I thank the Leas-Cheann Comhairle for the opportunity to raise this matter on the Adjournment.
The move to abolish duty free within the European Union is a reflection of the sort of rigid and inflexible decision-making processes that make many people throughout Europe cynical about the European project. Someone somewhere in the European bureaucracy decided that the concept of duty free is incompatible with the principle of the single market and, therefore, it must go, irrespective of the implications for jobs, the impact on the cost of air and sea travel and the consequences for the tourism industry.
As an island on the periphery of Europe with a high level of travel between here and other European countries and a tourism industry that is crucial to our economy, the proposal to abolish duty free was clearly a matter of vital interest. The Taoiseach is justifiably regarded as a shrewd operator with his finger on the political pulse. However, his decision as a member of the Council of Finance Ministers in 1991 to agree to the abolition of duty free must rank as one of the greatest political errors of his career. Make no mistake, the damage was done in 1991 when Deputy Bertie Ahern went in with his hands up and surrendered without a struggle. Since then we have been fighting an uphill battle to recover ground.
I accept that in the past year the Government has at last begun to realise the potential consequences of the 1991 decision for Ireland and, along with the Governments of a number of other countries, it began to seek support to have that disastrous decision reversed. However, it now appears that a report requested by European leaders at their summit last December from the European Commission will reject pleas for any reprieve for duty free facilities. The Government must not allow this to happen. This is a matter of significant interest to the people of Europe and the final decision should be taken by their democratically elected Governments, not by the Commission.
It is difficult to understand why any Government or international body, such as the European Union, would deliberately put people out of work. Sometimes Governments have to make difficult choices that can lead to job losses but it is shocking that any institution could to take a decision, purely for dogmatic reasons, to jeopardise what some sources in industry claim could be as many as 11,000 jobs here and 140,000 in the wider EU. Even the Commission report, which wildly underestimates the level of job losses, accepts that there will be 20,000 job losses throughout the European Union, 1,200 of them in Ireland.
Duty free has been an important element in air and sea travel for almost 50 years. It has stimulated trade, created jobs and helped to keep travel costs down. As night follows day, its abolition will reduce trade, jeopardise jobs and increase travel costs.
Aer Rianta is one of Ireland's most successful and go ahead companies. Its expertise is in demand throughout the world and it operates airport shops in the most unlikely places. However, its core business is running Irish airports. Duty free sales account for approximately 40 per cent of Aer Rianta profits. If that revenue goes it will have to be made up in some other way.
The same is likely to happen in ferry travel, an area where much of the travel is for leisure purposes, often day trips. Ferry companies estimate that every 10 per cent increase in fares leads to a decrease of approximately 10 per cent in the numbers travelling.
The knock-on effects in the tourism industry are likely to be dramatic. The Irish Duty Free Association has estimated that the abolition of duty free sales could lead to an increase of 30 per cent in travel costs and a consequent loss of 760,000 visitors to Ireland each year. Some £50 million worth of goods were sold by Aer Rianta duty free shops in Ireland and the total Irish duty free sales market is double that. A huge proportion of this consists of Irish made products. For example, 20 per cent of Irish Distillers whiskey sales are made through duty free shops.
The free movement of people is one of the cornerstones on which the EU is supposed to be built. Is it not a great irony that the EU is now proposing to do away with something that makes travel cheaper and more accessible to the majority of people? The Government must challenge the Commission on this issue. The Taoiseach should immediately lobby for support to have the Commission report rejected and should use the opportunity presented by the Berlin summit to lobby each Head of State.