I propose to take Questions Nos. 78 and 82 together.
I welcome the publication last week of the report by the Irish Tourist Industry Confederation on the impact of tourism on the Irish economy. The report is a comprehensive and analytical study of a sector that has enjoyed tremendous success and growth over the past decade but has recently come upon more difficult and challenging times. I look forward to having an early meeting with the Irish Tourist Industry Confederation to discuss the policy implications of the report.
The report highlights in an authoritative way the importance of the tourism sector to the Irish economy. The sector now generates nearly €4 billion in annual foreign revenue earnings and supports in the region of 150,000 jobs. The report also underlines the contribution the sector makes to balanced regional development.
I welcome the emphasis in the report on maintaining industry competitiveness and service quality levels. This reflects my recently expressed concerns about the importance of delivering value for money for the Irish tourism product.
There is also evidence from recent visitor attitude surveys conducted by Bord Fáilte that there is a deterioration in perceptions of value for money among visitors to Ireland, particularly from mainland Europe. Visitor concern with price levels here appears to relate to cost of goods and services consumed by them when they arrive here rather than the price of holiday offers, access or accommodation. This is borne out by the results of recent comparative studies of consumer goods, such as the Forfás study, which indicated that Ireland is the second most expensive country in the euro zone behind Finland. There is simply no refuting the fact that inflation rates in the restaurants, hotels and licensed premises sector and in the recreation and culture category are running considerably ahead of national figures.
While Government and its agencies have a role in supporting the further development of the sector, it is the tourism industry which plays the central role in keeping prices in check. In these more challenging times the industry must do all in its power to control costs, improve productivity, better manage its human resources and utilise modern technologies to best advantage.
The Government will continue to play its part in supporting the industry through a range of pro grammes and measures in the product development, marketing, training and human resource areas. I will look, in particular, to the new National Tourism Development Authority – combining the current functions currently being exercised by Bord Fáilte and CERT – to bring forward new thinking to help the tourism sector to confront the new challenges which they face. In this context, the ITIC report offers some useful guidelines which will be taken into account.
The more modest growth rates in the economy anticipated over the next few years should reinforce downward pressure on prices. The Government will continue to pursue appropriate macro-economic policies that serve to reinforce a favourable business environment. In this connection, Deputies will be aware that the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, has recently announced concerted Government action to address insurance costs.
I am aware of the contention of many of those working in the tourism industry that indirect taxation may be putting upward pressure on prices. Having said that, our VAT rates on tourism services and our excise duties, are not out of line with those obtaining in North European countries. The reality is that the Southern European sun destinations that charge lower rates are not in direct competition with Ireland as a tourist destination.
Much of the debate in Ireland on tourism prices this year has been emotive and anecdotal. There is no doubt that Ireland continues to offer excellent value for money as a tourism destination when account is taken of service and quality. Ireland is not a low-cost mass tourism destination. However, we must be vigilant in ensuring that our price competitiveness is not eroded, in order to enable the sector to respond vigorously and successfully to the changing dynamic of the marketplace. As I have already mentioned, I welcome the publication of the ITIC report as an important contribution to an informed debate on the future direction of the tourism sector which it is my intention to promote. Resolute action on the part of the tourism industry, in partnership with the Government, will do much to safeguard the future prospects of a sector that is so important in economic terms.
I will visit the United States this week to support Tourism Ireland's drive to promote Ireland as an attractive and value-driven tourism destination.