HI5003 Economics for Business - Topics for Individual essay Assessment Answers

Economics Business Essay

Assignment Task

Choose any One of the topics from the following list:

• Micro economics – study of individual behaviour – individual industry like education, meat industry, tourism and agriculture. Choose any ONE industry in Australia from this list and discuss the reforms been done in that industry.
• Cost of production- in any industry in Australia where costs of production are an important issue and analyse what is being done in the industry. May be the industry is switching to technology or/and some substitutes have been used to overcome this problem
• Demand and supply of certain resources in Australia and factors other than price which affect demand and supply
• Market structures like Monopoly, Duopoly, Oligopoly and Monopolistic competition in any industry in Australia.
• Elasticity of demand/supply
• Cost and Revenue

Introduction

The Australian economy has been struggling of late and the reason behind the slow growth is reduced business activities. It is argued that a huge gap has been left by the resources industry and that gap must be filled in order to anticipate growth in the economy. Several sectors have been pointed out to fill the gap. However, education and tourism have been disqualified according to Kate Hackie and Paul Dales who are top financial analysts at Capital Economics which is an economic research company (Baker). According to an article from the Australian Financial Review tourism will only have an impact in the GDP of the Australian economy if there is 35% increase in the Chinese and Indian population visiting the country. In addition, the two economists are arguing that 35% of the expected visitors must obtain passports. Meanwhile there are allegations that Chinese tourists are facing challenges accessing Australia because of the treatment they are getting (Freed). According to an article from the Australian Financial Reviews Chinese tourists are treated like second class citizens because their visa charges are higher compared to those of European and Americans visiting the country. It was noted that electronic visas from the US and Europe were costing only $20 and were easily accessible through the net. However, visas from China and India were found to be costing $135 and involved stringent bureaucracy to acquire them. Despite the allegations, there have been reforms taken to improve the tourism industry (Hannan).

New research in the tourism industry reveals that the government has strict rules when it comes to the working-holiday visas. Due to that rigidity the dependence of overseas travelling has dropped by 13% it was noted. Moreover, it has also been found that 10% of the employees in the tourism sector have shifted to other industries. On the other hand, it is also projected that the industry will be needing an extra 120,000 employees in the next four years. For that reason, the government has placed reforms to meet the growing demand in the tourism sector. A research conducted by Diloitte recently revealed that the tourism industry is facing a shortage of 38,000 workers. By the year 2020 the industry will require 60,000 skilled workers (Hannan, Ease visa rules to address tourism job shortage).

The government is already showing concerns and has already announced the extension of working –holiday maker’s visas from the current 6 months to 12 months. However, the reform has not been extended to the rest of the country and is only available at the Northern Australia part of the country. The tourism Minister was also quoted saying that the government is fixing the issue of shortage of skilled labor through the development of the tourism employments plans. The plans are made through the State and Territory governments. The Minister Richard Colbeck further added that the industry will be rolling out employment within eight regions in the country which are currently facing shortage of skilled labor. The minister also noted that the need is to cater for the rising demand in the tourism sector to reap the benefits (Freed).

The mining industry has been declining sharply in Australia while the tourism industry has risen sharply over the last 12 months. Statistical data indicate that international arrivals have risen to 6.7% representing $34.8 billion for the year ended September 30th 2015 (Freed). The arrivals are expected to increase sharply. The visa reforms is also expected to increase arrivals by 25% in the next three years. The industry is projecting to have 255,000 Chinese visitors within the next three years after the visa reforms. That is expected to increase the annual growth of the industry by 20% (Baker).

Further reforms have been channeled at the backpacker tax. The tax which is affecting the tourism and agriculture industry has been found to be hindering growth of the two industries. In 2015 Opposition leaders Shadow treasurer Chris Bowen and tourism minister Anthony Albanese argued that the government should have comprehensive consultations with the two industries to redesign the backpacker tax. The backpacker tax has been mentioned as one of the reasons why there has been a shortfall in the tourism industry labor force as many employees try to avoid the tax (Sprague).

The ACCI lobby group requested the government to do away with the backpacker tax and fix the visa process as one of the reforms to lift the tourism industry. According to the budget presented to the Australian Chamber of Commerce the government had been requested to streamline the visa process and also scrap the backpacker tax as one of the reforms to boost the tourism industry. In addition, the group has also asked that Tourism Australia to increase the labor force around the border forces and Australian airports to reduce the longer queues and waiting times observed in Australian border forces (Hannan, Ease visa rules to address tourism job shortage). It was also noted that Australian tourist visas were so expensive compared to neighboring countries and other stiff competitors in the tourism industry and that affected growth. Steve Whan the ACCI National Tourism Council manger acknowledged the strides taken by the government, but still urged the government to put more effort in order to compete effectively within the region. Mr. Whan also noted that the visa relaxation rules had been intensified and that has resulted to a lot of competition in the tourism industry. The government was also congratulated for the promotion policies which had intensified the promotion of the Australian tourism. Meanwhile, the government was requested to reform the Tourist Refund Scheme to allow competition from the private operators. Moreover, the reinstatement of the tax free threshold for the working holidaymakers are some of the recommendations the government was asked to work on. It was also noted that the government needed to activate the construction of the 6 star hotels at a cost of $645 million which will capitalize on the proximity of the Southeast Asian economies (Hannan, Ease visa rules to address tourism job shortage).

In conclusion, the tourism industry in Australia is facing some challenges which is hindering the industry from achieving its full potential. However, some of the reforms are underway while others have been proposed. Amongst the reforms proposed is the scrapping of the backpacker tax and streamlining of the visa processes. Meanwhile the government is already easing the huge labor gap of skilled labor by recruiting skilled staff around the 8 regions of the country. The government is also doing well in promoting the industry through advertisements. The government has also injected a considerable amount of money that is aimed at reforming the country to achieve its projections by 2020.