I move: "That the Bill be now read a Second Time."
I am pleased to introduce the National Stud (Amendment) Bill, 2000. The horse industry, thoroughbred and non-thoroughbred, has over the last few years continued to play a very important role and is now about to undergo significant change. This is true of many industries and is probably caused chiefly by the unprecedented growth in the Irish economy, the increase in disposable income, the radical improvements in the availability and use of leis ure time in people's lives, coupled with the modernisation of life styles.
All of this change created great opportunities for businesses in the service, leisure and tourism sectors. This is where the breeding, training and racing of horses and greyhounds are most active and progress and prosperity in these areas all have significant benefits for the producers of the basic products, that is, good quality horses and greyhounds. We have three State bodies playing leading and very important roles in these sectors – the National Stud, the Irish Horseracing Authority and Bord na gCon. All three have, through the efforts of very commercially minded and business orientated chairmen and boards, not only seized the opportunities that were there but with vision pushed these sectors beyond all apparent barriers to place them at the cutting edge for the future.
This Government has shown strong commitment to these sectors by the provision of an appropriate and much increased level of investment funding for the State bodies concerned. However, that was not all. Very critically at important stages over the last few years my colleague, the Minister for Finance, Deputy McCreevy, and myself, have prompted much needed change in the underlying organisational and financial structures underpinning these sectors.
In this process, I have also paid great attention to detail in terms of providing the essential legislative framework by introducing the Irish Horseracing Industry Act, 1994, which provided for the establishment of the Irish Horseracing Authority, the State Property Act, 1998, relating to the power to sell part of the National Stud Farm and the Irish Horse and Greyhound Racing (Betting Charges and Levies) Act, 1999, which re-structured the way in which the IHA was part financed. Today, I am introducing the National Stud (Amendment) Bill, 2000, and I intend to introduce, in the very near future, legislation – probably the most significant ever in this area – governing the final phase of the restructuring of the way in which the horseracing industry is organised and funded, giving it a secure and permanent footing for the long-term future.
I would like to concentrate on the radical changes which the horseracing industry has undergone in recent years and the even more fundamental changes which I have indicated are to come. There is no doubt that the establishment of the IHA and the work it has done since 1994 was a major step in the development of the horseracing industry in line with the aspirations of many involved in the sector. The result is there for all to see – increased prize money, better facilities at our racecourses and improved customer services resulting in strong growth in the key economic indicators of the health of the business. Attendance levels – 1.3 million in horseracing and 700,000 in greyhound racing – in recent years are an indication of the good state of health of both industries. Attendance numbers have increased substantially. Betting has also increased substantially and this year it is estimated that close to £1 billion will be bet off-course and £125 million on course in both industries.
Much of this positive development has come about due to the IHA and its development plan, spearheaded by its chairman, Denis Brosnan. Further and continued development is possible in both these industries.
We are now at another milestone in the history of Irish racing and we have a unique opportunity to take the final leap that will provide a secure and permanent organisational structure and funding to allow Irish racing develop to its full potential and will satisfy the needs of a rapidly changing industry for the foreseeable future.
As Deputies will know, I am talking about the establishment of a new unified structure under a body to be called Horse Racing Ireland or HRI to replace the IHA and take over certain functions from the Turf Club. It is planned that this will facilitate securing for Irish racing the revenue coming from the tax on off-course betting which currently goes to the Exchequer. Since the announcement by the Minister for Finance, Deputy McCreevy, in December 1999 of his willingness to consider such a major concession the road has been long and difficult to say the least. Consultations were extensive and negotiations went through difficult periods. That is what one would expect when the level of change being proposed is so great. However, the importance of the proposals for the future of the industry and all those depending on it for their livelihood was accepted by all and I am glad to be able to record here the success of the agreement reached recently with all parties.
I am now making arrangements for the drafting of the heads of the Bill and the necessary legislation will be put to Government in the near future. I am looking forward to publishing a Bill on the subject early next year. I am confident that not just are we doing the right thing, but we are now making a most profound change for the future of Irish racing.
This legislation deals with the immediate requirements of the National Stud. One aspect more than anything else which has stood to those in the horseracing industry is the ability to breed and train excellent world class racehorses. It is gratifying for me and all Irish people concerned with the horse industry to observe the international standing of the Irish bloodstock breeding and racing industry. For a small nation, the level of achievement is immense. The internationally recognised quality of Irish bloodstock and the renown of our horsemen and horsewomen lead to a natural sense of pride.
In this context, it is my view that the Irish National Stud is once again at the forefront of the Irish horse industry. On that basis, I am pleased to bring this Bill before the House which will allow the National Stud to develop even further. It is a tremendous national asset from the view point of the contribution it makes to horse breeding and the efforts of Irish breeders generally, the international reputation it helps to create and sustain and the consequential benefits it creates for the tourism sector.
It is appropriate in the context of the proposed Bill to reflect on some of the history and character of the National Stud. As I said previously in the presence of Deputy Dukes, the stud was bequeathed to the nation in the same year as myself. The Deputy hoped that Kildare got the better bargain. Of course, I disagreed with that analysis. During the past 100 years, since its inception as a stud, Tully has been the nursery of so many world famous racehorses that its name is almost a household word, synonymous with all that is best in the thoroughbred. Many people will recall Lord Gayle, Crash Course, Sallust, Ahonoora and many more outstanding international thoroughbreds. For 2001 the Irish National Stud will have five stallions standing in Tully, including Indian Ridge, one of the top proven stallions in Europe and sire of Namid, the top rated sprinter in Europe this year. The other stallions are world champion three year old of 1998, Desert Prince, champion French miler, Ashkalani and Priolo, sire of the champion miler, Sendawar, and joining them, the soon to be retired, Indian Danehill, a group one winner in France. Desert Prince spends some of his time standing in Australia in order to maximise income from a valuable resource.
In addition to the stallions standing at the company's farms in Kildare are four national hunt stallions based around the country, including the proven sire, Broken Hearted, and the new addition, Rudimentary, who is owned by the stud in partnership with Anngrove Stud. This makes the stud's stallions more easily accessible to breeders throughout the country while again maximising revenues and keeping the stud's interest in partnership arrangements which are the order of the day now in the bloodstock sector.
The stud company is currently trading very well with profits of in excess of £400,000 in 1998, in excess of £600,000 in 1999 and another predicted substantial profit in 2000. It is interesting to note that the total turnover generated from the company's stallions this year is more than £6 million, of which well in excess of £3.5 million is generated from foreign owned mares, such is the world class attractiveness of the Irish National Stud's stallions. For the future it is the intention of the stud to continue to invest in international quality stallions and mares. This is the core business of the company, which it has done very successfully for some years. On the stud's yearlings, this year turnover was almost £1 million at the recent yearling sales at Goffs and included the top priced filly sold in Ireland.
The year 2000 was a record year for tourism at the stud, the Japanese Gardens and Saint Fiachra's Garden, the appropriate millennium project, which opened in June 1999. It is expected that final numbers of visitors will be in excess of 145,000, some 17,000 more than last year and almost 50% higher than the figures about which we were talking when debating the State Property Bill just two years ago. The company is currently investigating the feasibility of building a new museum of the horse which, I hope, will be completed during the coming three years. Another aspect of the Irish National Stud's function for some years is its annual training course in horse breeding, of which it is justifiably proud. This most important course will be continued in the future as it is regarded one of the best training courses in the world and has a track record second to none.
The debate on this Bill gives the House an ideal opportunity to look back over the earlier legislation on the National Stud. The National Stud Act, 1945, vested the National Stud Farm in County Kildare in the Minister for Agriculture. It provided for the establishment by the Minister of a limited company under the Companies Acts to operate the stud farm and for the Minister to grant a licence to the stud company and to use the land accordingly. It provided also for associated matters such as the share capital and borrowing limits of the company.
The National Stud Act, 1976, amended the 1945 Act by, among other things, increasing the share capital to £5 million and the borrowing powers of the company to £500,000. The 1993 amendment Act increased the share capital from £5 million to £10 million and the borrowing powers from £500,000 to £5 million. The National Stud, through organisational restructuring, particularly strong leadership at chairman level and the development of a process of strategic planning in its administration combined with State investment has, over the last few years, become a profitable State body.
I wish to record my appreciation of the very good leadership shown by David Shubotham during his term as chairman and the current chairman, Mrs. Chryss O'Reilly, who have done a remarkable job for the Irish National Stud in the last few years and Mr. John Clarke, the current general manager of the stud. Since 1996 profits have exceeded £2 million. It is, however, in the context of today's requirements in the bloodstock sector restricted in its commercial operations by the current limits on share capital and borrowing and the status of its licence to use the stud lands. The Bill proposes to address these issues and deal with some other minor matters largely of a technical and legal nature.
The total amount of share capital that can be issued in respect of the national stud is currently limited to £10 million. To date, the State has purchased £9,975,374 of the available share capital, leaving a total of unissued shares remaining at only £24,626. The equity investment of recent years has all been channelled into the purchase of top quality stallions or shares in such stallions. It is, among other initiatives, the acquisition of these stallions which has underpinned the success of the stud and brought the company back from a loss-making position in the early 1990s to a viable and profit-making operation today. The stud will have to continue to purchase shares in more quality stallions over the coming years. For that reason it is proposed to increase the share capital of the company from £10 million to £25 million.
The National Stud's borrowing powers are currently limited to £5 million and such borrowing is subject to the approval of both the Minister for Agriculture, Food and Rural Development and the Minister for Finance. The price of top quality stallions in which the National Stud would be interested has increased substantially in recent years. When the stud becomes interested in a particular stallion it is crucial in competing in a tough market place and to achieve purchase at the most reasonable price available that the stud is able to move quickly in offering a price and completing a purchase. On some occasions also the stud will want to purchase 100% of the shares of a stallion and then seek investors to take up a proportion of those. Both of these manoeuvres would generally require substantial short-term borrowing. It is proposed to increase the borrowing limit of £5 million to £20 million, also to allow the stud's subsidiaries/joint ventures to borrow subject to the overall limit of £20 million and to provide that all such borrowings will remain subject to the consent of the Ministers for Agriculture, Food and Rural Development and Finance.
The National Stud currently holds the stud lands under licence from the Minister for Agriculture, Food and Rural Development. It is proposed to give the Minister the power to vest all or any part of the lands in the company, to make it possible for the company itself to purchase and sell land, subject to the consent of the Minister. This is particularly relevant now because of the Kildare by-pass, which will result in the separation of parts of the stud lands from the main farm, making those parts considerably less suitable for stud farming. The stud needs to be able to dispose of land which is no longer suitable for stud farming and to purchase suitable lands as and when the opportunity and need arises. This is provided for in section 2 of the Bill.
I have included also in section 2 safeguards in relation to funds generated from such sales so that the Ministers for Agriculture and Finance of the day can determine the uses to which such proceeds can be put. If the revenues are relatively small or reasonably in proportion to the stud's needs generally the Ministers may allow the stud to decide how the funds may be used in its best commercial interests. If there are particular purposes or projects relating to the stud which the Ministers deem require to be funded from the sales of land, they may direct that to be the case. If, on the other hand, re-zoning of the lands for instance involve the generation of funds significantly above the ordinary commercial needs of the stud company, the Minister can require that the surplus involved would be paid to the Exchequer. This flexibility will best serve the needs of the stud farm, the company and the State.
Under current legislation, the National Stud does not have the power to form subsidiary companies. The stud is now involved in what is effectively a separate business relating to its tourism activities and does from time to time operate its search for and purchase of bloodstock separately from its main stud farm operations. These businesses can be most efficiently operated from a VAT viewpoint, in particular through subsidiary companies. It is now proposed to allow the stud to establish such companies and also purchase shares in other companies and to enter into joint ventures, subject to ministerial consent, which is in line with powers recently introduced for the Irish Horseracing Authority and Bord na gCon.
Under the 1945 Act each director of the Irish National Stud Company holds one share in the company. Five shares are held by ministerial nominees who are civil servants in the Departments of Agriculture, Food and Rural Development and Finance with some responsibility or expertise in this area. The remaining shares are held by the Minister for Finance. To date 9,975,374 shares have issued, of which the Minister for Finance holds 9,975,362. Under the present arrangement new share certificates must issue and other documentation has to be amended every time there are changes to the board of directors or if any of the other shareholders retire or die. It is proposed to amend the Act to allow us to dispense with these procedures and to provide for the total share allocation to be held by the Minister for Finance and, if required, certain office holders in the Departments of Agriculture, Food and Rural Development and Finance.
The Bill also includes a number of other technical changes of minor consequence, dealing with the name of the company and its objectives which clarify the totality of the role and activities of the stud as it has evolved down the years.
There is no direct charge on the Exchequer in these proposals. However, if and when the Minister for Finance opts to purchase some of the additional shares in the National Stud provided for in this Bill there will of course then be financial implications for the Exchequer.
I commend this Bill to the House.
