Larry Dwyer

What is the future for tourism in Australia?

Aussies travelling and taking their holidays at home seem to be a “dying breed”, thanks to the high dollar, with most Australian residents having a taste for international travel only cataclysmic world events could change.

I feel Australia should place more emphasis on its urban tourism attractions, rather than the outback. Its cosmopolitan cities, its attractive streetscapes, its fine dining, sophistication and the sheer liveability of its cities are second to none. There are many fine urban tourism precincts that rival any around the world. And remember that Melbourne has vaulted Vancouver to become the best city in the world to live, according to the latest Economist Intelligence Unit’s Global Liveability Survey, with Sydney not far behind.

Domestic tourism products struggling the most are large-scale resorts in remote or outback destinations which are harder and more expensive to reach, and which simply can’t compete for value for money with overseas destinations.

I’ve also seen that consumer values are changing in ways that favour urban tourism, including strong Generation Y attributes such as being money rich and time poor, plus seeking hedonistic, discerning experiences. They are less loyal to brands – something the airlines know well now – and they seek value for money, not necessarily low prices, within authentic tourism experiences.

Australia should give up trying to compete at the mass-market level to attract tourists. A move to putting emphasis onto Australia’s urban areas has a good synergy with meetings, conferences, and events. Business tourism would be an important market in this context. However there is a place for the outback, and tours to more remote areas could piggyback on this.

One of the world’s fastest growing tourism markets is that of business events tourism. It is typically one of the highest yielding inbound tourism segments because of the high per-delegate spend. Worldwide, there is competition among destinations for such business and, with substantial government support for marketing activity and infrastructure development, this trend is expected to continue.

There are substantial opportunities for operators to associate themselves with business event tourism by way of accommodation, catering, tour operations, and organising professional conferences. Herein could be the future of Australian tourism, with business tourism capable of providing increased opportunities for the Australian tourism industry with strong appeal across all key markets.

Larry Dwyer is a Professor in the School of Marketing at the Australian School of Business.

Anil Hargovan

The Federal Court has not imposed extra penalties on six non-executive directors involved in the Centro court case, saying their convictions for breaching the Corporations Act are penalty enough.

My first impression suggests that Justice Middleton in the Centro case appears to have taken one step forward (in the liability decision which set the bar on directors performance standards in reading accounts dauntingly high) and two steps back (in the penalty decision handed down yesterday which did not go far enough in sanctioning oversight failure).

The tone of the penalty decision appears to be less caustic and more forgiving of the directors failure to exercise care and diligence.

The failure to throw the book at the directors in the penalty decision  has polarised the corporate community, attracted controversy and seen a vituperative reaction from sections of the media.

The penalty decision elevates shame and reputational loss as strong determinants of general deterrence but will not appease those baying for blood following significant oversight by the directors in the accounts involving billions of dollars.

The penalty decision boosts the directors shame and reputational loss as an effective deterrence tool.  Such sanctions will only be effective, however, for those directors who put a premium on their reputations.

Media reaction to the penalty decision would suggest that the penalties handed down were largely meaningless. It is important to remember that the judge refused to exonerate or grant forgiveness for breaches of the Corporation Act and did issue court declarations of breach of law which puts a stain of the cv of the directors and, more ominously, offers no comfort to the company and its directors facing class action by the shareholders.

In the refusal to grant forgiveness and the confirmation of breaches of law, the penalty decision has laid a stronger foundation and boosts the prospects of  shareholder success in the class action against the company. Herein lies the potential for a greater penalty afforded by this decision.  Perhaps the judge had one eye on the potential impact of the class action and tempered the penalty decision in light thereof.

Anil Hargovan is an Associate Professor at the Australian School of Taxation & Business Law at the ustralian School of Business.

Michael Peters

New legislation is intended to more closely regulate the duties and pay arrangement of financial planners.

However I would argue that more regulation is not the answer.

Financial Services Minister Bill Shorten’s new legislation has been largely supported by the financial services industry however the chant coming from government once again is ‘when in doubt regulate’.  It will only increase costs, make it less accessible and is unlikely to provide better advice.

Under the legislation, known as Future of Financial Advice (FOFA), financial planners will be obligated to renew contractual arrangements with clients every two years from the beginning of July next year.

It is proposed that what are called ‘fiduciary duties’ are to be codified, however most of what the law will require is good business practice, so why make it law? Why not put it in a code of behaviour endorsed by ASIC and enforced by the ACCC like other professions such as travel agents?

As proposed the legislation will also offer more powers for the financial regulator, ASIC, which will be given additional power to intervene earlier, as well as allowing the regulator to ban financial planners in certain circumstances.

Why are we using regulation to make people feel immune from the market place – which will sometimes lose them money?

People will still miss out on their bet on the stock market or interest rates, and that is quite simply how markets work. Protecting people from themselves through more regulation does not mean people will not lose money. Instead, it means those with money are likely to get access to better advice than those who cannot afford it.

Under the legislation, brokers would have to restructure remuneration arrangements on margin lending, cash management and banking products, and other product solutions sold to retail clients such as managed funds.

There is enough law to regulate planners and advisers; it’s just a matter of enforcing these rules, rather than making more law.

Michael Peters is a Lecturer in Business Law and Taxation at the Australian School of Business