I am grateful for the opportunity to appear before the Committee of Public Accounts to assist with its examination of the 2019 financial statements of HRI. As members will be aware, HRI is a commercial semiState body responsible to the Minister for Agriculture, Food and the Marine and was established under the Horse and Greyhound Racing Act 2001. HRI is responsible for the overall administration, governance, development and promotion of the Irish horse racing industry and operates a corporate structure that comprises the main body and nine subsidiary companies, one of which is dormant. Its functions are set out in legislation.
As the Comptroller and Auditor General set out, HRI's primary sources of funding are the Horse and Greyhound Racing Fund, race entry fees from owners, race sponsorship fees through racecourses, profits from commercial subsidiaries, a statutory foal levy on breeders, the sale of media rights, industry contributions to Irish Thoroughbred Marketing and a turnover levy on oncourse bookmakers.
We are based in Ballymany, the Curragh, County Kildare, and including our subsidiary companies, we employ a total of 247 people. Since the establishment of the Racing Board in 1945, the horse racing and thoroughbred industry in Ireland has been overseen by a State body and has been the subject of legislation. The reason for this is the unique position which the sector holds in Ireland. Horses are something which Ireland does well, and for a small country we hold leadership positions in many elements of the industry which makes a valuable contribution to the social, economic and cultural fabric of the country. This was well summed up recently by An tUachtarán, Michael D. Higgins, when he said the horse has a special place in Irish life and culture and, "A love of horses, their breeding and training, are an integral part of Ireland’s identity and of our reputation abroad."
Supportive Government policy over the years has enabled a significant rural industry to develop, and in 2017, Deloitte issued a comprehensive report on the value of the industry which made a number of important findings. The key findings were that the industry stimulates almost €2 billion of expenditure per annum in the Irish economy. This expenditure supports a workforce of 28,900 full-time equivalent jobs. After the United States, Ireland is the second biggest seller of bloodstock at public sales. In a normal year, 1.3 million people attend race meetings in Ireland. Bloodstock sales are valued at approximately €438 million per annum, much of which is exported.
The industry operates on an all-island basis, and every four years, the Minister for Agriculture, Food and the Marine appoints a representative of the industry in Northern Ireland to the board of Horse Racing Ireland. The board comprises a chairman and 13 ordinary board members who are a mixture of industry representatives and ministerial nominees.
The industry is multi-layered and comprises much more than just a day at the races. Despite our small size, Ireland is the third largest producer of thoroughbreds in the world, the second largest exporter of horses to more than 33 countries in terms of value, and arguably the leading country in terms of quality. In terms of size and scale, the thoroughbred industry is a significant one with a wide geographical reach. There are breeders in every county in Ireland and most of them, 92%, have five mares or fewer.
In terms of economic value and the value of exports through sales, the industry compares very favourably with other vital agrifood sectors such as fishing, poultry, pigs and sheep. One feature of the industry is its regional reach, and the Deloitte report pointed to significant economic activity and investment reaching into every county in the country. A previous industry analysis took the case of Bagenalstown in County Carlow and found that within a ten-mile radius of that town, more than 600 full-time jobs were accounted for through the horse racing and breeding industries and ancillary services. That picture is replicated in many other parts of the country.
The year 2019 was the last normal year experienced by most businesses. Ms Eade and I will be happy to deal with any questions the committee may have on our 2019 financial statements. Since then, much has changed and the industry is currently facing two massive challenges in Covid-19 and Brexit, both of which are having a significant impact. Covid-19 saw horse racing cancelled for 11 weeks last year and since the resumption on 8 June, racing has been run behind closed doors, under strict protocols, with only essential staff in attendance. Point-to-point racing is currently cancelled, which is a major problem for the national hunt sector and those whose livelihoods depend on it. Irish bloodstock sales, at which most of our international trade takes place, were heavily disrupted in 2020 with key sales either cancelled, deferred, or in some cases, moved to England. The industry is extremely grateful to be able to continue racing and is cognisant of the bigger picture. However, like many other sectors, the impact of Covid-19 will be felt for a long time.
As I said earlier, Ireland is one of the largest exporters of thoroughbreds in the world and Britain is our main market, which has meant that significant changes and readjustments are occurring as a result of Brexit. Over the past two years, together with various industry bodies and Government authorities, we have been working through the implications on the movement of horses between Ireland and Britain in the following areas: sanitary and phytosanitary applications, customs and VAT. Undoubtedly, the situation is more difficult since 1 January. Much work remains to mitigate the barriers to trade and prevent the industry in Ireland being marginalised as a result of geographical location.
Horse Racing Ireland has ambitious plans for the racing and breeding industry, and in March 2020 we published a strategic plan for the years 2020 to 2024, which sets challenging growth targets. While the industry is facing up to serious challenges, if properly supported it will play an important role in Ireland’s economic future. It is a valuable source of employment and investment into rural Ireland, an area in which Ireland has natural advantages of climate and soil structure. It is one that capitalises on our native skills and has a global reach which enhances Ireland’s reputation internationally. Moreover, it is an environmentally friendly agricultural activity. The key elements of the strategic plan are increased participation at all levels of the industry thereby increasing employment and economic activity, investment in areas that are critical to the development of the industry, raising the profile and attractiveness of horse racing to all its customers, world-leading standards of integrity and equine welfare, development of people within the industry to support sustainable employment, and securing a sustainable funding model for the future.
The key capital projects under this plan will be the redevelopment of the Irish Equine Centre in Johnstown, County Kildare, and the development of a new all-weather racetrack in Tipperary. The plan signals ambition to grow the direct and indirect employment in our industry to 35,000 people and the economic activity to €2.5 billion per annum.
The 2019 financial statements are before the committee. That was a good year for Irish horse racing and breeding, with increases in most of the key industry metrics and continued success for Irish horses on the racetracks of the world. The year 2019 saw the completion of the long-awaited redevelopment of the Curragh racecourse and the introduction of new broadcasting arrangements for Irish racing. It was also the year in which the threats to the industry from Brexit began to crystalise.
As requested, we have provided the committee with briefing material on three specific issues. As I said earlier, Ms Eade and I will be happy to address any questions members may have on those matters or any other aspect of our finances.