Australia’s travel, tourism, aviation and cruise sectors have reacted sharply to the 2026 Federal Budget handed down on Wednesday night, with much of the criticism focused on a $10 increase to the Passenger Movement Charge (PMC) and reduced funding for Tourism Australia.
From 1 January 2027, the PMC will rise from $70 to $80, with the measure expected to raise $755 million over four years. It comes three years after the government increased the tax from $60 to $70.
“Major blow”
Australian Travel Industry Association (ATIA) CEO Dean Long warned that “while disappointing”, the PMC increase would be acceptable if “the assurances ATIA has received to modernise the borders” occur.
“If that doesn’t happen, ATIA will have to hold the government to a blatant revenue grab,” he said.
Cruise Lines International Association (CLIA) Australasia was more critical, calling the higher levy “another burden on travellers”.
“Australia already charges travellers some of the highest fees in the world, increasing the cost of international travel and creating a disincentive for overseas visitors,” CLIA said in a statement.
The association added the increase was “particularly disappointing” as cruise operators continued warning Australia was losing cruise business to competing regions.
Tourism & Transport Forum (TTF) CEO Margy Osmond labelled the PMC rise a “major blow” for tourism operators and travellers.
“This is an absolute shocker for the tourism industry. We’re outraged that the government has decided to make travel even more expensive,” she stated.
“The government talks constantly about supporting tourism and growing visitation, yet tonight’s Budget makes Australia more expensive to visit and more expensive for Australians to travel.”
She also criticised the lack of consultation before the measure was announced.
“For a family of four, that’s $320 they’ll soon have to pay in tax as part of their airfare,” she said.
The Australian Airports Association (AAA) echoed concerns around affordability and competitiveness.
AAA CEO Simon Westaway said increasing the PMC during ongoing global uncertainty and Middle East conflict pressures risked hurting price-sensitive travellers.
“At a time when household budgets are already stretched, any increase to this passenger tax needs to be carefully considered,” Westaway remarked.
And if passengers are being asked to pay more, he said it is “essential that the additional revenue is reinvested in tangible border upgrades rather than being absorbed into consolidated revenue”.
Specifically, the AAA renewed calls for the government to digitise Australia’s paper incoming passenger card and to fast-track the implementation of seamless border technology ahead of the Brisbane 2032 Olympic and Paralympic Games.
What’s welcomed?
Despite the criticism, parts of the Federal Budget were well received.
For one, the AAA backed the government’s $14.8 billion fuel security and price relief package, including expanded jet fuel reserves and consultation around a domestic Sustainable Aviation Fuel (SAF) industry.
Westaway said the package could help strengthen Australia’s aviation resilience during continuing global supply disruptions.
The group also welcomed $38.1 million for the new Aviation Consumer Protection Authority and $4.5 million to extend the Australian Competition and Consumer Commission’s (ACCC) Domestic Airline Monitoring program.
“This extension of the ACCC Domestic Airline Monitoring report is a smart move and helps support a transparent, efficient and competitive aviation system in Australia,” Westaway remarked.
Mr Long also called the funding for aviation consumer protections and continued ACCC oversight of airline pricing “some meaningful steps for the traveller experience”.
Tourism in trouble?
Focusing on inbound travel, the Australian Tourism Export Council (ATEC) warned that reduced Tourism Australia funding would weaken Australia’s position in an increasingly competitive inbound tourism market.
ATEC managing director Peter Shelley said removing more than $50 million from Tourism Australia over four years sent “the wrong signal” for a $40 billion export industry.
“Reduced Tourism Australia funding risks Australia’s ability to convert travellers in an increasingly cautious and price-sensitive long-haul travel environment,” he stated.
One positive outcome for tourism operators, however, is a $2 million, two-year extension of the Quality Tourism Framework (QTF).
The Australian Tourism Industry Council (ATIC) said the funding would help another 1,000 businesses achieve sustainability, accessibility, and emissions-reduction standards.
ATIC CEO Erin McLeod said the program helped strengthen Australia’s reputation as “a high-quality, sustainable and welcoming destination for all visitors”.
Boomers abroad
In good news for many older travellers, the government announced it will extend the full rate of the pension supplement from six to 12 weeks for pensioners travelling overseas. The treasury says the change will benefit around 92,000 Australian pensioners who currently travel abroad for more than six weeks each year.
And the shift matters for the trade. Over-65s remain among Australia’s highest-spending outbound travellers, and the existing six-week cliff has long shaped how advisors structure long-haul European itineraries for retired clients.
Small business relief
The Federal Budget also announced that two cornerstone small-business supports have been made permanent.
As part of a $3.5 billion tax relief package, small businesses with aggregated turnover under $10 million will continue to immediately deduct eligible assets costing less than $20,000.
Treasury put the annual compliance savings at around $32 million. For travel agencies, the measure covers laptops, POS systems, signage, showroom fit-outs and similar capital purchases.
KARRYON UNPACKS: The Federal Budget feels like a balancing act for travel. Industry welcomes consumer protections and fuel security, but higher departure taxes and reduced Tourism Australia funding risk making Australia harder to sell globally during an already uncertain travel climate for operators.
