I move: "That the Bill be now read a Second Time."
The Bill proposes in effect to replace the Racing Board and Racecourses Acts, 1945 and 1975, and put in place a new comprehensive legislative framework for the horseracing industry in Ireland. Before I deal with the Bill itself, its various provisions and the circumstances that gave rise to the need for it, I would like to say a little on the significance of the industry.
We have a long and well-established tradition in Ireland in breeding throughbred horses for racing or export. While in more recent times we have seen the development of some large studs, the breeding of thoroughbreds, in the main continues to be a farm-based activity where farmers keep two or three brood mares in a mixed enterprise system. about 7,000 thoroughbred foals are registered annually. We are recognised worldwide for the skills that we have shown in horse breeding and as a result we have achieved an international reputation for producing quality horses. Our horseracing industry is also held in high esteem, internationally. The organisation and structure of our racing industry are already at a stage of development which surpass many of our counterparts abroad. This provides a firm base for continued development.
This is not however to say that we do not have difficulties in the industry and that some change is not required. Every economic sector needs to take stock of itself on a regular basis, to examine its structure and the means by which it can best equip itself for the future in order to achieve its objectives. A review of the overall organisational structure of the horseracing industry is appropriate, given its importance to our economy. There are about 25,000 people employed either directly or indirectly in the horseracing and breeding sectors.
Latest figures for output of the horse industry indicate an annual value of over £60 million. Exports are valued at about £50 million annually and there are encouraging signs of new buyers in the market. If the existing marketing promotions are continued and enhanced the overall position can be greatly improved. Irish Thoroughbred Marketing is doing a great job in promoting Irish thoroughbreds. We have recognised this by increasing the budgetary provision for this body in 1994.
Racing is a popular sport. The race meetings which take place at 26 racecourses around the country, and which are attended by over one million people, from an integral part of life in Ireland. These events also make a valuable contribution to our tourism industry.
The level of betting at horseracing in Ireland is substantial. Levies on betting at racecourses generate between £3 million and £4 million annually which goes back into the industry. The interest in racing here and the traditionally successful participation of Irish horses in many foreign races result in a high level of off-course betting. Such betting is not confined to horseracing events. Nevertheless the racing industry, and the interest it generates, is the major influence in achieving an annual turnover in off-course bets of £350 million with an annual yield of about £35 million to the Exchequer.
Despite its size and relative strength, this industry has not escaped the recession which has hit the sector worldwide in recent years. The position of the race horse owner has become particularly critical. The costs associated with keeping a horse in training have increased more rapidly than prize-money. In turn this has caused problems for some trainers who are finding it increasingly difficult to retain their patrons or to find new ones. On-course betting turnover which generates the main sources of income for the Racing Board has been in decline in recent years. For example, bookmaker on-course betting turnover fell from £104 million in 1990 to just over £70 million last year with a resultant decline in levy income from £5.2 million in 1990 to just over £3.5 million in 1993. As a consequence, the level of funds available to the industry as a whole has been contracting and there have been insufficient moneys available for development of racecourse facilities and prize money. This is most unfortunate at a time when horse racing has to compete with an ever growing list of alternative leisure activities.
Unless the facilities available at racecourses are continually improved, there is a danger that the industry could get caught in a downward spiral of falling attendances, lower levels of betting and consequent reductions in income accruing to the Racing Board, with little or no money available for capital development.
The position would have been much worse but for the action taken by the Government to introduce a grant-in-aid for the Racing Board in 1989. As a result, the board has obtained over £13 million from the Exchequer in the four years from 1990 to 1993. Of this figure £7.5 million was used to supplement prize money at the lower levels and about £4 million to develop racecourse amenities. The balance was allocated to promotion and advertising of the sport, marketing of horses and the provision of infrastructural services. These measures have brought about a significant degree of improvement. Most people in the industry would agree that, with an improved organisational structure and greater resources, the horseracing industry has considerable potential for growth leading to increased income for the economy generally and, in particular, to additional employment in the sector. The racing industry is a labour-intensive one, its expansion being directly reflected in higher employment.
The problems of the industry can be traced to shortage of funds and the lack of a coherent approach to its development. Having two separate bodies with, to some degree, overlapping responsibilities certainly does not help to bring cohesion into the industry. That is not to be critical of either body. The governing bodies — the Turf Club and the Irish National Hunt Steeplechase Committee — have done very valuable work in administering Irish racing for over two centuries. Their guardianship of the rules of racing and of its integrity is recognised domestically and internationally as being first class. The Racing Board, for its part, has, since its establishment in 1945, been an excellent focus for the financing and development of the industry. All of those who accepted appointment to the Racing Board and the members of the governing bodies served in a voluntary capacity. All are entitled to our thanks.
None of that, however, takes away from the fact that, in present circumstances, the absence of a single body to provide the focus for direction and funding in the industry is a serious impediment to its development. That is why we are now proposing in this legislation the establishment of a new horseracing authority to provide that focus for the future.
The new Bill, as well as proposing a new organisational structure, will provide a comprehensive legislative framework for the industry. We are providing in this legislation for the development of the industry well into the next century.
Our guiding principle in all of this — and our only motivation — is to put in place arrangements and legislation that will assist the industry to realise its full potential.
In framing these proposals we were conscious of three considerations in particular. Firstly, that the new Authority would be a representative one, covering the main sectors in the industry and in a position to give clear direction to the industry. Thus, contrary to some media views, what we are putting in place is not just a new Racing Board, it is a new Authority.
Secondly, in the new arrangements we proposed to preserve the strengths of the present. In particular, we were very conscious of the need to provide for the independence of the governing bodies as the institution responsible for the rules of racing and the integrity services and that the efficient administration provided by the Registry Office would continue to be available to the industry. The governing bodies have administered Irish racing now for over 200 years and we are deeply indebted to them for their unstinted service to the industry. Without their contribution racing could not have developed. The two bodies have carried out their functions professionally and regulated racing with impartiality. The governing bodies have not confined their involvement in the sector to the provision of services and the implementation of rules. At critical times for the industry they have invested funds, which they earned outside their formal role in the sector, back into the industry for the benefit of all. Irish racing certainly would not have flourished except for the major contributions of the governing bodies in the past 200 years.
In restructuring the industry it would indeed be very foolish for any Minister to seek to erode seriously the position of the governing bodies. What I have proposed in this Bill is to have written into legislation the functions of the bodies. Section 39 of the Bill provides for their continued regulation of horseracing, the making and enforcement of the rules of racing and the provision of the integrity services. They will be referred to jointly as the Racing Regulatory Body.
The Racing Regulatory Body will also have three places on the new Authority as of right under the provisions of the schedule to the Bill and it is, of course, possible that other members of the Authority representing other interests will also be members of the Turf Club or National Hunt Steeplechase Committee.
There are other provisions in Part 3 of the Bill giving the Racing Regulatory Body the statutory right to make charges for its services and guaranteeing to that body the cost of its integrity services. Contrary to some media comment, the position of the governing bodies, far from being undermined, is in fact being strengthened by the new legislation. The third consideration is to strengthen the financial base of the industry.
We are all conscious of the financial problems which have faced the industry in modern times. It was to help to meet these problems that the Government provided over £13 million to the industry through the Racing Board in the past four years. This is very tangible recognition of the importance the Government attaches to the industry. In line with the agreement on the establishment of the new Authority the Government decided to increase its contribution this year by over 100 per cent, that is doubling the amount. As a result I have been able to provide in the 1994 Vote for my Department close on £7 million for the industry. This amount, which is at least equal to the tax revenue from off course betting on Irish racing, represents major support for the racing industry.
It is our intention to maintain this support in the future, which should facilitate the continued improvement of prize money, the development of badly needed facilities on racecourses and the promotion of Irish racing and the Irish horse at home and abroad.
The responsibility of facing up to the current financial needs of the industry cannot, of course, all be placed on Government grants. The industry itself must do more in this regard. A particular responsibility will rest on the new Authority to see that attendances increase, revenue from betting maximised and sponsorship encouraged. The new legislation opens up greater opportunities to increase the overall level of betting turnover and levy revenue than were available to the Racing Board. I hope these opportunities will be grasped in a way that will see revenue from this source greatly increased to the benefit of the industry as a whole.
Section 54 of the Bill allows the Authority to apply a levy on all bets placed at a racecourse on horse races or any other events taking place elsewhere. Heretofore these were regarded as off-course bets and were liable to a 10 per cent off-course betting tax. The Finance Act will be amended to remove the 10 per cent tax on such bets but the Authority will be required to apply a rate of levy on those bets equivalent to the rate of tax applying to similar bets placed on the high street — a 10 per cent levy. The result will be that the revenue from levies on all bets placed at a racecourse will go the Authority for the benefit of horseracing. While the amount of betting at racecourses on off-course events at present is estimated to be quite small there will be under the new legislation an incentive for the new Authority to develop this source of income.
Section 63 provides for an amendment to the Totalisator Act, 1929. There is a provision in that Act which obliges any person operating a tote service to provide facilities for bookmakers to carry on their business at the same location. While this may be reasonable when a tote is being operated at a racecourse it would not be practicable if the tote were extended to operate from offices on the high street or if tote facilities were to be made available at individual bookmakers' offices through some arrangement with those bookmakers.
The Authority will be able to apply to the Minister for Finance for a new tote licence based on different conditions which would allow for such developments and the intention is to facilitate the new Authority in this regard. This would have the potential for a significant improvement in revenue from tote profits. The amendment to the Totalisator Act, 1929, will remove the requirement to provide facilities for bookmakers where a tote is operated except at racecourses where the requirement will remain.
Section 12 empowers the Authority to make charges in respect of the carrying out of any of its functions or the provision of any services. Under section 43 the Authority may require the Racing Regulatory Body to collect fees, levies or charges on behalf of the Authority. This is a new and flexible possible source of funding. Charges could be set or amended or removed without the need to put elaborate arrangements in place. It would in particular allow the Authority a greater possibility of ensuring a fair and equitable distribution of the burden of the industry's costs, especially in regard to a part of the cost of racing services, and this is essentially the purpose behind this section.
This Bill also provides for a range of new controls in key areas. Section 26 requires that the Authority must approve the amount and form of prize money offered in respect of all races. This is not unreasonable given that the Authority will be making a significant contribution to the prize money fund and will, in effect, be the guarantor of that fund.
The allocation of fixtures and the setting of programmes are critical to the proper and effective running of the industry and have, of course, clear financial implications. These are not the only considerations involved here but it would be difficult to see how an Authority with overall responsibility for the industry would not also have the ultimate responsibility for the fixtures list. We are, therefore, providing that responsibility will indeed rest on the Authority but that it will be exercised through a fixtures committee constituted on similar lines to the committee that currently performs this function and which will operate on the basis of terms of reference laid down by the Authority.
In view of the important position of the governing bodies in this area and in particular the implications which are involved in regard to the provision of integrity services, the Racing Regulatory Body will have a major role in the decisions on fixtures and programmes.
Section 33 proposes to control starting price returns. All who are familiar with the racing scene appreciate the significance of getting starting prices that are broadly acceptable to all sections of the racing industry and ensuring the maintenance of integrity in this respect. Starting prices are used extensively by off-course bookmakers in setting the odds at which bets are paid. This section sets down a procedure by which we will maintain a situation, of having only one starting price returned in respect of any particular race and where those involved in setting the starting price would be approved by the Authority. This is not intended to interfere with arrangements whereby racecourses benefit from the revenue generated by starting price contracts but simply to ensure that this essential element in the running of racing is adequately controlled.
Section 53 deals with the regulation by the Authority of bookmakers on racecourses. The lifeblood of racing is the betting that takes place. In order to make racing attractive it is not sufficient simply to have quality racing at venues with good ancillary services. The betting facilities must also be good. One of the initiatives which is provided for under section 53 is the possible introduction of betting offices at racecourses. I realise that there are those who believe strongly that this would not be a positive move.
It is possible that the full range of betting services could be provided by an extension or development of the current system of on-course bookmaking at pitches. It may prove to be the case that in the long-term a combination of pitches and betting offices would be the best method of providing the service that the punter wants. In the final analysis this is something which will have to be decided by the Authority. This Bill allows the greatest possible flexibility in that regard but provides that in making regulations under this section the Authority may take into account agreements reached between the racecourses and bookmakers. In that context I will be asking the Authority to decide on this issue at an early date.
In future racecourses will be required to be authorised by the Authority. Previously the Racing Board had no legal function in this regard. The new Authority must be in a position to ensure, as far as practicable, that all racecourses provide appropriate facilities and services to carry on the business of horseracing and accommodate the race-going public in a safe and hospitable environment. New racecourses in particular should not be approved unless their facilities are of a proper standard. The provisions of section 59 will, I believe, satisfy this requirement.
Section 61 deals with broadcasting and filming rights. It allows the Authority some say in the transmission or relaying of any broadcast of a race fixture and this is necessary in my view in order to ensure that such broadcasting is always done in a way which is in the best interest of the industry as a whole.
I would like to draw the House's attention to two or three other provisions which in due course could prove to be significant. Section 35 would allow a subsidiary of the Authority to apply for a bookmakers licence. Under section 36, however, it would need the consent of the Ministers for Agriculture, Food and Forestry and Finance before it could establish such a subsidiary. The operation of bookmaker offices by a subsidiary of the Authority could prove to be the vehicle by which a new range of betting services could be introduced. It could also be a revenue booster for the Authority. However, the relevant provisions in the Bill are enabling ones and the whole area would require some detailed research and analysis before any ministerial consent, as provided for, could be given. I would also draw attention to the fact that joint ventures between subsidiaries of the Authority and other companies are provided for in section 36 and this could lead to some beneficial partnerships between the State and industry.
Part IX deals with the amendment of the licensing Acts. The area of liquor licences for racecourses has been cumbersome and restrictive up to now. Sunday racing has added to these problems as occasional licences are not allowed for Sundays. Greyhound racing has had its own special regime appropriate to its own needs since 1962. The changes proposed here for horseracing are similar to those that applied to greyhound racing over that time. If it is to retain its customer support, racing must be in a position to provide a comprehensive entertainment and leisure service. It is not surprising that we have to make special exemptions from Acts which, in fact, date back to 1833.
The provisions for State boards in relation to a code of ethics for the Authority and its staff and for ministerial control on pay, superannuation and borrowing are included in Part II. The dissolution of the Racing Board and the transfer of all its assets, liabilities and staff are provided for in Part X.
Some people have asked why we did not simply amend the 1945 and 1975 Acts. By explaining, in as brief a form as possible, the changes this Bill is providing for I have answered that question. By attempting to carry through so many basic changes by way of amendment to legislation which is almost 50 years old would have created a complicated and, in my view, inadequate legislative framework.
Matters relating to the composition of the Authority are dealt with in the Schedule. What is being proposed here is a State body. In this way the sectoral interests involved in the industry can be brought together and given the Authority necessary to control and manage the industry. The industry needs a sound framework, a suitable environment and some working capital and these are the ingredients provided by the State. The framework is not only the legislation, it also comprises the composition of the Authority. It is essential that a satisfactory balance is achieved which gives fair representation to all the interests involved in the sector.
I have spoken earlier about the important role played in this country by the Turf Club and National Hunt Steeplechase Committee. I am proposing to allot two places on the Authority to stewards of the Turf Club and one place to a steward of the National Hunt Steeplechase Committee. I will, in filling the remaining places, endeavour to achieve reasonable geographical balance, a gender balance and a general balance of the main interests involved.
For seven further places I am proposing a system of nominated panels from which we will choose the appointees. Organisations which are well known in the industry will nominate a panel of at least three persons to represent their interests. The racecourses, because of their pivotal role in the sector, will get two places. Breeders, owners, trainers, bookmakers and employees will each have one representative.
The State is making a major contribution to the financing of the racing industry and, as I said, it will continue to be a major contributor in the years to come. The Exchequer grant and levy revenue, which can be collected only because it is provided for in legislation, now account for about 60 per cent of the funding of Irish racing. In other words, the taxpayer is funding Irish racing to the tune of almost two-thirds. In these circumstances it is reasonable — indeed essential, that a number of the members be selected and appointed by the Minister. I propose that four out of the 14 be appointed in this way. They will, of course, be people involved in and-or interested in the industry but not necessarily representative of any one sector.