Tourism Industry in Australia

Introduction:

There have been many reforms that are promoted by the Australian government in the tourism sector of the country. Owing to these developments in the tourism sector almost all the states in the country have benefited from the current reforms in the tourism sector. However most of the investments from the government have been directed towards improving the Airport infrastructure, accommodations services and transportation within the country. The developments in the tourism sector have impacted the labour demand and supply; educational systems for international students and also accommodation for the foreigners who visit Australia.

The development in the tourism sector has resulted in generating more employment in the tourism sector to the effect of 4.6% of the total employment in the country belong to tourism sector; (Research, 2013)a contribution of the tourism sector to GDP is increasing over the years nearly $ 43.4 billion is the contribution of the tourism sector to the GDP in the year 2014; the exports of the tourism sector in Australia is about $ 27.2 billion and it is major contributing sector of employment and output in the country. (Commission, 2015) In this paper we will analyse the various microeconomic impacts of the macroeconomic developments and reforms in the tourism sector.

Subsidies given by the government: and it’s microeconomic impacts

There are many subsidies provided by the government towards encouraging private sector investments in the tourism sector. These range from helping in registration of the small-scale businesses in the tourism sector and also in establishment of new accommodation services; operation of tours to many tourist attractions, etc (Commission, 2015). All these have shifted their supply of tourism services in the various states of Australia which has resulted in shift of the supply curve as shown in the following figure.

[pic 1]

The various subsidies provided by the government in the tourism sector now resulted in the shift of the supply of tourism services from SS1 to SS2 in the above figure with this resulted in price declining from P1 TO P2 and quantity increasing from Q1 to Q2 in the tourism sector (Boumal & Blinder, 2012). Not only this with the investments made in the tourism sector, the demand from the International tourists were visiting to Australia has also increased and not only price but other factors have contributed to it. For example international students who visit Australia for pursuing their graduation and post-graduation now increased over the past decade and this has resulted in the shift of the demand curve from DD1  to DD2.