The economic benefit to Australia of the mega tour is overblown, KPMG says
“Technically any spend associated with these patrons is just a transfer from one category of spending (or saving) to another – in this instance Tay Tay,” Dr Rynne said.
The real economic bounce comes from international visitors flying to Australia to see the pop icon at her concerts in the country’s two biggest cities. Their spending will count as a tourism export in the national accounts.
“Pre-COVID data shows the average international visitor to Australia stays 11 days and spends around $6000,” Dr Rynne said.
“So working on the (admittedly fairly big) assumption that the average international Swiftie does the same then in addition to their $500 concert outlay they could spend an additional $5500 – a total of $63 million,” he said.
“There could also be benefits from retaining expenditure by domestic fans who would otherwise go overseas – spending an average $5000 – if the concerts were not being held in Australia. Assuming we retain 2 per cent of domestic fans, then that is another $50 million being spent here rather than overseas.”
About 25 per cent of Swift’s gross receipts are likely to be spent on the costs of establishing and dismantling her set, injecting further activity into the economy.
“The costs are likely to be mostly labour as the concert sets have already been built; noting that Tay Tay operates two sets which leapfrog each other across concert locations,” Dr Rynne said.
Taxman comes knocking
All up, Dr Rynne said, Swift appeared on track to earn a $110 million pre-tax profit from her Australian tour.
A portion of this profit is likely to go to Swift personally as a fee, and she will be taxed at Australian marginal rates.
The remainder will go to an offshore corporate vehicle, which could benefit from the 5 per cent withholding tax rate under the US-Australia tax treaty.
“It’s difficult to say what the split between the royalty fee and the personal fee would be, but if we assume Taylor gets paid personally $1 million per concert and the rest is allocated to the offshore corporate vehicle, then the ATO is likely to receive around $8 million from Tay Tay from her earnings from the Australian leg of the Eras Tour.”
That leaves Swift with an after-tax profit of $101.7 million, which will subtract from activity in the national accounts since it will be treated as a services import.
That leaves the net economic effect of The Eras Tour at $10 million, or 0.002 per cent of GDP, Dr Rynne estimates.
Event Pty Ltd director Simon Thewlis agreed the estimates of the economic boost from Swift’s concerts were overblown.
“A lot of dollars are going on the tickets and the artist’s merchandise. The whole show is shipped in from the USA. So a large proportion of the dollars are being repatriated to the USA,” he said.
