Will Taylor Swift’s Australia tour really add a billion dollars?

22 February 2024 Consultancy.com.au 4 min. read
Profile
More news on

According to some experts, Taylor Swift’s presence in Australia could be worth north of a billion dollars to the national economy, however KPMG’s Brendan Rynne says the reality is much much lower.

Economic impact modelling for major events tends to produce eye-catching headlines, figures which often strike the casual observer as a tad suspect when used as a justification for public spending.

But how about when a consultancy doesn’t have any skin in the game? Some wild, and wildly varying numbers have been floated in the build-up to Taylor Swift’s Australian concert tour, but KPMG’s chief economist Brendan Rynne has now issued a dampener on the grander claims.

Will Taylor Swift’s Australia tour really add a billion dollars?

Source: KPMG

For anyone out of the loop, Taylor Swift is a pretty big deal nowadays. Her global Eras Tour is the first in history to surpass the $1 billion revenue mark, with over half a million tickets sold in Australia alone. With logistics requirements including transportation, accommodation and labour and other spending activity in areas such as hospitality and merchandise, estimates of the tour’s impact on the Australian economy have been as great as $1 billion or even more.

Rynne puts that figure at closer to $10 million. Such a discrepancy and it’s little wonder that those of us without an economics degree can be distrustful of the numbers and their framing. Here, the professional services firm – which previously helped the Queensland government secure the 2032 Olympic Games with suggestions of a $17 billion economic boon – is running the numbers in terms of net economic impact on GDP for the March quarter.

Again, for those of us without economics degrees, in brief, the Australian Tax Office is predicted to bank around $8 million from Swift’s estimated $110 million in tour profits according to her speculated tax arrangements, with the difference – described as ‘a services import’ – roughly cancelling out in-country spending on operational costs and from overseas visitors in net GDP terms. ‘GSP’ is of course another matter, with hosts Victoria and NSW to benefit from interstate travellers.

Rynne, KPMG's former global transfer pricing lead partner, says the estimated $140 million in spending activity generated by the 570,000-odd ticket-holders overall seems about right, but the vast majority of those fans are local residents, and, “Technically, any spend associated with these patrons is just a transfer from one category of spending (or saving) to another – in this instance to Tay Tay.” The real benefit comes from the 2 percent – or 10,500 people – coming from overseas.

Rynne pegs their combined contribution at $63 million based on pre-Covid international visitor data, with each foreign Swiftie spending around $500 on the day of the concert and then – acknowledgments here as to the sizable assumptions – sticking around in the country for an average of 11 days and forking out a further $6,000 apiece. As the analysis relates to the March quarter alone, future tourism gains through word-of-mouth and media exposure aren’t included.

A little ungenerously, Rynne excludes from his final calculations the noted $50 million in potentially retained expenditure from domestic fans who might have otherwise headed overseas had the concerts not been held down under, while accepting the upper-end estimate of $41 million in local operational costs for such an extravagant show across its seven dates in Sydney and Melbourne, jotting it down as ‘compensation of employees / mixed income’ in the ledger.

So just over $100 million brought in to the country due to Taylor Swift, and a little over $100 million in after-tax profits presumably headed out. Skipping the tax management breakdown (suffice to say, the bulk of the tour profits will be paid to an offshore corporate vehicle in the form of royalties), that leaves the ATO with $8 million in company and income tax, with about $2 million to share around injected into the rest of the Australian economy.

It’s easy enough though to picture Rynne smiling to himself at the computer as he gets the import and export numbers to line up as a playful exercise in anti-hoopla Swiftie-baiting, while making sure to include at least a little tax bonus to the nation and some extra pocket money to avoid being labelled an outright monster.

Notably, he concludes with a cheeky Taylor pun; “For those claiming the tour will make a huge boost to the economy, I would say: You Need to Calm Down.”