15 Oct 2009

Planning reform crucial to tourism development

By Brett Gale

Tourism is among the many sectors which face the challenge of dealing with different planning legislation depending on the location of their properties, adding a layer – or two - of bureaucracy which increases capital costs. To address this, TTF is working on a National Tourism Planning Code which will provide consistency for developers, investors and operators.

TTF AustraliaFederalism has brought Australia political stability the envy of countries around the world, but it also brings with it a range of attendant anachronisms which add to the regulatory burden, increasing compliance costs for business. The streamlining of legislation through the COAG process will bring efficiency and productivity gains, while reducing red tape and barriers to market entry will foster competition in many sectors.Federalism has brought Australia political stability the envy of countries around the world, but it also brings with it a range of attendant anachronisms which add to the regulatory burden, increasing compliance costs for business. The streamlining of legislation through the COAG process will bring efficiency and productivity gains, while reducing red tape and barriers to market entry will foster competition in many sectors.Federalism has brought Australia political stability the envy of countries around the world, but it also brings with it a range of attendant anachronisms which add to the regulatory burden, increasing compliance costs for business. The streamlining of legislation through the COAG process will bring efficiency and productivity gains, while reducing red tape and barriers to market entry will foster competition in many sectors.

Tourism is but one industry involving companies with interests in various jurisdictions and the inconsistency of planning regulations is a hurdle many operators must face. To simplify matters, TTF is currently devising a National Tourism Planning Code, which aims to unify definitions of tourism-related structures, including hotels and resorts, giving investors and operators more certainty. The complexity and specific knowledge required to deal with the disparate regimes is eloquently illustrated by the accompanying article in this edition of TTF-Clayton Utz Insights, State planning reforms roll on – but all in the same direction?, which features the work of no fewer than five people, each a specialist in their home state.

Prima facie, the answer to the question "What is a hotel?" would seem relatively simple, however from a regulatory standpoint it’s far from simple. Not only do hotel developers, owners and operators have to deal with differing planning regimes across state borders, local governments have their own definitions and regulations – adding yet another layer of regulation. We acknowledge that localised exceptions and conditions may be valid, but would contend that a single national definition would be suitable in the vast majority of cases. Such a definition would deliver significant cost savings during the construction and fit-out of new developments, as well as the refurbishment of existing building stock, not to mention their subsequent operation.

The Federal Government will later this year release the National Long-Term Tourism Strategy, a document which will provide the framework for the continuing development of a sustainable Australian tourism industry over the coming decades. The strategy is being developed following input from tourism businesses and other industry stakeholders. TTF’s Managing Director Christopher Brown was a member of a strategy steering committee established by Tourism Minister Martin Ferguson in July 2008. The committee, led by former Qantas chair Margaret Jackson, produced a report which recommended that the strategy deal with supply-side issues, including planning. The Jackson Report, Informing the National Long-Term Tourism Strategy, calls for the case of tourism investment to be improved through developing integrated destination development plans and creating a national visitation priorities list. It calls for a stronger recognition of tourism in government planning and approval processes, taxation and infrastructure investment planning. The committee also advocated that COAG conduct an urgent systemic review of planning and regulatory regimes; a process, we acknowledge, that is already underway.

The report identified a need to develop attractive, welcoming and accessible destinations that are intelligently priced. It cited the complexity, inconsistency and lack of transparency regarding regulations, planning and approval processes and the barriers they create to tourism development. Of the recommendations made in the Jackson Report, the tourism industry has prioritised those it believes will have the biggest impact in helping to foster private investment and growth in tourism:

  1. National Tourism Objectives and Targets - Articulating clear objectives, strategies, measurable targets and accountabilities for industry and government agencies.
  2. Destination Development Plans - Integrating infrastructure, product development and marketing for priority destinations, particularly for the gateway cities.
  3. Federal-State-Industry Co-ordination and Reform – Defined and co-operative roles for industry and Federal agencies; and COAG reform of planning systems, development approval, taxation and natural and cultural heritage regulation.
  4. Dedicated Skills Council – Establish a tourism and hospitality specific skills council.
  5. Research Capability - Develop a high-powered national research capability.

TTF’s National Tourism Planning Code directly addresses points (2) and (3) above, seeking to establish best practice standards and guidelines for tourism planning and development, encompassing the definition, zoning, design standards and approval of tourism accommodation and facilities. It is intended that the code will be a resource for both public agencies and private business to facilitate the development of innovative tourism products.

The aim is to provide planning standards which improve tourism quality, capacity and sustainability at the same time as realising local environmental, social and economic needs. Firstly, the Code will provide local authorities with the tools to plan, assess and approve appropriate tourism product without undue regulation hampering innovation. Secondly, it will harmonise and streamline tourism planning across all jurisdictions to reduce costs and attract investment funds and talent. Finally, it will provide certainty on planned tourism supply, reduce illegal tourism operations and establish standards for private development of quality product.

Tourism needs prime sites in attractive locations, yet prospective investors are often put off by complex planning and regulatory requirements. Add this to the relative returns offered by residential or commercial development and tourism projects can struggle to attract investors. Between 1998-99 and 2003-4, the return on investment in the tourism industry averaged 11.8 percent, compared with an all-industry average of 14.9 percent. In concert with other recommendations made in the Jackson Report, removing some of the regulatory hurdles could help to make tourism development more competitive and therefore stimulate private investment.

Australia has some of the most spectacular natural assets in the world and a variety of landscapes few, if any, other countries can match. However, that alone is not enough to entice visitors. Our relatively high wages make it difficult for us to compete solely on price, which means our tourism product must continue to be upgraded and updated so Australia can offer quality accommodation and innovative attractions and experiences. In the context of the extraordinary value available this year, it’s imperative that Australian holidays are perceived to represent good value, while delivering service above and beyond expectations to enable us to compete with other destinations and maintain our share of a tight travel market.

As the global financial crisis continues to play out, job creation remains a primary focus of governments around the country and tourism has a major role to play. The industry already provides direct jobs for close to half a million Australians – almost half in regional and rural areas - and has the potential to employ thousands more in an environmentally and economically sustainable fashion. Although domestic tourism is forecast to remain flat over the next ten years, the number of international visitors to Australia is expected to increase by almost 50 per cent, which will see tourism expenditure grow from $90.8 billion to more than $106 billion by 2018. However, these growth rates will only be achievable if supply-side issues – planning prominent among them - are addressed.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.