Vol. 486 No. 1
54 Mr. Noonan asked the Minister for Finance if he has received the report on the value of duty free sales to the Irish economy; if he will circulate this to the members of the Oireachtas; and if he will make a statement on the matter. [1722/98]
I have not received the report, but expect to do so shortly. I will consider what action to take at that stage.
When will the Minister receive this report? Will he give a commitment to make it available to Members? Will he also give a commitment not to pigeonhole the report until after the two by-elections? Duty free sales are an issue in both constituencies.
Is the Minister aware of a letter I received yesterday from Commissioner Flynn on behalf of the Commission? In the letter, the Commissioner reiterates, in the most categorical terms, the position of the Commission and the Council of Ministers that there will be no departure from the decision taken in 1991 when the Taoiseach, as Minister for Finance, agreed to the abolition of duty free sales. The Commissioner is taking an extremely tough position. He is speaking for his own Commissionership and for the Commission as a corporate unit.
I am not aware of the letter. However, I am not surprised by it. The Deputy inquired whether I would be influenced by the by-elections. The terms of reference for the KPMG report were set by my predecessor, Deputy Quinn. The consultants were appointed by me when I came into office. It had been expected the report would be concluded by 31 December 1997. It is now expected that I will receive it within the next month or so. The delay was because the main union involved wished to make a detailed submission to the consultants. Some other matters had also to be attended to. I am disposed to publishing the report when I receive it, subject to any issues of financial confidentiality concerning the organisations involved. It is important that we have the correct figures to back up our case.
I am not surprised by the line the Commission is taking, individually or as a body. In recent interviews, Commissioner Monti stated that the Commission would bring forward proposals for change over his dead body. The Commission has steadfastly refused to undertake a study of duty free sales. Perhaps it is afraid of what such a study might reveal. The Commission must bring proposals before ECOFIN. That is the dilemma faced by the Irish and other Governments. I have pointed this out on previous occasions. I am not surprised by what Commissioner Flynn has said. He is stating the Commission's position.
What is the estimated cost of the consultants report? In view of the statement made by Commissioner Flynn on behalf of the Commission and ECOFIN, of which the Minister is a member, is it not an expensive fig leaf if the position is already set in concrete? The Minister and his colleagues have decided there will be no change. Effectively, that is what Commissioner Flynn is saying. He states that the Commission shares the view of the Council. The Minister is a member of the Council. It is a case of ‘no surrender', ‘not an inch', no change will be made — duty free is gone.
The report will cost, approximately, £40,000. Any proposal to change the abolition of duty free sales will have to be made by the Commission. That is within it's legal remit. Deputy Quinn raised this matter at the ECOFIN Council in December 1996 but there was no support for the Irish position. The Minister for Public Enterprise, Deputy O'Rourke, recently raised this matter at Council meetings. A considerable amount of lobbying is taking place. The Taoiseach also raised the matter at the Amsterdam Heads of State special summit on employment.
Officials of my Department had meetings with their UK counterparts in the lead up to Britain's EU Presidency with a view to placing the matter high on the UK agenda. The UK does not regard this a priority matter. As far as the Commission is concerned, this matter was decided in 1991. Duty free sales will finish on 30 June 1999 and the Commission does not wish to hear any more about it. The Irish Government has been trying to have this decision reversed by raising it at a number of European fora.
Deputy Noonan kindly reminded me of by-elections and elections. Amazingly, the previous Minister for Finance, Deputy Quinn, announced the consultants study on 14 May 1997. Perhaps the Deputy and others could tell me if there was any significance in that date? Somehow I think an election might have been called that day or the day after.
We worked up to the last day.
Effectively, the Minister accepts that duty free is gone. Would he agree that if there is to be any hope of the matter being revisited over the next six months, at the very least, it would require some support from the Presidency? Did the Minister discuss this matter with Chancellor Gordon Brown at the ECOFIN meeting last week or on any other occasion? Did he receive any indication from the Chancellor or his officials of what the UK view would be?
I have not met Chancellor Brown on this matter. However, officials of the Department of Finance were in contact with their UK counterparts in the lead up to the UK Presidency. The UK does not regard this as a priority for its Presidency. The Deputy is conscious of forthcoming events. We have not accepted that 30 June 1999 is a fait accompli. I have clearly outlined the facts regarding this issue in the House on a number of occasions and the difficulties in having the decision changed. The leader of the Labour Party experienced similar difficulties as Minister for Finance when he tried to raise this matter. It is encouraging that across Europe there is a greater appreciation by other member states of the difficulties which the abolition of duty free sales will cause. This is not a uniquely Irish problem, but not every member state has the same worries about the abolition of duty free facilities because the issue does not concern them to the same extent. This is a difficulty for Ireland in promoting its case. Changing the decision would require unanimity.
It is only fair to put these facts on the record. My predecessor announced the study just before the last election and I appointed the consultants in order to provide documentary evidence with which to present our case. While previous studies were trade based, this study will be an independent assessment of the issue.
Do the terms of reference given to the consultants include the issue of job losses? Will the Minister indicate the ultimate extent of job losses at Dublin airport and in the Limerick and Clare region arising directly from the decision of Deputy Bertie Ahern when Minister for Finance to agree to the abolition of duty free sales?
The terms of reference drawn up by my predecessor to assess the effect of the abolition refer to the impact on Government revenue, on points of entry and carriers, and on the cost of travel. The study being undertaken by KPMG will address the question of job losses. Everybody knows, including Deputy Rabbitte, that changing the decision will be a mammoth task. The concession in 1991 which allowed the extension of duty free for a further seven and a half years was meant to provide the last period of operation of the duty free system. The proof of the Commission's reluctance to make any move on the issue is its refusal to appoint consultants to examine the overall problem. Presumably it does not want to hear the conclusions of a consultant's report on the issues raised by us. However, when we have the results of our study we will be in a position to provide the Irish assessment.
It is interesting that the Minister said his officials contacted the officials of the Chancellor of the Exchequer. I distinctly remember the Chancellor of the Exchequer stating prior to the British presidency that this issue would not be considered during its presidency. Obviously, therefore, the lobbying was not very successful.
The abolition of duty free sales at all airports, especially regional airports such as Farranfore, is a matter of concern to me. It will put new pressure on the future viability of these airports. Has consideration been given to any form of compensation or the encouragement of alternative activities? The Minister is indicating that the decision is a fait accompli, something which will come as very depressing news for the management of these airports which are surviving on a shoestring.
Deputy McDowell spoke about the decision as being a fait accompli. I have never spoken about the issue in such terms. Every effort is being made by the Taoiseach, myself and the Minister for Public Enterprise to have this decision reversed. We are awaiting the KPMG study which should be of assistance to us in pressing our case. It will provide an independent assessment of the matters raised by the Deputies. I am sure the study will also address the abolition of duty free as it might affect regional airports such as Farranfore. I am conscious of the importance of airports to the development of the regions. We will be able to move forward once we receive the report and outline the Irish position to the EU Commission.
I am fascinated by the Minister's balancing act. While he says he is optimistic and has not given up on reversing the decision ——
I am a realist.
——he has given a dozen reasons why the decision may not be reversed, including the fact that any decision has to be unanimous and that other member states have different points of view. The Minister's reasoning seems to point in different directions from the conclusions he has reached.
The agreement of the British presidency is necessary if there is any chance of having this matter placed on the agenda. This is why I am surprised the Minister did not raise this issue directly with the presidency when he had the opportunity to do so last week. Is the Minister saying he is saving his political capital with the presidency for other issues?
If I am to raise this matter with the British presidency, it would be far better to do so having received the KPMG report. Since coming into power on 26 June we have been making efforts to have this matter revisited. It was raised by the Taoiseach in his speech at the special heads of Government employment summit. The effort to overturn the decision will be a difficult battle. Unanimity is necessary and the proposal must come from the Commission. However, there are some encouraging signs in that other member states are more aware of the difficulties posed by the initial decision. Hopefully, this will allow the matter to return to the agenda of the ECOFIN council.
We have been to the forefront in pursuing this matter and in trying to have the original decision reversed.
Which countries support our position?
When Deputy Quinn, as Minister for Finance, raised this issue in December 1996 at the ECOFIN meeting in Dublin his proposal was met with a deafening silence. Nobody supported him. However, over recent months a number of Ministers with responsibility for transport in other countries, whom Deputy O'Rourke has met at Council meetings, have expressed concern in this regard. I am hopeful that one of the major member states will have a change of heart on this issue. This would help in having the issue returned to the agenda.
I am sure the Minister is aware of the severe pressure on Shannon airport dating from when Fianna Fáil was previously in Government. At that time the Minister for Transport, Deputy Cowen, decided to overfly the airport. Does the Minister realise that the abolition of duty free sales will put more severe pressure on Shannon airport? Will he assure me that the KPMG report will deal specifically with the issues concerning Shannon and not just with the global issue on a national basis?
As I pointed out in reply to a question from Deputy Deenihan, the KPMG study will examine the impact on the airports. I am sure the impact on Shannon airport will be included in the study. Deputy Noonan is getting geared up for the impending by-election in his constituency.
Let us await the study commissioned by the Deputy's Administration. It will shortly be available and will allow us place all the facts on the table. We will be well armed with the independent assessment of the abolition from an Irish perspective and can move forward from there. There is no disagreement in the House regarding this matter. This Administration, like the last Administration, is anxious to have the decision reversed.
