asked the Minister for Tourism and Transport the plans, if any, he has to enable car hire firms to offer more competitive prices to tourists.
Ceisteanna—Questions. Oral Answers. - Car Rental Rates.
5.
Levels of car rental rates are, in the first instance, a matter for the individual car rental companies. However, the Government and I are fully aware that car rental rates in Ireland are less than competitive when compared with some European countries and with North America which accounts for 55 per cent of tourist rentals.
The high cost of motor insurance and excise duty is regularly cited as the main factors contributing to the relatively high level of car hire costs in this country.
As I pointed out to the House in response to a parliamentary question from Deputy Hussey on 16 November 1988, while the current state of the public finances precludes a lowering of excise duty, or a deferral of excise duty on car rental fleets, Government policies in other areas are helping to improve the competitiveness of the sector.
The Government's economic policies which have led to substantial reduction in inflation and interest rates allied with the moderate pay increases negotiated under the Programme for National Recovery have all helped to improve the competitiveness of Irish industry and tourism in particular. Of direct relevance to tourism, and the car hire sector particularly, these policies have brought about more competitive tourist accommodation rates which, allied to lower access transport fares, have helped considerably to improve the competitiveness of fly and self-drive holiday packages to Ireland.
Specific measures to tackle the high cost of motor insurance are an integral part of the Government's Programme for National Recovery and these measures are in train. The provisions in the Courts Act, 1988 will foster an environment for lower motor insurance premia. My information is that, arising from increased competition in the insurance secor and in anticipation of the benefits arising from the Courts Act, insurance premia have already begun to come down.
It is clear, therefore, that, short of reducing the level of excise duties on car rental fleets, the Government are making every effort to improve the competitiveness of the car rental sector. I can assure the House that these efforts will continue.
Arising out of the Minister's reply — which was really a party political broadcast rather than a reply to a specific question — the Minister will be aware that Aer Lingus have now reduced their return fares across the Atlantic to 299 dollars for coming months with the result that it is much easier to cross the Atlantic twice — it is cheaper — than to hire a car for one week in this country. In view of that, would he accept that those costs constitute a major disincentive to the North American market? Furthermore, would he say whether the Government have engaged in any costing exercise of what it would cost them to reduce excise duty or — as the car hire people talk about — charge excise duty only when these fleets are sold on for the second time? Have the Government engaged in any cost-benefit exercise between that cost and its advantage to the tourist industry?
With regard to excise duties, I should say that studies have been undertaken. Indeed we have examined very carefully the position in Denmark where the scheme alluded to by the Deputy is in operation with regard to excise duties and the selling-on period. I am glad to say that, coupled with the reduction of fares the Deputy mentioned and recently announced by Aer Lingus, there has also been an announcement that they are making provision for car hire at a very low cost indeed.
With one firm.
These two combined will impact on the price of car hire. I have said already that I regard the figures as too high. I have a list of them from two different sources. We emerged not too badly on the list from one source and second highest on another. The fact of the matter is that the rentals are too high, particularly vis-à-vis the large United States market. We are endeavouring to deal with that.
Of course the broader question of excise duties will come up very much for consideration with regard to the single market in 1992, as the Deputy well knows, when they will have to be dealt with.
In view of the——
Deputy Nealon, I am anxious to dispose of your question No. 6 and No. 7 in the name of Deputy Pat O'Malley before time runs out, which is fast approaching. I would ask my colleagues to bear with me in this regard.