Vol. 562 No. 2
110 Mr. Wall asked the Minister for Arts, Sport and Tourism his views on fears expressed by tourism industry representatives that a conflict in Iraq will dramatically affect the number of visitors to this country for an indefinite period; and if he will make a statement on the matter. [5728/03]
I am keenly aware of the concerns expressed by the tourism industry in relation to the impact that the continuing uncertainty in relation to Iraq is having on booking patterns. Whereas indications for business in the first quarter of 2003 look good, it seems apparent from reports from the industry that there has been a considerable softening in bookings for the period after March, most notably from the United States.
This is a time for cool heads and measured responses. The key to tackling the situation is to closely monitor evolving consumer reactions in key marketplaces and to develop appropriate and balanced responses, in particular in the area of marketing and promotion.
My officials and I have met the chief executives of the tourism State agencies to ensure that a robust contingency plan is in place to respond to the impact of any outbreak in hostilities. My objective is to be proactive and to support the industry in whatever way I can in dealing with the emerging situation. The contingency plan has three central tenets: establishing a communications network to gather market based intelligence on actual events and their impact on consumer behaviour and confidence; evaluating this intelligence and altering our tourism marketing campaigns and programmes as necessary; and putting in place an industry response group to monitor events and actions as a central pivot to maintaining excellent communications with the tourism industry in Ireland and overseas.
An internal response team is meeting within Tourism Ireland Limited on a weekly basis to analyse the most current information available from the markets, utilising its global office network located in 19 countries worldwide. The objective will be to identify the best prospects available to us and to review our marketing messages, mediums and programmes to ensure that they suit the changed environment.
Although remedial action would be premature at this point, this may eventually entail shifting focus from marketing Ireland as a destination towards the use of tactical marketing, working in tandem with the industry to promote specific products and services and focusing on territories closer to home. The domestic marketing campaign and niche marketing activities programmed by Bord Fáilte will also be adjusted as necessary. A tourism industry response group, operating under the auspices of the tourism marketing partnership, will be convened and will meet as often as necessary to review the situation and the implications for marketing activities.
Additional informationThe marketing programme for 2003 was devised by Tourism Ireland and Bord Fáilte against a background of political and economic uncertainty. It is flexible and highly responsive to emerging market developments. To financially underpin the marketing programme I have secured an additional €5 million for the tourism marketing fund in my Department's Estimates for 2003. This brings the Exchequer investment in frontline marketing activities to €48 million, part of which can be specifically earmarked to cater for measures to deal with a possible Gulf conflict.
Both policy makers and tourism practitioners have learned a great deal from the experiences of foot and mouth disease and the events of 11 September. The tourism sector in Ireland is a mature and resilient industry which has a proven capacity to deal with external shocks. The major difference between the previous two crises and the Iraqi situation is that the industry has had good notice.
No one can predict with confidence how the current situation will unfold or how long it will take to resolve. We are however, forewarned and I am confident that the tourism agencies and the industry are well placed to implement whatever contingency plans are necessary to deal with the difficulties and challenges that lie ahead.
I thank the Minister for his detailed reply and I look forward to reading the remaining section in the Official Report. Does the Minister agree that the competitive edge of the Irish tourism industry has been damaged by the increases in insurance premiums and VAT. The Irish VAT rate of 13.5% compares unfavourably with the rates of 7% in Spain, 5.5% in France and 5% in Portugal. Besides, the current rate of inflation in Ireland is 5%. These rates must influence families or groups of people when they decide where to go for their holidays.
What is the position of the Minister's Department on this matter? Has the Department held meetings with the Department of Enterprise, Trade and Employment regarding the problems caused by high insurance premiums. The high cost of insurance and the high rate of VAT are critical factors in preventing Ireland from being an attractive holiday destination.
I recently read a newspaper report of a large international insurance company which is considering Ireland as a possible marketplace. I hope this company will come into Ireland to create a competitive edge in the insurance industry. Does the Minister see the erosion of the competitive edge, caused by the increase in insurance premiums and VAT, as the major difficulty in attracting tourists to Ireland?
Public liability and employers' liability insurance has risen considerably in recent years. I share Deputy Wall's concern in that regard. There is no doubt but that the cost of insurance is having an adverse effect on the industry itself. Sometimes when prices are increased this can be directly related, in part, to an increase in the premiums which people are now obliged to pay.
The Tánaiste and Minister for Enterprise, Trade and Employment is responsible for the insurance sector. She has plans in place to tackle the question of awards and legal costs and there is a proposal for a personal injuries assessment board. A recent report on the insurance industry has made various recommendations, which the Tánaiste has indicated she intends to implement. That is the Tánaiste's area. However, the Government is cognisant of the problem which people are facing and is trying to tackle it.
Any increase in VAT will impact on the tourism sector. We are, after all, speaking about the provision of food, drink and accommodation. This year VAT increased by just 1% and there was a decrease in corporation tax of 4%.
All in all, I am hopeful that we will have a very good year in the tourism sector. However, I am aware that our attempt to increase business from the United States by 10% would be devastated if hostilities broke out in the Middle East. Overall, we are trying to increase the number of tourists coming to the country by 5% and revenue by 10%. If we were to achieve those targets the country would have the best tourism year ever.
That completes priority questions. We now take other questions. I remind the House of the time limits, particularly on supplementary questions and answers, of one minute each.
