Proposal to draw well-off tourists to state

AUSTRADE has recommended a federal scheme to subsidise travel to Tasmania be strengthened to encourage more and wealthier tourists to visit.

The Australian government organisation made the point in a submission to a Productivity Commission inquiry into the cost of freight in Tasmania, initiated by Prime Minister Tony Abbott as one of his first acts in government.

The inquiry is expected to focus on the Bass Strait Freight Equalisation Scheme and Passenger Vehicle Equalisation Scheme.

Last time the commission reviewed the scheme, in 2006, it recommended it be abolished.

In its submission, Austrade warned against any changes that made it more expensive for tourists to see Tasmania by car.

"Any changes to the BSPVES that result in changes to overall car usage have the potential to impact significantly on the Tasmanian economy and the communities of which it is comprised," it said.

Austrade said tourism accounted for $2.3 billion a year, or 9.3 per cent of Tasmania's gross state product, but was even more important to the regions, making up 16.2 per cent of the West Coast economy and 14.6 per cent of the East Coast's.

It said the commission should consider the impact of the scheme on car hire prices - now the lowest in the country - non-tourist visitors, the impact on tourism in Victoria and how to make travelling with a car to Tasmania "more appealing" to "high yielding tourists".

The recommendations mirror those made by the Tasmanian government in its submission.

The state submission argued against substantive change to the freight or passenger vehicle equalisation schemes. It said that despite the federal government's promise to maintain the schemes, the terms of reference allowed "significant scope to identify and recommend changes to the design and delivery (of the schemes)."

"As a matter of principle, the Tasmanian government is strongly opposed to any changes to the current equalisation arrangements that would undermine the scheme's fundamental objective of addressing Tasmania's freight cost disadvantage," it said.

The inquiry is due to release a draft report later this month.

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