Home buyers might be smiling this morning at the prospect of their mortgage repayments being slashed, but the $24billion tourism industry – as well as other key exporters such as miners – stand to gain the most from the collapse in the dollar’s value.
As the interest rate cut of one percentage point further drives the dollar down, the depressed tourism industry is hopeful of a turnaround in fortunes but not too optimistic in the face of a global economic downturn.
Tourism and Transport Forum managing director Chris Brown yesterday said the plummeting dollar was welcome news on the eve of the launch of a new advertising campaign for Tourism Australia crafted by Baz Luhrmann, director of the coming epic film Australia.
“It’s good timing – there’s a global economic malaise and we can’t sit around the woolshed crying about it,” Mr Brown said. “We’ve all got a job to do. And the drop in the Aussie dollar combined with the launch of the movie makes the timing impeccable.
“For most of the world Australia will always be an expensive destination. We just can’t drag the tectonic plates closer to one another, so when you overlay the high Aussie dollar, it really makes it difficult to keep Australians at home and to attract the rest of the world to come here. So we are unambiguously the low Aussie dollar cheer squad.”
Consumers will pay more for imported goods, but that will be partly offset for the average home buyer, who will pocket about an extra $200 a month from the rate cut.
But this week’s slide in the dollar has given tourists already here an unexpected increase in their spending power, and made Australia a more affordable option.
English couple Mark Nunn, 24, and his girlfriend, Claire Bradshaw, 21, have been in Australia about three weeks and are considering extending their trip.
“We initially budgeted for spending about $420 a week, and we’ve been easily meeting that target,” Mr Nunn said. “Australia is quite good value, really.” The dollar’s fall had been a “pleasant little bonus”.
And miners, hit by falling prices, were also happy. The managing director of nickel miner Panoramic Resources, Peter Harold, said the dollar’s fall was great news. “It’s taken some of the hurt in the fall in commodities prices off. We’re delighted.”
The $40 million Tourism Australia advertising blitz across 22 countries features two short commercials produced by Luhrmann.
The campaign replaces the one featuring model Lara Bingle, who controversially asked potential visitors: “Where the bloody hell are you?”
The campaign will begin today in Britain.
It will appear in cinemas, television, print and online and will run until June next year.
Tourism Minister Martin Ferguson said the ad blitz came at a difficult time for the industry.
“The campaign is a source of great hope for the industry,” hesaid.
Over the past week, the dollar has plunged dramatically, closing last night at US72.72c, after almost reaching parity earlier in the year, an exchange rate that was blamed for causing the number of foreign holidaymakers to drop by almost 4.5 per cent.
Tourism Australia’s forecasting committee will meet next month to consider the impact of the falling dollar and global turmoil, and is expected to release new projections in December. In its last report, in March, the committee noted that the then surging Australian dollar was a significant burden to tourism operators.
The effect of exchange rate fluctuations is not immediate because, on average, almost half of visitors to Australia book their flights between one and six months before arrival.
Tourism Australia estimates about 5.6 million overseas tourists visited Australia this year, and forecast that number will grow to 8.7 million by 2017, though those figures may be revised because of the economic uncertainty.
Olivia Wirth, executive director of the Tourism and Transport Forum, which represents large operators, said growth predictions were too optimistic.
“We’ve just seen a decline of 4 (to) 5per cent in the number of holidaymakers coming to Australia in the last year,” Ms Wirth said. “I don’t think the prediction that there’ll be an increase next year of over 3per cent is right. It will have to be revised down.”
On the flip side, the falling dollar is also expected to encourage Australians to put off overseas holidays and vacation at home, providing a further buffer for local operators.