Cuireann sé áthas orm cur leis an díospóireacht seo are na Meastacháin, ach de bharr an ganntanas ama atá ann, leanfaidh mé ar aghaidh.
I am pleased to have this opportunity to contribute to the debate on the Estimates. In doing so, I would like to make some broad comments about the Government's economic policy. The proposals made in the Estimates must be seen in the context of the national economy and the restructuring and development programme that has been undertaken by the Government.
The economic and social policy objective are aimed at substantially increasing sustainable employment opportunities as well as generating the wealth and resources necessary to improve the lot of our people. To do this Government policy is designed to control public expenditure and re-establish growth in the economy.
We have addressed the problems of high borrowing, inflation, interest rates and we have created an environment where business, industry and services can plan and develop their enterprises with confidence. Building on that confidence, the development that we require will be achieved by improving the competitiveness of Irish industry and by creating the right conditions for investment and job creation.
In the drive for growth we have adopted imaginative and innovative policies designed to harness the spirit of enterprise. As we move towards 1992 and the completion of the internal market, we must recognise and grasp the tremendous opportunities which that offers. To capitalise on the opportunities which the market will offer we must ensure that what we sell, be it products or services, come from the most efficient cost structures and regulatory arrangements we can devise.
In the tourism and transport sectors we have clearly defined the roles of Government. First, the Government must act as the regulator of the sector. Secondly, as the shareholder of the main companies in these sectors they must ensure that they provide an adequate return on the community's investment in them. I am happy to say that we are beginning to see the results of the imaginative and innovative programmes and policies of which I spoke.
In aviation, for example, the strategy of lowering air fares; providing more capacity on all major routes and encouraging competition is paying handsome dividends. Moreover, the good results on the aviation side are being reflected also in our tourism figures. Access travel is, of course, one of the main keys to improved tourism performance. Therefore, it is essential that our transport policies as far as possible meet the demands of the tourism industry.
I believe we have now got that policy right. As the House will be aware, there have been significant reductions in air fares especially on the UK and continental routes and that a range of highly attractive fares from the US are also available. The result of this strategy has been the spectacular growth in passenger numbers that we have seen.
This year we expect that up to six million passengers will have passed through Irish airports as compared to four million in the same period last year. Few could deny that this magnificent performance demonstrates conclusively that the potential was there, is there and is now being tapped.
An interesting by-product from the strategy of reducing air fares has, of course, been the impact on the performance of Aer Lingus. The reduction in fares levels has been more than offset by increases in passenger numbers. The success of the lower air fares policy is underlined by the fact that the company is now in the happy position of being able to fund its ongoing fleet replacement programme without recourse to the Exchequer. I hope the previous speaker will not get annoyed as he said he might if it was otherwise. The board next year will acquire four new aircraft, two Fokker 50s, two B737s and will lease in a Lockheed 1011 airbus.
The targets for improvements in tourism performance combined with the results over the past two years clearly indicate the need to provide the maximum capacity on the various routes. The new aircraft will meet the demand for that increased capacity when it arises next year. The Aer Lingus acquisition programme clearly demonstrates the company's ability to respond constructively to the market forces as well, of course, as showing the company's commitment to the Government's targets for tourism growth.
It is not only Aer Lingus that have seen and grasped the opportunities. Ryanair are in there too and this company carried its one millionth passenger recently. This year they expect passenger numbers to be of the order of 600,000, double on what they had been in 1987. As well as contributing their share to the growth in this sector Ryanair have, of course, brought the added element of competition to the market — a factor which is essential in helping all to look at cost and operating structures. Only by the constant monitoring of performances in this way can we be sure of having the lean efficient productive operations that bring the levels of development we require.
It would be remiss of me if I were not to mention that the increased passenger numbers have had a tremendous impact also on the fortunes of Aer Rianta. The rate of return being earned by Aer Rianta is very strong and the company must be complimented for the entrepreneurial spirit they show. I say this because it would be easy to sit back and passively accept the benefits coming their way by way of increased passenger numbers. However, they have not been content to sit on their laurels but have gone out and chased the business wherever it might be. In this respect I have in mind particularly their involvement with Aeroflot. As the House may be aware, Aer Rianta now supply a wide range of services to Aeroflot, including the operation of a duty free shop at Moscow, the provision of duty free facilities on all Aeroflot routes, and their most recent venture, the aircraft painting contract at Shannon.
Once again in 1988 Aer Rianta will return a large surplus to the Exchequer. With a throughput of almost six million passengers it is hardly surprising that the board are engaged in a major investment programme covering development and refurbishment at all three State airports. The largest development, a project costing some £32 million, is the provision of a new runway at Dublin Airport together with the relocation of the control tower and State services building at the west side of the airport. At Shannon Airport, too, there is considerable development with the upgrading and extension of the passenger terminal facilities.
The rapid expansion in traffic, the impact of which, I am glad to say, has been felt also at Cork, has resulted in a major upgrading of the facilities there. This has been long overdue in the 25 year life of Cork Airport. I had the pleasure last July of opening phase 1 of the new terminal extension. Up to the end of September passenger numbers increased by over 82,000 or 24 per cent on the same period last year and I am sure that the additional space provided has certainly relieved some of the pressure building.
Of course the extension to the terminal is only part of the extension of the facilities at Cork Airport. On what might be described as the operational side other major investments at the airport include an extension of 1,000 feet to the main runway which has been brought into use within the past week. In the new year it is intended to provide a new instrument landing system and new navigational aids. Also on the drawing boards for installation in the following years is a new modern integrated radar system to replace the existing facilities. We will then have a very low to nil diversion rate from Cork which has bedevilled the region for far too long.
As I mentioned, the technical facilities for Cork I should perhaps emphasise that these are part of a major upgrading programme for all radar, communications and navigational aids facilities in the State costing over £30 million. In 1989 it is expected that £5.5 million will be spent. The renewal programme is timely because it will ensure that the technical capacity of our national airspace is adequate to meet the demands that will be placed on it by the developing commercial operations.
In making sure that the State airports operate to maximum efficiency we have not overlooked the needs of, or opportunities offered by, the smaller local airports. Last August we announced a major development plan for regional airports. This will entail a total investment of £4 million over the period 1988-89 and will ensure that these airports are up to the standard which would meet necessary operational requirements.
It is estimated that improvements in the regional airports could leave them in a position to handle 200,000 passengers on an annual basis. In tourism terms this level of activity could generate revenues of the order of £50 million and create approximately 3,000 jobs. These of course would be additional to the jobs created during the construction phase at the various locations around the country.
I think it can be fairly said that the Government are sparing no effort in providing the facilities to bring the tourists to our doors. The next question, therefore, is the tourism industry itself which has become a national movement with widespread interest and genuine enthusiasm by all our people.
There is now a profound air of optimism within the Irish tourism industry. The new found confidence is not surprising when one considers that, following a 12 per cent growth in overseas numbers last year, we are now heading for a 15 per cent growth in 1988. Such percentage levels of growth have not been seen for many years and are due in no small way to the Government's decision to prioritise the development of the tourism industry.
In the Programme for National Recovery the Government set ambitious targets for tourism for the following five years. The objective is to create an extra 25,000 jobs and to attract an additional £500 million in revenue. To achieve this we will have to double visitor numbers. Many have said that these targets are far too ambitious but with nearly two years behind us we are on course and I am certain that the targets can and will be achieved.
The thrust on tourism has been amply demonstrated over the past 18 months or so through a wide ranging series of innovative measures in the areas of marketing and product development. These include a special marketing programme in May 1987 and in 1988; the development of a more extensive and competitively priced access transport service; and the extension of the benefits of the business expansion scheme to the export tourism sector which up to then had only been available to manufacturing industry. Responses by the industry and investors to this particular initiative have been most encouraging. Bord Fáilte have received some 4,000 inquiries and to date have approved marketing and development plans in respect of 24 projects involving investment of almost £19 million. These cover a broad range of tourism facilities and amenities. A further 15 projects are currently under consideration.
Further innovative measures include the introduction of a £200,000 petrol voucher scheme for the summer of 1987 for UK motorists visiting Ireland; the autumn of 1988 car rental bonus scheme for North American visitors entitling them to a $50 rebate of the cost of car hire and the recent broadening of the scope of the VAT (Refund of Tax) Order, 1986, to enable a greater number of tour coaches to qualify for a reduced 10 per cent VAT rate.
The Government underscored their commitment to encouraging the expansion of conference business by initiating the conference ambassador scheme as part of the £4 million marketing campaign for 1988. This scheme was launched last May by the Taoiseach and was attended by over 1,000 industry executives.
The objective was to encourage these industry leaders to actively promote Ireland abroad as an ideal conference venue. There has been a very positive response to the Government's initiative and we are optimistic that 1989 will show substantial growth in the conference sector of the industry.
The industry has reacted in a most positive and practical manner to these measures by providing additional funds for direct marketing and for the development of the tourism product. Their continued backing for the Government's measures and leadership has again been manifested in their decision to match the Government's recent commitment of a further £5 million for marketing programmes to boost tourist traffic in 1989.
This allocation on top of the £18,227 million grant in aid to Bord Fáilte for 1989, provided for in the Book of Estimates will mean that the Exchequer contribution to the Board's marketing and promotion programme for 1989 will be up £3 million on the 1988 provision. The present Estimate provision underlines the Government's continuing determination to ensure that the tourism growth targets set out in the Programme for National Recovery are realised.
Increased investment by the industry itself in the tourism product and in marketing is crucial, given the global environment in which tourism operates. By the turn of the century it is expected to be the world's largest industry. It is, I hasten to add, one of the most aggressively competitive industries and we must be able to participate in that competition. Not only are the major traditional tourist destinations investing heavily for their share of the business but very many emerging countries now see tourism as a relatively fast way to increase their prosperity by gaining foreign revenue and to increase employment.
The message, therefore, is clear to us all. We must build on the growth that we have seen over the past two years. There can be no room for complacency. We must ensure that our product meets the demands and quality required by the marketplace and be prepared to sell that product effectively. The industry must be sufficiently developed to meet and satisfy the expected growth in the years ahead and must have the flexibility to adapt its products to the changing tastes as well as having the innovative capacity to create new products.
Every effort must be made to extend the season and to attract more customers — both domestic and overseas. One way forward is to provide more all-weather facilities. This year we have given practical recognition to the fact that activity and special interest holidays have become the fastest growing sectors in world tourism. With a generous headstart provided by our natural environment and uncrowded towns and countryside, we have put together our most extensive programme for special interest activities. Our national recreations of golf, angling and horse riding are now the beginning only of a very long list which even includes American Football in Dublin next month when Boston College and the Army hold their annual game. The success of our sports representatives will be of considerable help in that regard.
It is vital to offer tourists a quality service, value for money, hospitality and professional standards of service. A ready smile and a willingness to oblige are essential. By retaining consistently high standards only can we increase our share of the world's fastest growing industry. It is important also to understand the cultural background of our visitors. The shift of emphasis on the part of the Department of Education from the mere literary aspect of languages to their practical usage — particularly German, Italian, Spanish and French — is welcome in that the people servicing our industries should avail of the opportunity to learn these continental languages and understand the cultural background of our visitors. That is now part and parcel of the necessary training for our tourism and catering industries, a welcome innovation.
I should like now to move to surface transport modes, in particular, to the part to be played in our economy by the road haulage industry. Transport has a vital part to play in the completion of the internal market. Ireland's location on the periphery of the Community places us in a most disadvantageous position vis-à-vis access to continental markets. Nevertheless, we have fought long and hard to have our plight recognised by our continental colleagues. I am happy to say that considerable progress was made in the road freight transport are in the course of the Council of Ministers' meeting in June this year.
Of more immediate significance to our haulage industry was the increase in Ireland's quota of multilateral haulage authorisations to 671 for 1988 and to 940 for 1989. The impact of these increases will be appreciated when compared to the 1984 allocation of 88 authorisations. Perhaps I should explain that an EC multilateral authorisation allows the international carriage of goods by road for hire or reward from any member state, by any route, to any other member state. Therefore it will be seen that this increase offers tremendous opportunities for our haulage industry in the context of 1992.
The other major component of the surface transport industry which comes under the wing of my Department is CIE. When public finances have had to be tightly controlled CIE must share the general restraint and accept some reduction in State allocations. The CIE subvention for 1989 — which amounts to £109.884 million — is almost £4 million less than the allocation of £113.605 million provided for the board in 1988. In fact most of the reduction in the CIE subvention is due to the reduction in interest rates on the DART system. CIE are engaged in a continuous programme of reducing costs, rationalising services and marketing their products aggressively. The creation of the three operating companies is designed to ensure generally a more responsive approach to consumer demands.
I am heartened by the balance struck in these Estimates. Balancing the evident control of the public finances our strategy is aimed at stimulating the productive sectors where there is a real prospect of generating the wealth necessary to provide substainable employment.
