NBN enables the improvements of tour agencies and
operators by enhancing the communication and giving all the required inofmmation on the
websites. In this way, it can be stated adoption of this policy in tourism market has increased the
tourist arrival in the country (Airey and Ruhanen, 2014).
There are various issues which have impact on the impementation of National Broadband
Network. These issues are such as choice of technology, costs and politics (Smyth, 2017).
Choice of technology is one of the most important issues that can affect the use of broadband
network. Sometimes, government failed to choose right technology to install the network in the
country. Use of National Broadband Network may occur higher costs to the country’s
government (Moutinho, and Vargas-Sanchez, 2018). The government needs to spend on the
maintenance of technology and networking devices. In addiition to this, the government did not
have a clear objective for its implementation. the government has faced various complaints
related to delay in new internet connection, unusablle landline service, unusable internet service
and slow speed of internet data.
In this way, NBN policy is very effective and helpful to the tourism industry in Australia that
evantually influences the economic growth of country.
Conclusion
From the above essay, it can be concluded that tourism industry in Australia has experienced a
significant growth than other industries. This growth has a positive impact on the development of
Australian economy. Gross domestic product and unemployment rates are two major economic
indicators which are supported by the country’s tourism reforms. These economic reforms have
created the transparency in the tourism industry. It can be founded that Australian tourism
industry can assist in establishing the long-term relations with both the domestic and
international tourists. The above essay includes the economic analysis of Australian economy. It
shows that reforms in tourism industry support the gross domestic product of country. Moreover,
it significantly contributes to the employment rate in the nation. The graphs in above essays
show different economic indicators in the country. Furthermore, the country is improving its

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tourism activities by focusing on infrastructure in its fiscal policy. It makes a considerable
investment in the growth of transportation like rail, roads and airports. NBN policy has an
important role in the growth of tourism industry. Thus, it can be stated that Australian tourism
industry is one of the major contributing service industries in the country.

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