Tourism Satellite Account (compilation of tourism data and statistics)
Chairperson: Mr D Gumede (ANC)
Date of Meeting: 13 October 2010
Statistics South Africa and the National Department of Tourism briefed the Committee on the Tourism Satellite Account (TSA). The TSA was a statistical instrument used to measure the size of the tourism industry’s contribution to the economy of a country according to international standards of concepts, classifications and definitions. Official data and not modelling techniques was used in the construction of the TSA. The development of the TSA model was based on supply and use tables. The first estimate was done using 2005 data. The contribution of tourism to the economy based on the draft TSA for SA 2005 was 3% and the contribution of tourism to employment was 4%.
Members queried the currency and frequency of the data placed before the Committee as the TSA had used data from 2005. Concerns were allayed with the explanation that the TSA would be updated with more current data.
The divergence in the information supplied to the Committee was also a concern. The Committee had previously been told that tourism’s contribution to the GDP was 5.6% whereas in the briefing document it was only 3%. However, it was explained that the 3% represented only direct contribution and did not include indirect contribution to GDP. Members said that they had also erroneously believed that tourism had surpassed mining in its contribution to SA’s GDP as even the Minister had made statements to that effect. The Department pointed out that what was true was that tourism had surpassed mining in the creation of employment opportunities. This was perhaps where the misunderstanding originated.
There was a common feeling amongst members that statistics on the effects of the 2010 FIFA World Cup on tourism were needed. Had the World Cup boosted tourism in SA? Post-World Cup figures were needed in order to determine whether the expenditure on hosting the tournament was justified. The Department agreed that as soon as the relevant data was available it would be forwarded to the Committee.
Statistics South Africa and the National Department of Tourism briefed the Committee on the Tourism Satellite Account (TSA).
Statistics South Africa briefing on the Tourism Satellite Account
Dr Rashad Cassim Deputy Director General: Economic Statistics and Mr Riaan Grobbelaar, Acting Executive Manager, National Accounts outlined important concepts and definitions such as what was a tourist. They then explained the TSA process in South Africa, the draft TSA for SA 2005 and finally looked at tourism statistics in general. The answer to the question, “What was the need for a tourism satellite account?” was that the nature of tourism was so different. Tourism was generic and drew on different parts of the economy. The development of the TSA model was based on supply and use tables. In looking at statistics, distinction had to be made between the three kinds of tourists: foreign, domestic and outbound tourists (locals that travelled abroad). The TSA provided a feel for the estimated contribution of the tourism industry to the economy. The first estimate had been done using 2005 data. The data was compiled from a series of surveys.
In May 2009 the first draft of the TSA was completed. In November 2009 the National Accounts was rebased and benchmarked. By November 2010 the final TSA for SA 2005 and the preliminary TSA for SA for 2006 to 2008 were to be completed. In compiling the TSA, key concepts need to be considered. Distinctions need to be made between tourism and non tourism industries, between visitors and non visitors. In so doing an indication of the value of the tourism industry could be given.
Members were given a breakdown of figures for the flows of tourism expenditure through the SA economy for 2005. The contribution of tourism to the economy based on the draft TSA for SA 2005 was 3% and the contribution of tourism to employment was 4%. The Committee was also given a comparison of results of the TSA versus figures of the World Tourism Council (WTTC). The TSA relied on hard data whereas the WTTC was based on a simulated model. Interestingly, the figures were not that different from each other. Figures showed that employment created by tourism was far greater than that created by mining. The percentage contribution of tourism to the economy varied from country to country. For example, in 2005 Austria sat at 6% and Australia was at 4%. Mr Cassim felt that there was no reason why SA could not increase its contribution to 7%. In trying to explain the significance of discussing in 2010 the 2005 contribution of tourism to the economy, he said that it was a monumental task and a huge effort to compile the TSA. It might seem dated to use 2005 data but in three to four years no radical changes had really taken place. The resultant figures were very much relevant to present day. It was useful to see the effect of tourism on the economy over a four to five year period.
National Department of Tourism: Update on the Tourism Satellite Account
Mr Victor Tharage, Deputy Director General, said that there was an increasing awareness of the role that tourism was playing and could play in the economy in terms of generation of ‘value added’, employment, personal income and government income. The TSA was a statistical instrument used to measure the size of the tourism industry’s contribution to the economy of a country according to international standards of concepts, classifications and definitions. The TSA provided a framework for policy analysis of issues related to tourism economics, as well as for model-building, tourism growth analysis and productivity measurements. Official data and not modelling techniques was used in the construction of the TSA.
The main purposes of the TSA was to analyse in detail all the aspects of demand for goods and services which might be associated with tourism within the economy, to observe the operational interface with the supply of such goods and services within the same economy of reference and to describe how this supply interacted with other economic activities.
Once all the tables of the TSA had been completed, one had a measurement of tourism’s contribution to the Gross Domestic Product (GDP), the number of jobs created by tourism, tax revenue generated by tourism industries, tourism’s ranking compared to other economic activities, and its impact on the country’s balance of payments.
The TSA gives the official statistics on whether the tourism sector is reaching its targets for its direct contribution to economic growth and job creation.
Ms G Krumbock (DA) said that the intention was for tourism to be a driver in the economy. As he understood it, the TSA figures would only be updated every five years. Tourism was a sensitive industry and up-to-date statistics were vital. The 2010 FIFA World Cup had come and gone. Was the tournament worthwhile? He wished to see tourism figures for August and September 2010 to check whether the World Cup had boosted tourism. There was a need for updated statistics. Another issue
was that previous reports to the Committee had stated the direct contribution of tourism to the GDP was 5.6%. The briefing by Statistics SA said that the figure stood at 3%. What was the reason for the divergent figures?
Mr Grobbelaar stated that any satellite account used supply and use tariffs. It reflected goods produced and the consumption of it. This was the basis of a satellite account. The most up to date data that was available was for the year 2005. Hence the base year for the TSA was 2005. The TSA was being updated and by 2011 the TSA would reflect 2009 figures. The lag would only then be two years. He explained that perhaps the figures that had been quoted to the Committee could have been WTTC figures. The 3% was the direct contribution of tourism to the GDP. A distinction needed to be made between direct and indirect contributions of tourism to the GDP.
Mr Tharage added that 5% was the indirect contribution by tourism and that the 3% was the direct contribution by tourism. The total contribution by tourism to the GDP was 8%.
Dr Cassim said that the 5.6% quoted to the Committee was dangerous. He was surprised that the figure had been quoted to the Committee, as it had never been 5.6%. The issue was also whether the figure of 5.6% was referring to a direct or indirect contribution by tourism. The development of the TSA had taken a long time. The figures used were being updated.
Ms M Njobe (COPE) said that the Committee had received reports that tourism had surpassed mining as far as its contribution to SA’s GDP was concerned. The information before the Committee presently was based on 2005 figures. What was the situation at present? By how much was tourism surpassing mining for its GDP contribution. She said that figures for 2009 would even be acceptable.
She asked how a distinction was made between SA rands spent by a foreign tourist and that of a SA tourist on groceries. Did the survey of accommodation done by Statistics SA include guesthouses or was it only done on hotels?
Dr Cassim responded that the tourism GDP contribution was not greater than that of mining. Tourism figures on the creation of employment were greater than that of mining. He stated that the accommodation survey had taken guesthouses into account. The entire spectrum of accommodation was taken into account.
Mr Grobbelaar added that the survey took into account all paid accommodation within SA. Use and supply tables were used to gage the level of economic activity. The tables would be used to determine what was spent on, for example groceries, at a shop. SA Tourism had a departure survey which showed how much was spent by foreign tourists on groceries.
The Chairperson was concerned about the currency of the information at hand. He asked whether Statistics SA could not use a model to project figures for 2010.
Dr Cassim responded that the issue of projections went to the heart of a governmental statistical agency. Statistics SA stayed clear of modelling and projections. It could not forecast figures. The derivation of figures had to be shown. He said that perhaps the Department could appoint a consultant to do projections. By November 2010 the TSA final figures for 2005 and the preliminary figures for 2006, 2007 and 2008 would be complete. A distinction needed to be made between preliminary and final figures. In most instances there was not much difference between preliminary and final figures. Statistics SA was at the mercy of what data was given to it. The more frequent the data was provided, the more revisions could be made.
Mr Krumbock reiterated that the problem was that the Committee got different sets of statistics. Even the Minister had stated that tourism contributed more to the economy than mining. The last figure that the Committee was given was that tourism contributed R189bn to the economy.
Ms Njobe said that the Committee was dependant on the figures that it was given. The Minister had not been the only person to state that tourism figures had surpassed mining. It had made the Committee proud to hear that tourism was contributing a great deal to the GDP. There needed to be co-ordination on figures that were released. There should not be divergent figures for the same thing. She also asked for the figures relating to the 2010 FIFA World Cup in order to check on whether the tournament had been a worthwhile exercise.
Mr Krumbock asked if the 2005 figures for the TSA used the old or new definition of a tourist.
The Chairperson said that the Tourism Business Council of SA had provided the Committee with data taken from 2008. He pointed out that perhaps the Minister had made use of this data when speaking on tourism. Caution should be exercised when data was received. The source of the data should be properly verified.
Mr Tharage said that the Department did note the Committee’s call for the standardization of data. He explained that tourism’s contribution to the GDP was not greater than that of mining. That was not what was meant in the information that was provided to the Committee. What was being referred to was the rate of growth of tourism over the rate of growth of mining. At that point in time the rate of growth of tourism was greater than that of mining.
On the 2010 FIFA World Cup issue, Statistics SA was analyzing figures to determine how many tourists attended the tournament. The Department on the other hand was looking at the supply side. Once all the information was assimilated, lessons could be learnt from the tournament. The information would be forwarded to the Committee.
Ms Manganye (ANC) asked whether Statistics SA linked it statistics with the Department of Home Affairs statistics.
Dr Cassim replied that Statistics SA had the task of certifying data that was released by government departments. Statistics SA and the Department of Home Affairs did co-ordinate efforts. The figures used by Statistics SA were from Home Affairs in any event. Tourism arrivals figures were based on data obtained from Home Affairs.
Mr Tharage said that the main source of information, in the absence of current data, was the WTTC.
The Chairperson asked what contribution was made by domestic tourism.
Mr Tharage said that domestic tourism contributed 52% and inbound tourism contributed 38%.
The Chairperson asked if the status quo would remain for the TSA to be done every five years or would it improve. He asked the presenters to speak on trends that were observed over five or ten year periods.
Ms Njobe asked if the Department was content with the figure of 52% for domestic tourism. Domestic tourism still had a great deal of potential. Was there a way to encourage South Africans to be tourists?
Dr Cassim said that tourism bore the brunt of Apartheid the worst. Tourism had the potential to pick up phenomenally. Tourism expenditure trends were picking up across the board. For example previously disadvantaged blacks were also spending more on tourism. Trends on accommodation and on the arrivals of tourists could be forwarded to the Committee.
Mr Tharage said that the strategy on domestic tourism was being finalized. 37 000 comments had been received on the strategy. The core message from comments received was that domestic tourism should form the backbone of tourism in SA. Domestic tourism’s focus had been on the upper-middle class of society. The bulk of citizens formed part of the lower-middle income working class. The issue was how to reach out to these individuals. It included the civil service, teachers and SAPS members for example. This was the renewed focus of the strategy. There was a 12% increase in domestic tourism. An R9m increase year on year for domestic tourism was foreseen.
The Chairperson thanked the presenters for the briefings and they were excused from the meeting.
The Committee discussed its next meeting where it consider Annual Reports 2009/2010 for the Department and SA Tourism. The Chairperson reminded members to peruse documents as issues such as challenges and achievements would have to be interrogated.
Members were informed that the Committee had received bilateral agreements between SA, Kenya and Egypt. The Committee Secretary explained that the bilateral agreements were referred to the Committee only for information purposes. If the Committee wished, the Department could brief members on the agreements and their benefits.
Ms Njobe asked whether the Committee had to ratify the bilateral agreements.
The Committee Secretary explained that the agreements had been forwarded to the Committee in terms of Section 231(3) of the Constitution, which meant that it was referred to the Committee for information purposes only. Agreements referred in terms of Section 231(2) of the Constitution had to be ratified by both the National Assembly and the National Council of Provinces.
The Chairperson said that the Committee had to decide on whether to allocate time and resources to consider the bilateral agreements. The Committee agreed to defer discussion on the issue.
The meeting was adjourned.