Dan Tehan (Wannon, Liberal Party, Shadow Minister for Immigration and Citizenship) | Link to this | Hansard source

In continuing my contribution to the debate on the Passenger Movement Charge Amendment Bill 2024, I want to go back to where I was when I began the speech in the House and give this quote from 2017 from the then shadow tourism minister. The then shadow tourism minister in 2017 said:

… the increase in the Passenger Movement Charge has real consequences for tourism and will have jobs impacts in the tourism industry, which employs a million Australians, is Australia's largest services export and has been nominated as one of Australia's five super growth sectors …

There was a bit of frowning from the other side when I read that quote because I don't think they quite understood who the 2017 shadow tourism minister was. It was the now Prime Minister. It's quite funny that the Prime Minister, in 2017, was aghast at any idea of increasing the passenger movement charge yet now we see it going up by $10.

What are we doing here? What are we seeing now? We are seeing the consequences of a government that can't manage the economy. What happens when you can't manage the economy, the cost of living goes up and the cost of doing business goes up? It is that, sadly, you have to tax more and you have to charge more. That's what we're seeing right here and now. The tourism industry, at a time when the cost of doing business continues to increase, is now seeing the passenger movement charge go up, even though the Prime Minister knows that this will have real consequences. One of the great shames of a government that can't handle the economy, especially for smaller businesses, is that they are impacted by the decisions that governments have to make as a consequence of their failure to manage the economy. This is one of those decisions. We already know that the passenger movement charge in Australia is one of the highest departure taxes in the developed world. At a time when we want to be doing everything we can to help and support our tourism industry, it is unfortunate that we now see that the passenger movement charge is increasing.

One of the things that is very fortunate is that the last time the passenger movement charge increased—and that's when we had those fine words from the Prime Minister—is that the then government put a five-year freeze in place through legislation. That obviously has rolled over and that five-year freeze has ended, but we saw the passenger movement charge stay stationary for five years. This $10 increase is consistent with the CPI over that time. For that reason and because of what we did previously, the opposition is not going to stand in the way of this passenger movement charge increase. In the end, given the government's economic mismanagement, we know and understand that they have no alternatives as a big-spending government to, sadly, being a higher-regulation, higher-taxing government as well. We're not going to stand in the way of it, but what we would say is: please, government, get your economic management right, because you cannot continue to put higher taxes and higher regulatory costs on every industry in this nation. If you do, to quote the Prime Minister's own words, it will have:

… real consequences for tourism and will have jobs impacts in the tourism industry, which employs a million Australians, is Australia's largest services export and has been nominated as one of Australia's five super growth sectors …

Kylea Tink (North Sydney, Independent) | Link to this | Hansard source

I rise to speak to the Passenger Movement Charge Amendment Bill 2024, as, while on the surface it would seem of little consequence to add a $10 fee that has not been adjusted since 2017, the truth is that the approach being taken here is symptomatic of a much larger issue—that is, the challenge of encouraging travellers to spend more where they land rather than eating up their disposable income through taxes on airfares. While this charge may not have been increased in seven years, there's no lack of other additional charges added to a base fare which, in some instance, ultimately mean the on-costs can sometimes be more expensive than the base fare.

The charge to be imposed on every passenger onboard a departing international flight from 1 July 2024 will add $10 to the current passenger movement charge of $60, meaning each airfare, regardless of where you are headed, will be $10 more expensive from 1 July. Whether or not this $10 will change anyone's mind about taking the trip in or out of Australia really isn't the issue to me—after all, we're only talking about adding another 1½ per cent to the cost of a return flight from Melbourne or Sydney to Bali. It is, however, about just how many additional costs are borne by a traveller and the transparency around where these fees or taxes are even going in the first place or why they are ultimately there. Finding out what charges and taxes are added to the cost of an air ticket is usually pretty straightforward. They are usually all documented at the bottom of your ticket receipt. But finding out whose pocket those charges end up in and for what purpose is a completely different scenario.

I have to declare here that I have family who work in the travel industry, and over many years I've seen my family members struggle to adjust to the changing environment. Whether it was the shrinking commissions on all forms of travel, particularly those available on airfares for agents, or the increasingly angry discussions I see them having with customers who are frustrated that everything seems to be getting so expensive, it can be emotionally draining watching someone you love work themselves to the ground for diminishing returns while others come forward to take an increase in cuts. The passenger movement charge used to be more commonly known as the departure tax, and for a long time now it has simply been included in airfares, so it's been difficult to actually feel the pinch. For agents and industry, this tax is recognisable via the code AU. But there are other taxes that are also routinely applied, and they include the passenger service charge, which has the code WY; the safety and security charge, which applies to all international and domestic airfares, which has the code WG; and the passenger service charge on domestic-only flights, which has the code QR. Then, depending on where you're going, there are also arrival charges or taxes, and this is where I take issue with the entire system.

In terms of providing a real-life example: last September I took my children and my parents to Bali for a holiday. We hadn't been overseas since before 2020, so I'd been saving really hard for a long time for this trip. Looking back at my airfares, the following taxes and fees were charged. There was, of course, the base fee for each ticket, which is a fee that covers exactly what you would expect it to cover: the seat that you're sitting on in the plane. Then there was the passenger movement charge, which, as I said earlier, used to be known as the departure tax and is an Australian government tax on all passengers departing for an overseas destination. In my case, this was charged at $60 per ticket. Then came the safety and security charge departure tax, which is an Australian government charge, again, on every domestic and international air ticket. It was introduced following 9/11 and seemingly is charged to cover the cost of underwriting safety and security services on all flights in Australian airspace. For this reason, the charge imposed on a long-distance domestic flight is likely to be higher than on an international flight. For me on my Bali flights, the charge was $32.11 on each ticket.

The passenger service charge departure international tax was the next one on my ticket. This tax goes to the Australian airport you're using and is payable for both departure and arrival. The amount for this tax varies from one airport to another, but in my case I paid this fee on three separate occasions, as we travelled to Bali via Brisbane. In total, this fee cost me another $110.77 per ticket. Finally, a charge that was coded as TD, of the amount of $24.20, was applied as an additional passenger service charge at some point—but, to be honest, I really don't know why. It seemed to be applied when I added the domestic leg to our international tickets, but not even my travel agent could actually tell me what it was for.

In total, I ended up paying an additional $227.08 per person for each of those airfares, or nearly $1,400, and that doesn't include the money that I then paid in the form of an arrival tax when we landed in Bali. That's $1,400 that was no longer available for me or my kids to spend. We couldn't spend it in Bali supporting local businesses, we couldn't spend it on the way out in the airports, and we certainly couldn't bank it and put it towards another holiday at another time. But the shocking truth is that, had we been going somewhere like Los Angeles in the United States, the taxes would have been even higher, with the total on-costs increasing by an additional $40 per person, or another $240 overall.

While I understand why this government would argue a $10 increase in this one passenger movement charge should hardly be challenged, I just don't agree. Every additional on-cost charge by a government should always be scrutinised, as they rarely exist in isolation and, as we have seen with the introduction of the safety and security charges, once applied they just don't ever seem to be removed.

It should be said that, as a citizen, there is no tax for arriving back in Australia, and children under 12 and international travellers transiting through Australia to another country are exempt. It is also worth noting that these charges are not just levied on Australian residents but also borne by tourists, based on what I can only assume is the idea that, if you're wealthy enough to travel overseas, the government would like a piece of the action. But my question here then is: why should the government take money that would otherwise be spent in small businesses and tourism outlets both here and internationally?

When it's introduced in July 2024, the $10 increase in the passenger movement charge will ultimately add another 1.43 per cent to a $701 trans-Tasman return economy airfare and another 0.32 per cent to a $3,000 return flight from Sydney to Dallas. Many will assume that, given travellers heading overseas have already been whacked with massive price increases since the resumption of overseas travel, a $10 increase will just be a drop in the bucket—right? Surely it doesn't matter that both domestic and international tourists will take the hit—after all, you're either wealthy enough to travel in the first place or you're just a tourist and you don't vote, so you really have no choice but to cop it. But even the government is prepared to confess that this $10 drop in the bucket will ultimately earn around $100 million per year for the Australian government.

In making the case for this increase, the government can point to other countries with far higher departure taxes. Leave the United Kingdom on a flight bound for Singapore or Hong Kong, and the air passenger duty, which is the United Kingdom's equivalent of the passenger movement charge, is $172 per passenger. But, even with that as the international standard, the question remains: is it the amount being charged or the very principle of the charge that needs to be challenged here? Once collected, what is this money even going to be used for?

Looking at this through a broader lens: after the horror years of 2020 and 2021, the tourism gross domestic product, or GDP, rose 60.1 per cent, to $57.1 billion, in chain volume terms in 2022-23, but this remains below the 2018-19 peak of $63.4 billion.

Tourism's overall contribution to our economic GDP growth rose to 2.5 per cent in 2022-23, but again this remains below the 2018-19 level of 3.1 per cent. It is currently estimated that 44 per cent of every tourism dollar in Australia is spent in regional destinations, and tourism hovers around fourth-largest of Australia's exporting industries, accounting for 8.2 per cent of Australia's export earnings. Domestically there are 8,478 flights per week, with 56.6 million passengers being carried over the course of the year. This is 26 per cent growth year on year. In total, 76.2 million seats were sold in the last 12 months. That's up 19 per cent year on year. But this is still significantly less than the prepandemic peak of nearly 78 million. Whilst internationally we have recently bounced back to an average of 2,118 flights per week to 61 destinations, it's still behind the 2,183 flights that were taken in January 2019.

Importantly, tourism directly employs some 666,000—or, as we just heard the previous speaker say, one million—Australians, making up five per cent of Australia's workforce, and there are nearly 11½ thousand travel agents spread around Australia. Over 355 of them are registered as being in my electorate of North Sydney, and these are the people I worry about. They will now need to look their customers in the eye and inform them that, through no fault of their own and with no meaningful benefit to themselves, the airfares they're quoting them are guaranteed to increase in price by $10, come 1 July. Ten dollars across 56.6 million passengers is a lot more than the $100 million gain currently predicted by the government, so I'm not sure what to make of that calculation. But then, talking to those who work in this industry and those who travel, the lack of transparency and accountability is something we're becoming way too accustomed to. So next time you find yourself angered by the behaviour of airlines or travel agents, spare a thought for those involved in the industry, for they seem to currently be both the whipping boy and the trough when it comes to political intentions.

Given this, on behalf of the community of North Sydney, I do not support this legislation—not because I think the dollar increase is unreasonable in and of itself but because I just don't think it's okay to whack an extra cost onto a service on the basis that it shouldn't really matter. I would, however, very much welcome a full, thorough and transparent review of all taxes currently applied within the travel industry. For that reason, I stand ready to work with the government to see that realised.

Clare O'Neil (Hotham, Australian Labor Party, Minister for Home Affairs) | Link to this | Hansard source

I thank the MPs who took the time to contribute to what is a really important debate. I want to thank the member for North Sydney, whose contribution I was glad to hear. I respect her perspective. She has obviously thought about this matter a great deal.

I commend the Passenger Movement Charge Amendment Bill 2024 to the House. It's an important part of the government's overall strategy for managing the security of our borders, an area where costs are growing year on year. The Passenger Movement Charge Amendment Bill 2024 will amend the Passenger Movement Charge Act 1978 to implement one of our government's budget measures—that is, increasing the passenger movement charge from $60 to $70, effective from 1 July. As I mentioned, this is one of several measures the government announced in the 2023-24 budget as part of our overall economic and fiscal strategy to make sure that we can continue to deliver services where costs are rising. Of course, it is very important to continue to deliver a strong budget, and you'll note that our Treasurer Jim Chalmers has been able to deliver a budget surplus for the first time in a very long time. The increase of $10 is broadly in line with inflation. Some of the other speakers have noted that it was 2017 when this charge was last increased, and that $10 increase that we're seeing on top of the $60 is broadly in line with inflation. The additional revenue generated from this increase will help advance Australia's economic interests and support the rising cost of services on our border. I'm pleased to support this bill before the parliament. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.