Vol. 429 No. 5
2 Mr. Deenihan asked the Minister for Tourism and Trade his views on the severe shortage of cars during the peak tourist season in July/August as experienced in the 1991 and 1992 tourist seasons; and if he will make a statement on the matter.
10 Proinsias De Rossa asked the Minister for Tourism and Trade the plans, if any, he has to ensure that there are sufficient hire cars available to cater for the tourist market in 1993 in view of the difficulties experienced by a number of tour operators in the peak July/August period in 1992; and if he will make a statement on the matter.
I propose to take Questions Nos. 2 and 10 together.
Supply constraints tend to arise within sectors of the tourism industry, including car hire, directly related to the traditional peaking nature of demand in the popular family holiday months of July and August. Thanks to major new investment and marketing initiatives targeted at generating shoulder and off peak season business, the situation has improved in recent years. However, short term supply difficulties continue in the car hire sector, particularly for a three week period at end July-early August. Last year, in anticipation of such difficulties, the Government decided to allocate £1 million in the 1992 budget for a grant scheme to boost car hire supply to a level sufficient to meet expected 1992 peak demand.
This year the Government has decided to adopt a different, more long term approach to help solve the problem, details of which were announced by the Minister for Finance in the budget. Under the new arrangement the Government proposes to introduce a scheme of partial repayment of vehicle registration tax in respect of cars being disposed of from the hire fleet. Details of the scheme are currently being finalised by the Department of Finance in consultation with the Car Rental Council. The additional resources which this scheme will inject into the sector, estimated at £3 million this year, will enable car hire operators to expand their fleets to cater for the peak season. The problems relating to the car hire sector will continue to be kept under review.
I should also mention that I am currently in the process of preparing a new plan for the development of tourism which will include measures aimed at further spreading business to the off peak and shoulder seasons, thus further reducing the concentration of demand for car hire in the July-August period.
Would the Minister agree with the Bord Fáilte projections that there will be a shortage of approximately 3,000 cars at the peak of this year's tourist season, that this could lead to a loss of approximately £28 million in tourist revenue and that it will have a particularly damaging effect on the Italian, German and US markets? Will he comment on the suggestion that the care hire sector should be allowed to import cars on a temporary basis at the peak of the tourist season?
With regard to the Deputy's last question, in his Budget Statement the Minister for Finance ruled out the temporary importation of cars. As the Deputy correctly stated, this problem in the car hire sector has existed for some time. He also said that this shortage could lead to a loss of approximately £28 million in tourist revenue this year. However, I do not anticipate that this will be the case. There are a number of reasons for the problems in the car hire sector. The shortage of cars only arises for one or two months of the year. Car hire costs are directly related to the underlying costs incurred by people in the car hire business, for example, the cost of cars, high insurance costs and so on. A number of car hire companies are not inclined, for good business and commercial reasons, to buy extra cars to cater for the peak of the four to six week tourist season.
In 1992 the Government introduced a £1 million grant scheme which brought a number of cars onto the market. However, it has been decided to adopt a more long term approach this year by giving a partial rebate of vehicle registration tax to car hire companies. There can be problems at the peak of the tourist season for a variety of sectors, not least of which is the car hire sector. The Tourism Task Force addressed the problems experienced by the car hire sector and these problems have also been examined in special reports. Those problems were exacerbated at the end of the 1991 tourist season when two of the major car hire companies decided to leave the Irish market. There is also the further problem that car hire in Ireland is very expensive — it is more expensive here than in any other European country. The Government believes that the approach being adopted this year should alleviate the problems in this sector in the long term and make it more profitable for car hire companies to put more cars onto the market. I will continue to review this issue. I accept that there is a problem in this sector, but it has existed for a number of years. I will see how the approach adopted this year works, and I will introduce other alternatives if it does not work.
Deputy Deenihan rose.
A very brief question, Deputy. I am concerned about the lack of progress in dealing with Priority Questions today and the likely inability of our disposing of the five questions before us.
Is the Minister aware that the major tour operators are very concerned that the shortage of cars for hire could have a very damaging effect on the credibility of Irish tourism? Is he also aware that the impression given by the Minister for Finance in his Budget Statement was that the partial rebate of vehicle registration tax would not be deferred until such time as the cars were being sold? In other words, the car industry were misled to the extent that they felt the rebate would be a greater incentive than it actually is. This may not lead——
I must ask the Deputy to leave it at that.
——to the availability of more cars for hire.
The Car Rental Council are in negotiations with the Department of Finance on the details of this scheme. If this problem gave rise to a reduction in the number of tourists coming to Ireland I, like tourist operators, would be very concerned. It is not easy to solve this problem due to the fact that the demand for cars peaks at a certain time. If we could extend the tourist season, eliminating the problem of seasonality, these problems, which have existed for a long time, could be solved.
Question No. 3, please. There are now some five minutes left to dispose of the three remaining questions.
