I am very pleased, as Minister for Tourism and Trade, to have this opportunity to speak in the House on the 1995 Finance Bill which delivers on the detail of the taxation proposals announced in the budget. As the Minister for Finance has indicated, this Bill is the first in a series which this Government intends to present to create a climate of taxation which rewards work, promotes enterprise and creates social solidarity.
I was interested in a number of the comments made by Deputy Andrews. I agree with his comments on St. Patrick's Day parades. This should be the national showcase of a modern Ireland at an important time in our development. I have examined this matter in the Department. I have received a number of representations from Members and various other interest groups. I can give a guarantee that he will not again see the kind of St. Patrick's Day parade to which people have become accustomed. At a recent meeting of the tourism council I approved an allocation of £50,000 to employ an artistic director to look at the range of possibilities in respect of the St. Patrick's Day parade to project Ireland as a modern enterprising young country. I hope the artistic director together with the various interest groups, particularly in the Dublin region, where some appointments will be made to a special committee, will ensure that the St. Patrick's Day parade becomes the showcase of the modern Ireland to which Deputy Andrews refers.
Tourism and trade have crucial roles to play in furthering the objectives of rewarding work, promoting enterprise, creating social solidarity and in particular in stimulating employment opportunities. As a Deputy representing County Mayo in this House for the past 20 years, I am more acutely conscious than many of the haemorrhage of our young people emigrating which has beset this country and especially the west.
In the coming months we will commemorate sensitively the millions of people we lost as a result of the Famine 150 years ago, those who died and those who had the strength to flee. One hundred and fifty years on, many are still going but the circumstances are not as tragic. Many are now well educated, get good jobs and manage to get home for Christmas or for holidays but the void in their families is still great. The void in their town or village is still great as is the loss to the community of young strong minds and bodies.
As Minister for Tourism and Trade I have a responsibility to those young emigrants and their families. I must pursue policies and initiatives which make it possible for them to get good employment opportunities in our towns and villages. We all know there is no simple solution to the problems of unemployment. There is no simple quick fix. The problem has to be tackled on a broad front with a range of policies and initiatives.
I intend to frame my remarks generally in the context of tourism and trade development and how this can assist in tackling unemployment. The importance of tourism to the Irish economy is directly linked to the potential to create badly needed and sustainable employment. It is a highly labour intensive sector with a low technological base and a predominance of small enterprises.
Most inputs are home-produced and tourism has a high multipler in terms of national income — the direct content of tourism is in fact only about 10 per cent. Each £1 million of foreign tourism revenue therefore contributes the equivalent of 55 full-time jobs.
Tourism is a particularly powerful instrument of regional policy because it helps to raise incomes and provide employment in the more remote and less developed regions. Many of our major tourist attractions are located in less developed regions whose very remoteness is a powerful attraction.
The significance of tourism to the regions will become even more important over time as the numbers directly working in agriculture decline. As well as the purely economic considerations, tourism also has the important effect of energising and raising the morale of local communities which have been adversely affected by emigration and depopulation. Since becoming Minister for Tourism and Trade, I have been pleasantly surprised at the amount of local effort and initiative which is being put in all around the country on local tourism projects.
Recognition of the vital role that tourism plays in the economy and the potential to increase that role, must be at the heart of our plans to develop the industry. Tourism now represents 7 per cent of GNP, compared to 5.4 per cent in 1988 and accounts for 8 per cent of employment. In some parts of the west and north west tourism accounts for more than one in ten local jobs.
Between 1988 and 1993, 25,000 new jobs were created by tourism or 40 per cent of the total number of new jobs in the Irish economy. This Government is fully committed to continued, planned development of the sector and ambitious, but realistic, targets have been set up to the year 2000. Foreign exchange earnings are set to rise to £2.25 billion or an average annual increase of 9 per cent with jobs to increase by 5 per cent annually from 91,000 to 120,000.
Last year was a good year for Irish tourism on a number of fronts: overseas visitor numbers were up by almost 11 per cent; we had particularly strong growth from both the British and North American markets; the review of Bord Fáilte's role was completed and we are well on our way to its recommendations being implemented; the Operational Programme for Tourism was agreed and published — already over £13 million has been approved in 39 projects throughout the country, involving a total investment of over £35 million and last, but by no means least, the ending of violence on the island has opened up new opportunities for tourism throughout the island, opportunities which we are setting out to exploit in close cooperation with our colleagues in Belfast. We have lived with the Northern troubles for so long that we underestimate the harmful effect they have had on the international perception of this island, either as a place to visit or as a place in which to invest. How many of us would consider going to Bosnia or Palestine for our holidays? For many people abroad, that is what they believed we were asking them to consider. Lifting that yoke from the back of Irish tourism opens up great possibilities for economic development and job creation, North and South.
We have made a particular effort to associate ourselves both North and South in the marketing of this island as an all Ireland/all island entity. I have met my counterpart from Northern Ireland, Baroness Denton, on a number of occasions to publicly give solidarity to that commitment. We were happy that the Northern Ireland Tourist Board accepted our invitation to attend in America, and in New York in particular, at the St. Patrick's Day celebrations this year. It is important to understand that it is now so easy to market Ireland as a single entity and we intend to continue to work and strengthen that part of our development.
This year's budget, and the Finance Bill before us today will help to strengthen the Irish tourism industry throughout a variety of both general and specific measures. The pilot renewal scheme for traditional resorts is the most significant single initiative in this Bill which I believe will have a revitalising effect on a number of traditional resort towns.
I expect that there are few Members of this House who have not as a child, spent an annual week, fortnight or month in one of the traditional, small holiday resorts around the country and remember them, as I do, with fondness and a degree of nostalgia. With the increasing availability of cheap foreign holidays in the sun, however, many of these resorts have fallen on hard times.
The combination of declining visitor numbers and shortened season have resulted in a lack of investment in both planned renewal and new product development, thereby accelerating the downward spiral. This in turn has lead to a situation where many resorts are unable to respond to a renewal of interest in home-based holidays and even less to play a part in attracting overseas tourists and contributing to Government objectives.
If these resorts are to increase their appeal to domestic and foreign tourists, it is essential that the visitor accommodation and other tourist facilities are extensively improved to meet the demands of the modern holiday-maker and that new tourist facilities, appropriate to the character of the individual resort, are provided to attract a new and growing tourist trade. Accordingly, the provision under this year's Finance Bill for a new pilot tax incentive scheme specifically designed for the improvement of certain traditional resort areas is particularly welcome.
The scheme is based on the very successful urban renewal scheme model which has been instrumental in promoting the renewal and revitalisation of cities and towns around the country and in encouraging development in areas where it would not otherwise have taken place.
It incorporates many of the features of that scheme, notably, accelerated capital allowances, double rent allowances and rented residential accommodation relief.
Accelerated capital allowances will be available in respect of capital expenditure incurred on the construction of eligible buildings or structures and, subject to conditions, on the refurbishment of such buildings. The allowances consist of an initial allowance, available to both lessors and owner-occupiers, of 50 per cent, annual allowances of 5 per cent and accelerated annual allowances, commonly referred to as free depreciation, available to owner-occupiers only of up to 75 per cent. Where an initial allowance is claimed there will be no entitlement to free depreciation.
A double rent allowance will be available as a deduction in computing trading income for the first ten years' rent arising under new leases of certain buildings or structures, again subject to conditions in the case of refurbished buildings and structures.
Finally, rented residential accommodation relief will be available in respect of construction expenditure incurred on the provision of certain rented residential accommodation, the expenditure incurred on the conversion of certain buildings into rented residential accommodation, and the expenditure incurred on the refurbishment of buildings of multiple residential accommodation.
These reliefs which will apply where the accommodation is available primarily for letting to tourists may be offset only against Irish rental income, and may not be availed of in addition to capital allowances.
Clearly this scheme will provide Achill, Ballybunnion, Bundoran, Courtown, Kilkee, Lahinch, Tramore, Westport and Youghal with a most useful complement to the support available under the Operational Programme for Tourism. As this is a pilot scheme, it was not possible to include every area in the country in the initial allocation. However, I hope that the motivation that exists among the business community will be reflected in very significant investment in these areas. Although the scheme is being promoted between the Departments of Finance and Tourism and Trade, I have no doubt but that the Minister for Finance will be amenable to looking at the question of an extension of this scheme subsequent to a review of the success of the pilot scheme.
The legal definition of the precise areas to be designated is described in the Third Schedule to the Bill. As far as possible, entire townlands and urban districts have been included in the interest of simplicity and clarity, although this did not always prove practicable. I am satisfied that the coverage is as generous as could reasonably be expected. For the convenience of potential investors, my Department has requested the county managers in the seven relevant counties to prepare large-scale maps outlining the designated areas and to make these available for inspection in appropriate locations.
The Bill already proposes that all Bord Fáilte registered and approved visitor accommodation, i.e. registered hotels, guesthouses, caravan and camping sites, holiday hostels, youth hostels, holiday camps, holiday cottages and holiday apartments, and approved bed and breakfast establishments in the designated areas, may benefit under the scheme.
It is also intended that other tourism buildings or structures which I approve will be eligible for the incentives. While these have yet to be agreed between me and the Minister for Finance, I envisage that most Bord Fáilte or Shannon Development approved tourism products and services will be included with a number of other facilities used by visitors to these areas. My aim is to include all facilites which have a genuine tourism dimension and I hope to be in a position to publish a list of the categories of eligible buildings and structures shortly.
My Department, with Bord Fáilte, Shannon Development, the regional tourism organisations, the local authorities and others, has a role to play in promoting this new scheme, although ultimately it will depend on individual investors and entrepreneurs to capitalise on the marvellous opportunity that this scheme represents. I am confident, however, that it will help to create a favourable climate for private sector investment in the designated resort areas, that it will contribute significantly to their regeneration and that it will enable them to play their part in meeting Government targets for overseas tourism revenue and job creation.
We in Ireland possess a rich heritage, including both our natural and built heritage. Bord Fáilte surveys confirm that almost half of all holidaymakers to Ireland visit places of cultural or historical interest. Country house tourism is an important subsector of the heritage tourism sector and section 20 of the Bill extends certain tax reliefs to significant houses of historic or architectural importance which operate as guesthouses for at least six months in the year.
At present, transfers of heritage properties like historic houses, gardens or works of art are exempt from capital acquisitions tax provided,inter alia, that reasonable access is afforded for public viewing. The relief is, however, not available for shares in a company holding heritage property. Section 147 of the Bill provides for the granting of relief to shares in existing companies to the extent that the value of the shares is attributable to heritage property. This measure will help to preserve the heritage properties of long-established family-owned companies following their transfer to the next generation.
The Bill also provides in section 157 for a scheme of tax relief on donations of items of national heritage. This is another measure which will help the preservation and enjoyment of our national heritage.
The tourism industry stands to gain significantly from the general taxation provisions contained in the Bill. With the PRSI changes announced in the budget, the income tax reliefs set out in this Bill will provide additional reward to those at work, especially the low paid. As a highly labour-intensive industry, the cost of employing extra staff is a major issue with many tourism employers and these changes will improve their situation significantly. The reduction in the standard rate of corporation tax from 40 per cent to 38 per cent represents a first and very welcome step on the road to securing a standard rate of corporation tax which is comparable with our overseas competitors. The extension of various capital gains tax and capital acquisitions tax reliefs in this Bill will be of assistance to tourism businesses while the improvements in the reliefs available to new entrepreneurs under the seed capital investment scheme will encourage more new business start-ups.
The year 1995 promises to be the best ever for Irish tourism. In addition to the £6.3 million which will be spent on this year's overseas tourim marketing initiative and Bord Fáilte's normal spend, I have recently allocated Bord Fáilte an additional £1 million for complementary marketing and promotional activity in 1995.
The prospects in our main markets overseas are generally good. The immediate impact of the peace dividend may well be seen in a big increase in British visitors. We can again expect significant growth from north America and further recovery from continental Europe. Investment in tourism infrastructural projects, marketing and training will pick up as the pipeline of EU-supported projects continues to flow and as we continue to enjoy generally favourable conditions for investment.
I now turn to the contribution which trade is making to our economic regeneration. The year 1994 was one of the best on record for Irish exporters with an excellent performance, once again, by our indigenous companies.
Given the economic upturn in many of our key markets, good trade figures were anticipated but the actual out-turn was well ahead of expectations. An Bord Tráchtála focuses most of its resources on assisting indigenous companies to build their export sales and market share and, in recent years, the pay-off has been significant.
Indigenous export growth is all the more beneficial to the economy when one considers that indigenous exporters are major job creators because, in the main, they operate in sectors which are twice as job-intensive as those dominated by the multinationals and purchase more of their inputs in the Irish economy, giving a further employment spin-off. Last year indigenous exporters increased employment, as measured by the ESRI, by 1,200.
The picture in each of our main markets last year was one of recovery from recession, buoyancy and growth, but the most striking feature of the sales achieved by Irish exporters in 1994 is that they ran well ahead of the upswing in the markets. The increase chalked up by them was well ahead of the 7 per cent growth in total world trade. Britain, for example, increased its total imports by less than 5 per cent last year while our exports to Britain rose by 18 per cent. Germany's import growth was 5.5 per cent; our exports increased by nearly 9 per cent.
This means that Irish companies are not only winning increased sales abroad, they are also winning increased market share which is the real measure of our performance. It explains why Irish exporters have been able to increase their sales consistently in the 1990s, in both the difficult and recessionary markets of recent years and in the better times we are now experiencing.
I am glad to note, from last year's figures, that our market diversification is continuing and, specifically, we are selling more in continental Europe. This is not to understate the continuing value of the British market where we are doing very well. For example, more Irish clothing is sold in Britain than in Ireland. Last year, indigenous exports to Britain were worth almost £2 billion and we anticipate a further significant increase this year, notwithstanding the appreciation of the Irish pound against sterling. While this peformance is very good, I do not need to tell our exporters that the British market cannot be taken for granted. It may seem like an easy market but many a first-time exporter has come to grief there and this is why we will continue to offer significant State support.
The year 1995 must see a significant intensification of our drive to seize the enormous new business opportunities in continental Europe. The time is right for an accelerated Opportunity Europe programme. A number of factors are converging this year. The European Union has been enlarged to 15 members, giving Irish exporters greater access to affluent markets in Austria, Sweden and Finland. Economic conditions across the Continent are better than they have been for some years, with all economies, and Germany in particular, showing growth. The International Monetary Fund's most recent World Economic Outlook bears this out. Following a process of major restructuring, European industry is increasingly pursuing a policy of outsourcing, which gives Irish suppliers valuable potential new business; this year, the impact on trade growth of the recent GATT Agreement will begin to be felt and Europe is likely to be one of the big beneficiaries.
For all of these reasons and, perhaps most importantly, because the groundwork has already been laid, Irish industry must focus on Opportunity Europe in 1995. This will involve a dual strategy of providing the fullest support to the 800-plus Irish companies already selling in Europe and, at the same time, encouraging Irish exporters who are successful in the British market to expand their market reach into other markets in Europe.
I would like to say a word of congratulations and appreciation to the many small and medium-sized Irish companies whose individual efforts and successes lie behind the excellent aggregate figures achieved in 1994. Amid the welter of facts and statistics, it is all too easy to forget the reality that Ireland's indigenous export sector is made up of thousands of companies and men and women who are the risk-takers and the achievers.
People often bemoan the low visability of Irish products in the shops of Europe and, of course, they are right in that we can always do better. However, they very often forget that Irish firms are succeeding in other sectors, which are low-profile and less glamorous but just as valuable, such as automatic components, printing and software. This effort does not go unrecognised and unsupported by the State. The marketing element of the Industry Operational Programme envisages a total spent of almost half a billion pounds by 1999 from national, EU Structural Fund and private sources. The three main components of the plan are: giving information to industry on market opportunities; support in exporting those opportunities; and direct financial assistance.
Recently, I gave An Bord Tráchtála the target of doubling indigenous exports by the end of that period and I would like to conclude with a brief comment on this. It is not, perhaps, a target in the conventional sense. Neither my Department nor An Bord Tráchtála actually exports anything and I would not presume to set sales targets for individual Irish companies. The target of doubling export sales is based on an analysis of opportunity, potential and capability. It indicates the scale of the result which we can attain with an allout effort. While it as an ambitious target, if Irish exporters continue to perform as well as they are doing at present, there is every likelihood that, come this time next year, I will be revising that target upwards. This Finance Bill is part of the Government's support for greater investment, greater competitiveness and greater employment. From my work in this Department in recent months I am convinced that if we maintain the levels of motivation and effort being applied in the tourism and trade areas, our country in general stands to benefit. Our economy will strengthen and there will be greater opportunity for our young people to stay at home and earn their livelihoods here. We can together, in the context of the new Ireland emerging from the peace initiative, create a society of which we can be justly proud.