Vol. 702 No. 3
63 Deputy Olivia Mitchell asked the Minister for Arts, Sport and Tourism the discussions he has had with the Department of Finance and the Department of Enterprise, Trade and Employment regarding the difficulties facing the hotel sector; the representations he has received from the hotel industry; and if he will make a statement on the matter. [8343/10]
As we all know, the hotel sector generally had a difficult trading year in 2009. Declines in personal spending and consumer confidence and unfavourable exchange rates across our major source markets had a significant impact on the numbers of overseas and domestic tourists staying in Irish hotels. In this context, my officials and I are in frequent contact with individual hoteliers and the Irish Hotels Federation, IHF, and are well aware of their concerns and priorities. I am in regular contact with the Minister for Finance and the Tánaiste and Minister for Enterprise, Trade and Employment about the issues facing the sector and there are also frequent contacts at official level.
As a result of such contacts, budget 2010 incorporated a range of measures to renew tourism. These provide for an overall increase in funding levels for tourism services, including the maintenance in real terms of funding for the tourism marketing fund and a trebling of the funds for tourism product development. In addition, a new rail travel initiative aimed at senior citizens from abroad and a reduction in excise duty on alcohol products and VAT will also benefit the sector. I should point out that the IHF welcomed the strong acknowledgement by the Government of the important role of tourism in the economy as well as the specific measures I have just outlined.
I am keenly aware that labour now represents over 40% of hotel costs. I welcome the recent changes in Sunday pay rates in the hotel and catering sectors. I also welcome the recent announcement by the Minister of State with responsibility for labour affairs that he will propose an "inability to pay clause" in the Industrial Relations (Amendment) Bill. This measure will assist hotels and other businesses facing substantial challenges to stay in businessand safeguard jobs. The inclusion of tourism in the employment subsidy scheme and the work of the credit supply steering group are also positive developments for the sector and have been welcomed by the IHF. All of these measures had been the subject of prior discussion between the Tánaiste and me.
As the Bacon report clearly indicates, tackling the overcapacity that undoubtedly exists in the hotel sector is a complex matter and ideally requires a market response over time. I am conscious of the difficulties that hotels and the tourism sector face in the current economic climate. It is my intention, together with that of my Department and the tourism State agencies, to continue to work with the industry to assist the sector to manage its way through these difficulties, be it in stimulating demand, helping to address costs and productivity or securing access to credit. The Deputy may rest assured that I will continue to raise those issues that affect the industry bilaterally with my ministerial colleagues and at the Cabinet table.
I thank the Minister. I wish to take him up on one of his points, as the others might arise in later questions. Previously, I raised with him the difficulties being experienced by some hotels in getting credit whereas those that owed the most, those that were virtually owned by banks, were having no trouble in getting credit. Indeed, money was being poured into them. I wrote to the Competition Authority about this matter, which responded to the effect that it shared my concerns. It is trying to approach the matter from a different angle. Unfortunately, a requirement under the Competition Act is that one firm must be dominant if the authority is to act. That is not currently the case, although it may be when the loans are taken over by NAMA. Nevertheless, what is occurring is anti-competitive and distorting the market.
A question to the Minister.
Hotels that should have gone to the wall are receiving credit from banks on the back of taxpayers' money. It is unethical and was not envisaged when we put money into the banks. Neither was it envisaged for NAMA.
Could the Minister help in any way? If this situation is allowed to drift, we will have fewer hotels, as those in question will fail regardless. The spread of hotels across the country will also pose a difficulty.
I will call the Deputy again.
Could the Minister ask the Competition Authority or, in the context of reckless trading, the Office of the Director of Corporate Enforcement to examine this issue? Could he ask the Financial Regulator to examine it in terms of the banks giving their large debtors and clients an unfair advantage? There seem to be many ways to approach the issue, but it should be stamped out right now. If it lingers under NAMA, it will be catastrophic.
The Deputy and I have been ad idem regarding her point for some time. That we have both raised the issue in our respective ways has been helpful. Obviously, I have discussed the matter with the Minister for Finance and raised it at the Cabinet table, where I intend to keep it. The construction and operation of NAMA will be crucial and I cannot countenance a situation in which hotels that are clearly non-viable are kept going simply to turn over money at rates below the real costs of hotel rooms, etc. in the marketplace. I have evidence to show that this situation is affecting competitive hotels, albeit ones that are struggling because of the decline in the tourism market. They can survive by setting intensely competitive rates, although not substantially below cost.
Notwithstanding the Deputy's points and the complexity involved in the various reasons for supporting hotels, the situation boils down to difficult decisions being taken quickly and early in the operation of NAMA. Businesses that are clearly incapable of functioning in the market must go out of business. There is an overcapacity in the market of approximately 15,000 beds. All of these do not need to go, but hotels are being supported despite not being viable.
We have gone over time. I want to allow Deputy Mitchell to ask a brief supplementary question.
I would ask a brief question if I could remember it. The Leas-Cheann Comhairle has put it out of my head. If bad hotels are to go the wall, the Bacon report suggested that the clawback be dropped. However, I am against that suggestion. We gave people money to get into the business and now we are giving them money to get out of it. Bad hotels should fail if good hotels are to survive. This is the way the market works. We should not be giving more taxpayers' money.
The Deputy probably knows the answer. That issue was raised in our pre-budget considerations, but it is not a road the Government has gone down. There are inherent dangers, in that——
I heard rumours.
——it could be applied across the system. It would be a win-win scenario for someone who failed,——
Exactly.
——but that is not the intention of any scheme and certainly not this one.
I thank the Minister.
64 Deputy Mary Upton asked the Minister for Arts, Sport and Tourism his views on the future funding of the horse and greyhound sectors; and if he will make a statement on the matter. [8340/10]
Government support for the horse and greyhound racing industries is provided under the Horse and Greyhound Racing Fund, which was established under section 12 of the Horse and Greyhound Racing Act 2001. Funding of both Horseracing Ireland and Bord na gCon supports two important productive industries and helps to sustain the important role of horse and greyhound breeding and training enterprises in the development of the rural economy. These industries directly account for approximately 27,500 jobs, generate substantial economic activity and make a vital contribution to the rural economy including, as is often forgotten, farm incomes.
The funding given to the greyhound racing sector helps to sustain a tradition that has existed for hundreds of years and underpins economic activity in what are, in many instances, less affluent regions. The funding has also contributed significantly to the almost €90 million invested in the improved facilities now available at greyhound tracks around Ireland. The funding has allowed Horse Racing Ireland to undertake a capital investment programme that has underpinned growth in the sector. The funding has allowed Ireland to develop into a world centre of excellence for horse racing.
A total of €59.3 million has been allocated to the fund for 2010. To give effect to this Estimates allocation it was necessary, under the relevant provisions of the Horse and Greyhound Act 2001, to have the increase in the horse and greyhound fund specified in a regulation. The Horse and Greyhound Fund Regulation 2010 was approved in the Dáil and Seanad on 4 February 2010.
A review of the horse and greyhound racing fund has been completed. The report states that while not all aspects of the total contribution of the sector can be definitively quantified, there is adequate direct and indirect evidence to support a strong argument that the horse and greyhound racing industries constitute a major source of direct and indirect employment, give rise to considerable domestic and export earnings and are a key driver of substantial economic activity, especially in rural areas.
The report maintains that any sharp withdrawal or curtailment of funding in the short-term would likely have major detrimental impacts on the industries involved with the consequent risk of undoing much of what has been achieved since the fund came into existence in 2001.
Additional information not given on the floor of the House
At least in the medium term these industries need secure State support. If this was not available, employment would fall, infrastructural development would not take place, the product would deteriorate, integrity would become compromised and the industries would be seriously undermined.
When the fund was established it was estimated that it would be fully financed from the excise duty on off-course betting. When the fund commenced the rate of duty was 5%, but the rate was subsequently reduced to 1%. Any shortfall in the amount generated by the excise duty is made up by direct Exchequer subvention.
Excise duty on off-course betting has been 1% since 1 July 2006. I have already stated that the gap between what is raised through the off-course betting duty and the amount to be provided for the Fund under the provisions of the Horse and Greyhound Racing Act 2001 continues to be met directly from the Exchequer. The Minister for Finance has stated that it is his intention to widen, if possible, the tax base on which betting duty would be applied. Bets placed either on-line or over the telephone are generally with out-of-State companies so applying betting duty is therefore problematic. However, officials from the Department of Finance, in conjunction with the Office of the Attorney General, the Office of the Revenue Commissioners and the Department of Justice, Equality and Law Reform, are looking at the scope to overcome legal and operational difficulties in this area. In addition, the Department of Finance is working closely with the Department of Justice, Equality and Law Reform which has initiated a review in order to provide the Government with options for a new and comprehensive legal and organisational framework governing gambling architecture in the State.
Given the current budgetary situation it is reasonable to concede that multi-annual funding cannot be agreed at this time. Instead, a provision was made in the Estimates for the industries in 2010. Other options, however, may require amending the existing legislation. My officials are currently considering the future funding options for these two industries.
We would all agree on the importance of horse racing and the greyhound industries for employment here and with all their other positive benefits outlined by the Minister, about which there is no argument. The issue that arises is around the methodology for funding. The review, to which the Minister referred, is out of date and inaccurate. For instance, it states that excise duty on off-course betting will be increased in 2009 from 1% to 2%, but that did not happen. The excise duty on it is still 1%. More importantly, there is no indication in that report as to how any additional revenue might be generated. The point is made in the report that the value of on-line betting in 2007 was approximately €1.5 billion. That is a huge amount of money that is available to be taken on board and to be taxed in some way. I want the Minister to set out how he plans to capture the taxation of on-line betting as a method of supporting the horse and greyhound fund.
If I am correct the figure the Deputy gave of €1.5 billion covers specifically the horse racing element because the figure for off-shore betting is more substantial, being in the region of €3.5 billion. It covers many areas, not least of which is on-line poker and all the other such activities that are taking place. The Minister for Finance is specifically engaged in this matter with the Revenue Commissioners, as it is a taxation issue. There are two ways to address this. One way, which would be direct and easy to operate — which would overcome the problem that arose last year when we said we would raise the tax from 1% to 2% — would be to make it compulsory for all those involved in the betting industry to pass on the tax to the punter. The difficulty for the smaller bookmakers last year, which was a reasonable point, was that the bigger players could afford to pay 2% and not pass it on whereas the small bookies could not and that would have damaged them substantially and put many of them out of business. That was not my intention, nor the intention of the Minister of Finance in terms of increasing the tax. That is one side of the matter.
The other side of the matter is how we will find a mechanism of taxing companies which are largely located offshore. That is the problem, namely, that they do not come within the Irish taxation system. It is hard to tax a company in another jurisdiction. My view is that if a company is doing a substantial amount of business in any given country, there will have to be agreement, even if it has to be at EU level, that this business can be forthcoming in terms of delivering tax in the jurisdiction from which it is making a great deal of money. The Minister for Finance and the Revenue Commissioners are trying to resolve this matter legally at present.
Is it not the case that bets placed in Ireland should be taxed in Ireland and that such tax revenue accruing should come back into this country?
While it might be difficult technically to address the activities of Internet service providers, it appears no effort has been made to tackle that aspect. That is another support mechanism that could and should be in place to deal with this matter.
I do not disagree with the Deputy but, clearly, we cannot do anything that would be illegal.
I am not proposing that.
I am not suggesting the Deputy is but that is where the complexity of the issue arises. Clearly, we want to do something that will work, which is our primary objective, and that will increase the tax revenue accruing to the State in order that we can make sure that the horse and greyhound fund, effectively, is entirely funded from the industries. That, essentially, is the Deputy's point, namely, that we cannot continue to use revenue accrued from taxpayers to fund the horse and greyhound industries.
I take it that before the end of the current year some moves will be made to ensure that the industries will be self-funding. It is unsustainable to continue to use general Exchequer funding when there are so many more calls on that money.
It is my intention that we will have a solution prior to the budget that will be introduced at the end of this year and that such a solution will be included in the provisions of that budget. I know that is also the intention of the Minister for Finance.
65 Deputy Olivia Mitchell asked the Minister for Arts, Sport and Tourism if he has received new guidelines from the Arts Council relating to the assessment of the artistic merits of works submitted for qualification under the artists tax exemption scheme; his views on those guidelines; and if he will make a statement on the matter. [8344/10]
As I stated in my written reply of 21 January 2010, the original intention of the legislation referred to by the Deputy was, inter alia, to create an environment in which the arts could flourish and also to encourage Irish artists on modest incomes to remain here rather than going abroad to earn a living. Under subsection (12) of section 195 of the Taxes Consolidation Act 1997, there is provision for guidelines to be drawn up by the Arts Council and the Minister for Arts, Sport and Tourism, with the consent of the Minister for Finance, which determine if the work is an original and creative work and whether it has, or is generally recognised as having, cultural or artistic merit. Officials in my Department, the Arts Council and the Revenue Commissioners are currently engaged in finalising new draft guidelines for consideration.
Section 195 of the Taxes Consolidation Act 1997 empowers the Revenue Commissioners to make a determination that certain artistic works are original and creative and have either cultural or artistic merit. This section provides an exemption from tax for the profits or gains arising to a person from the publication, production or sale of an original and creative work which has artistic or cultural merit in any of the five following categories set out in the legislation: a book or other writing; a play; a musical composition; a painting or other like picture; and a sculpture. The Revenue Commissioners may consult with a person or body of persons which may be of assistance to them in reaching decisions on the granting of such an exemption. The Arts Council is an example of such a body.
While the drawing up of guidelines is the responsibility of my Department and the Arts Council, the Revenue Commissioners are the users of the guidelines.
I am sure the Minister knows that what motivated me to table this question was the recent securing of tax exemption status by the Minister's former leader and our former Taoiseach for his autobiography. When I raised this issue almost two years ago, on foot of a sports celebrity having secured tax exemption status, the Minister told me that new guidelines were being drawn up. It is now almost 18 months later and the guidelines are still being drawn up.
I checked what is regarded as a work that has cultural and artistic merit. The provisions state that a work has cultural merit if its contemplation enhances the quality of individual or social life by virtue of that work's intellectual, spiritual or aesthetic form and content. I do not wonder that the Minister would laugh.
I am smiling.
By no stretch of the imagination could this work be considered a work that is cultural and certainly it could not be considered artistic, where the bar is even higher. I am aware that the tax exemption legislation has changed and a cap on income in that respect has been introduced. The granting of tax exemption status in this case undermines this measure for people who genuinely deserve it. It goes against the spirit of the legislation which was to help new struggling, emerging artists. God knows Deputy Bertie Ahern is not one of them.
I ask that the guidelines be introduced. I understand that the Arts Council was not consulted in this case. In cases such as this where the work is borderline — I am being generous in saying that — the Arts Council should be asked for its recommendation.
I do not want to, nor do I believe it is the Deputy's intention, to necessarily focus on one particular individual.
We have had very good examples in this respect and some books have been very good and very interesting. The issue is subjective and that is the difficulty here. The Arts Council has a view and it has expressed some views to me on this matter. I do not want to say that it takes a narrow focus but it takes one that is very much on the artistic side, if I could put it that way. For example, a large number of books are written relating to sport. Some of them are very good and some are complete rubbish but who am I to decide what is rubbish or good? What is good for one person is not necessarily of interest to others. Given that we live in a world of technology, it is amazing that young kids are ever introduced to reading. The room of young boys, in particular, in a house will have the latest sports book on a personality such as Ronaldo. That is the type of material they want to read because the subjects are their heroes.
It is difficult to deal with such matters. Should the books be excluded on very narrow artistic grounds or do we see a wider benefit in having those kinds of books included? The Deputy would probably agree that many of those books are not very profitable. The book referred to by the Deputy earlier would not have a very significant international resonance. The book is available for the market over here but such books are of specific interest to people in this country or Irish people abroad.
We are in a finalised position and I am sorry for the delay in the process between what the Arts Council is suggesting, what the Revenue Commissioners feels should be involved and what our own officials have stated. It is a very subjective issue and it bothers me. I do not want to be elitist and neither does the Deputy.
Is the Arts Council not about getting as close to perfection as possible? I take the point that young lads want to read about sports but neither Ronaldo nor Packie Bonner needs a tax incentive to write a book. That is not the purpose of the tax incentive, which is to help emerging and young artists. Deputy Bertie Ahern is not one of those and neither is Ronaldo. Does the Minister see the point? This undermines genuine attempts to help emerging and young artists.
I am not convinced it undermines action which both the Deputy and I strongly support, the helping of emerging artists whose career will be in writing plays and books, sculpture, music or anything else. That is the intention behind the support. Part of the difficulty, as the Deputy knows well, is how to frame this in a legislative sense so we do not get it wrong. I would like to finalise the matter but I am slightly torn on how to do it and who to include or exclude. I have had good and interesting discussions with famous people, others who have written books and officials but it is a subjective matter. We need to finalise the issue and the Revenue Commissioners want it finalised also.
66 Deputy Mary Upton asked the Minister for Arts, Sport and Tourism the actions he has taken arising from the report of the tourism renewal group; and if he will make a statement on the matter. [8341/10]
The report of the tourism renewal group set out tourism's contribution to Ireland's economic and social development and its prospects in a changed world, as well as a framework for action for tourism's survival, recovery and growth in the period to 2013. The report proposes five survival actions to minimise the impact of current challenges and nine recovery actions to set Irish tourism back on a growth path as the world economy recovers. All of these actions are being vigorously pursued by me, my Department and the relevant agencies.
Following publication of the report, my officials, focusing initially on the survival actions, pursued them with the tourism agencies and other relevant Departments and bodies. Fáilte Ireland and Tourism Ireland have built in the relevant renewal group recommendations to their business and marketing plans for 2010. My officials are also working with a range of other organisations to develop opportunities to focus resources, achieve common objectives and maximise the impact on tourism.
Building on the framework for action, the 2010 budget recognised the tourism sector as a critical, labour-intensive sector. As I stated in an earlier response, the overall tourism services budget was increased, enabling the level and value of investment in overseas marketing of Ireland to be maintained in real terms, as recommended by the renewal group. Investment in visitor attractions was also increased to €22 million. Tourism was included in a range of cross-cutting measures to support enterprises and jobs, and these included the employment subsidy scheme and the credit review system. Additional specific measures, such as changes in alcohol excise duties and VAT and the rail travel initiative for senior citizens visiting Ireland, will also help the sector to recover. We talked about the rail travel initiative in the House last year.
Drawing on the report of the group and complemented by general supports for enterprise, my Department is identifying the right measures and is working with other Departments and the tourism agencies specifically to drive their delivery in order to position the tourism sector for recovery and growth as the Irish and global economies get back on track.
We are in agreement that the tourism industry will be one of the more significant in the coming year. It will certainly require as much support as possible. The Minister mentioned that survival actions were being addressed so does that mean the abolition of the air travel tax may be possible? That issue is raised time and again by people in the tourism industry.
I have had correspondence from the Coach Tourism and Transport Council of Ireland making valid points on the difficulties in accessing visas, particularly for people coming from places such as China. The process for them is very difficult and convoluted. One of the council's members recently spoke with an agent in Indonesia who said that he could sell 1,000 coach tours to Ireland this year with 40 people on each tour if it was not so difficult to get into the country. Will the Minister comment on how this might be addressed?
The Deputy's first point regarded the air travel tax, which I raised in budget discussions with the Minister for Finance and my colleagues. Judgment calls had to be made in an effort to maintain the tourism budget or even enhance it. I was not successful in winning the argument as it involves a substantial stream of revenue.
It is very hard to quantify in real terms the impact of the tax. I have spoken to tour operators abroad who have told me the tax has not had a significant impact.
They do not make the charge.
It must be charged on the outbound flight.
This is a priority question from Deputy Upton.
The Minister is wrong.
I am making the point in general terms. There is no doubt that in broad terms, everybody would prefer if the tax was not there. I will not defend it as a positive mechanism for encouraging people to come to Ireland. I agree with the Minister for Finance that the books must be balanced in the very difficult circumstances we are now experiencing. My preference was to maintain the tourism budget, and this is probably shared by the industry. We have tripled the product development budget.
On the second point, the visas, I spoke only this week to the Minister for Justice, Equality and Law Reform on the matter. Some of our officials are trying to resolve this at the highest level, although there are difficulties which impact to some degree on the tourism side. There is a balance to be struck to take into account the economic tourists who come into the country and have no intention of leaving and those who are genuinely coming on holiday. We need to resolve the matter as the eastern markets hold great opportunities for us.
The emerging markets do as a whole.
A number of other countries have reversed the travel tax because it cost them more than was being brought in. It is very hard to justify the balancing of the figures and the matter should be looked at. Almost everybody in the industry opposes it. What actions are being taken by the Department in supporting the smaller aspects of the tourism industry, such as bed and breakfasts, with regard to e-capability?
This is an interesting and one of the more positive outcomes to an issue. As the Deputy is probably aware, there has been a great effort among bed and breakfasts and small hoteliers to substantially improve their reach in e-marketing and the use of technology. Fáilte Ireland has put many resources into such businesses for free in order to get them up to speed and have good sites produced. There are good linkages between these sites and main sites as well. That will continue as an ongoing process.
Many people who have received help and assistance from Fáilte Ireland have mentioned how positive the help and assistance has been, as well as how positively it is affecting the ability to attract more tourists.
67 Deputy John O’Mahony asked the Minister for Arts, Sport and Tourism his plans regarding the publication of the national sports facilities strategy 2010 to 2015; and if he will make a statement on the matter. [8229/10]
A draft national sports facilities strategy 2010-2015 has been completed within my Department and circulated to a number of Departments and other relevant bodies for observations prior to finalisation. The draft strategy is now being amended to take account of the comments received and will then be submitted to the Government for approval and publication.
The aim of the five-year strategy is to provide high-level policy direction for future investment and grant assistance at national, regional and local level and to ensure a joined-up approach across the various agencies and Departments involved in supporting the provision of sport and recreational facilities. The strategy also identifies the wider economic, health and social case for continued investment in sports facilities. It aims to prioritise areas for future investment and to ensure continued impact in the relevant areas.
I thank the Minister for his answer, but the real answer I want is when this will be published. We are going back to 2002, when the Minister's predecessor announced the strategy, and there was a review before that. The Minister is now saying that it is with different Departments.
The draft is already completed.
When does the Minister expect it to be published and brought before the House so that people will know the strategy for facilities in the country? What are the cost implications of the draft? Does the draft contain a commitment to the national sports campus?
I have just come from the conference to announce elite funding under the carding system. I am pleased at the very positive comments I received from representatives of all different sports bodies about the level of funding put into the sport, and how significant it is for them that the level of support for our top athletes is maintained. I made my view clear at the conference that we must continue to build at Abbotstown. We have not been able to do it in the timescale originally set out, given the economic situation that exists. With the completion of the stadium at Lansdowne Road in May and with Thomond Park and Croke Park already completed, the missing link in our sporting facilities is in Abbotstown. About 50 to 60 different sports will benefit from the development out there. If things improve this year, we will be able to move on that in the next couple of years.
The Minister said in previous answers that until this strategy is in place, there will be no new funding for facilities or for sports capital funding. Even though he said there will be no funding for facilities in 2010, does he mean that there will be no funding for the lifetime of this Government? Is he telling us that the whole thing is being put on the long finger?
The Deputy is raising a separate question. I was specifically talking about Abbotstown. The number of projects done last year for clubs reached record levels. There is another €50 million in the budget this year for the continuation and completion of——
They are existing applications.
They do not exist until they are built. There were existing applications, but many of them had to apply for planning permission which they only recently received. I would not exclude the possibility of a new round of sports capital funding. It is my intention to get the draft report into a final report, bring it before the Government and publish it as quickly as possible.
That would be very welcome. We have been talking a lot about stimulus, and this is an ideal stimulus that stretches its tentacles into every club and organisation around the country. At a time when prices are much lower, it would be a very good strategy.
I agree with the Deputy. There is great value for money available at the moment. Facilities that might have cost X plus Y a few years ago will only cost X today. That is to the benefit of those who are building them and to the Exchequer.
