Aviation Passenger Movement Charge (PMC)

Question

1. Can the department explain why the Government proceeded with a Passenger Movement Charge increase in the 2025-26 Budget when Treasury's own aviation elasticity research finds that a 1 per cent increase in fares reduces passenger demand by around 0.5 per cent in the short run and 2.5 per cent in the long run? 2. Did the Government model the likely reduction in inbound international visitation from increasing the PMC from $70 to $80, and if so, what assumptions were used for average fares, route mix and price elasticity by market? 3. On the Government's own numbers, the measure is expected to raise around $755 million over five years. What estimate has been made of the offsetting loss in visitor expenditure in Australia if the higher PMC results in fewer international arrivals? 4. Has the department assessed whether the additional PMC revenue could be outweighed by reduced tourism spend, particularly over the longer run once traveller behaviour adjusts and habit formation effects take hold? 5. Was any specific analysis done on the competitiveness impact for Australia relative to substitute destinations in the Asia-Pacific, particularly where travellers may choose lower-cost alternatives such as Bali or Thailand? 6. Given the PMC increased from $60 to $70 in July 2024 and is now legislated to rise again to $80 from January 2027, what work has been done on the cumulative impact of a 33 per cent increase in under three years on travel demand and Australia's tourism competitiveness? 7. If the stated rationale is revenue, why was a measure adopted that may reduce visitation and broader economic activity, rather than one that grows the visitor economy and lifts total tax receipts through higher spending?

Answer

Please see attached PDF.

Documents

• Question with answer (PDF) (opens in a new tab)
• SQ26-000745.pdf (opens in a new tab)