The Australian travel industry has reacted with fury to the 2025-26 Federal Budget’s decision to raise the Passenger Movement Charge (PMC) by $10 to $80 per person – a tax levied on every traveller departing Australia by air or sea.
The increase, which came without industry consultation and takes effect after a six-month transition period, has been met with near-universal condemnation from peak bodies who say it undermines years of work to position Australia as a competitive international travel destination.
Tourism & Transport Forum’s Margy Osmond delivered the bluntest verdict.
“This is an absolute shocker for the tourism industry,” she said. “We’re outraged that the Government has decided to make travel even more expensive, when operators are already under enormous pressure from the ongoing fuel crisis and surging operating costs.”
“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. For a family of four, that’s $320 they’ll soon have to pay in tax as part of their airfare.”
Ms Osmond said it was “deeply frustrating” that no consultation had taken place before the announcement, and called for the new rate to be frozen for at least four years to give the industry some certainty. She also renewed calls for PMC revenue to be reinvested in border modernisation – something the Government has so far failed to commit to.
“It’s inconceivable that none of the extra revenue that’s going to be collected from this tax hike looks set to fund the urgent border modernisation we have been calling for,” she said. “The PMC has increasingly become a revenue grab for Treasury, with little evidence the billions collected from travellers are being reinvested back into tourism, aviation or border infrastructure.”
Cruise sector warns of further competitiveness blow
Cruise Lines International Association (CLIA) said the increase placed “yet another burden on travellers” at a time when the cruise community has been highlighting Australia’s loss of cruise tourism to other regions.
“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. “This increase is particularly disappointing at a time when the cruise community has been highlighting Australia’s loss of cruise tourism to other regions, and it is a further blow to the country’s competitiveness.”
CLIA reiterated its support for calls to reinvest PMC revenue in modernising Australia’s border processes for both aviation and cruise.
Inbound sector warns of ‘wrong signal’ on a $40bn export
The Australian Tourism Export Council (ATEC) went further, saying the budget “fails to support Australia’s international tourism competitiveness” at a moment when inbound visitor momentum is already softening.
ATEC Managing Director Peter Shelley pointed to what he described as a combined hit of more than $50 million stripped from Tourism Australia’s budget over four years, on top of the PMC rise. “This Budget reduces support for an industry that is still stabilising post the pandemic, and facing growing pressure around traveller affordability, aviation costs and booking conversion as a result of the Middle East conflict,” he said.
ATEC’s latest member pulse survey found 57 per cent of tourism exporters identified traveller hesitation as the greatest emerging risk facing their businesses. March arrivals data has already begun to reflect that caution, with holiday visitation slipping as the conflict’s impact on flight costs and global confidence ripples through booking behaviour.
“Reduced Tourism Australia funding risks Australia’s ability to convert travellers in an increasingly cautious and price-sensitive long-haul travel environment,” Shelley said. “International tourism marketing should be treated as a strategic export investment rather than a discretionary saving measure.”
ATIA: some wins, but PMC must deliver on border promise
Australian Travel Industry Association (ATIA) CEO Dean Long offered the most measured response, acknowledging some meaningful steps in the budget including funding for aviation consumer protections, a new Ombuds scheme, disability standards and continued ACCC oversight of airline pricing.
“The Federal Budget lands against a challenging economic backdrop, but the fundamentals for travel remain solid,” he said.
“For many Australians, travel is non-discretionary – whether it’s seeing family, travelling for work, or a long-planned holiday. Cost pressures are real, but travel holds its place even when household budgets are stretched.”
On the PMC, Long stopped short of outright condemnation – but only conditionally.
“While disappointing, as long as we see implementation of the assurances ATIA has received to modernise the borders. If that doesn’t happen, ATIA will have to hold the Government to a blatant revenue grab,” he said.
Deliver border upgrades now: AAA
The Australian Airports Association (AAA) expressed disappointment over the new the Passenger Movement Charge (PMC) increase.
Every outbound international passenger over the age of 12 is charged the PMC to cover government costs of managing the border, however only about half of its annual $1.4 billion revenue is actually used for border management.
AAA chief executive Simon Westaway said increasing the PMC by $10 during a challenging economic period risked placing further pressure on price-sensitive travellers and Australia’s tourism competitiveness, with ongoing global uncertainty and Middle East conflict continuing to affect fuel prices and supply chains.
“At a time when household budgets are already stretched, any increase to this passenger tax needs to be carefully considered because it risks making overseas travel more expensive for regular families wanting to take a holiday,” Westaway said.
“If passengers are being asked to pay more, it is essential that the additional revenue is reinvested in tangible border upgrades rather than being absorbed into consolidated revenue.
“In the first instance, we urge the government to digitise the paper Incoming Passenger Card as an app for overseas arrivals. This is a simple fix to a frustrating administrative process for anyone flying into Australia and would be a modest productivity investment towards a future seamless border.
“The paper card is an outdated method to gather information and gives the impression that Australia is falling behind on new technology.
“This upgrade should sit alongside broader investment in border technology, more SmartGates and better resourcing for the Australian Border Force. Our competing neighbours, including New Zealand, Indonesia and Singapore, are already delivering a far better border experience than us.
“Ultimately, we need to be proactive on border modernisation ahead of the 2032 Brisbane Olympic and Paralympic Games, with greater use of biometrics, digital declarations and seamless travel technology.”
What happens next
The Government has a six-month transition period before the new $80 PMC rate takes effect. Industry will be watching whether that window delivers the border modernisation commitments that have been offered as justification – or whether, as multiple peak bodies have now signalled, it amounts to little more than a tax hike dressed up as reform.
For now, the mood is clear. As TTF’s Osmond put it: “Given how much uncertainty the industry is already facing, this could really be the straw that breaks the camel’s back.”
