The Tourism Industry and COVID-19

By Matt Keogh MP

22 February 2021

The tourism sector has been hit the hardest by the COVID-19 pandemic induced economic downturn, as borders have closed, non-essential activities have been discouraged and international tourism has dried up within the blink of an eye. The 40,000-odd travel agents across the country have copped the brunt of this downturn. The business model for travel agents is unique, many of whom are small businesses, and they have complex cashflow strategies. When booking and organising trips, they take their cut off the top, but it also means that when those trips are cancelled, as they have been during this pandemic, it's up to them to stump up the cash for the refund in the first instance before that refund can then be claimed by the holiday operator, tour company, airline or hotel. In usual times, this isn't a huge concern, as cash flow is enabled by further future bookings, but in this instance, of COVID, where no-one is travelling and no-one is planning to travel any time soon, that cash flow has completely dried up.

Early in this crisis, travel agents were under the pump, cancelling trips. They were also bleeding money, as more and more refunds were issued, leaving them with less and less cash for themselves or to pay their staff. Now even that work has dried up and many travel agents across the country have had to close altogether. The situation for travel agents is absolutely dire, and, until the global circumstances surrounding COVID stabilise, they have no hope of getting anywhere near back to normal. Their work is completely stalled, and through no fault of their own. They were the first to be hit by the pandemic, in many respects, and indeed they will be the last to recover.

And now the lifeline that they had been relying on in order to try and survive, JobKeeper, is about to be withdrawn by the Morrison government too. Travel agents need support—and I'm not talking about the grants package already introduced by the Morrison government that is, shamefully, not fit for purpose. We must provide an urgent lifeline to travel agents on the brink of collapse, instead of that inadequate loss-carryback scheme for which the vast majority of travel agents appear to be completely ineligible anyway. Travel agents and other industries are still suffering. They need tailored economic supports that will keep their heads above water.

Treasury expects that 1.3 million Australians will be on JobKeeper by the time that measure is withdrawn at the end of March, in 34 days time. That's about 10 per cent of the nation's workforce. On top of that, Treasury's own figures expect that around 100,000 of those people who have a job today will lose that job upon JobKeeper being withdrawn at the end of March.

There is so much growing anxiety and uncertainty about JobKeeper being cut, from the tourism sector and much more broadly across the nation. Yet we still haven't seen a good plan for secure, well-paid jobs to replace it. This withdrawal of support is coming far too early. Workers, small businesses and entire communities—like those up in Cairns who rely so much on international tourism to keep afloat—are hurting badly. We can't afford to lose our tourism sector and the travel agents who are such great ambassadors for it and a necessary part of enabling it.

Surely this must be starting to get personal for the Prime Minister. How else is he going to get his next beachside international holiday during a crisis if he can't get access to travel agents! We know how good some travel agencies have had it under some of the ministers of this government. Surely it's time for this government to start repaying travel agents a favour!

The vaccine rollout has now slowly—and albeit delayed—begun, and that is a good thing. But that doesn't mean that the crisis is, by any means, close to being over. Travel agents, the live events industry, tourism, cinemas, hospitality and accommodation are all struggling, and will be until we can get our borders open, get vaccination throughout our community and make sure that our economic recovery is affecting not just some parts of our community but all of our community.

Many of these sectors and many others still require JobKeeper. It is too early to withdraw such necessary financial support—financial support that is not just for business but for the employees who rely on those businesses. We need to continue to support those sectors, to make sure that the support continues, before it's too late—before those small businesses, come the end of March, get thrown into a wall by this government. The government is leading them along with breadcrumbs of hope coming to the end of March, but with no firm plan—no clarity around who will get supported or who won't get supported after March. Will anyone in the small business sector actually end up getting support after March? We don't know. Small business doesn't know. Those 1.3 million people relying on JobKeeper to hold their job don't know. And the government must fix it.