It is estimated that some 31,000 jobs were lost in the tourism industry last year and 21,000 the year before that. It is certain that more jobs will be lost this year. The tragedy is that this could be avoided and that it is possible for the tourism industry to have a bright future. A thriving tourism sector is essential because the economy will only recover through growth in export services industries such as tourism. However, that will happen only if the Government stops putting barriers in the way of the success of the tourist industry. Those barriers are causing significant problems for the sector, with the result that jobs and revenues are being lost and damage done to our international reputation.
How long more does the Government intend to ignore these barriers to business? At what point in the scale of job losses will it realise it is dealing not with an industry that is crying wolf but with an industry in extremis? I have spoken at great length and on many occasions about the enormous damage the travel tax is doing, as airlines take their aircraft and their business elsewhere. The Government can no longer pretend that the drop in capacity and routes into Ireland is down to a worldwide recession. If that were the case, seat capacity into Ireland this summer would not be down 13% when that for Europe as a whole has increased by 5%. We are not all in the same boat, as the Government would have us believe.
In January, Dublin Airport Authority traffic was down by 300,000 passengers, but Ryanair grew its passengers by 400,000. As far as seat capacity is concerned, we are the worst performing European country. As an island country, we should strive to be the best. We are worse even than the Ukraine, which is hardly a renowned tourist destination. If further proof were needed that this is a home-grown problem, it is that last year, our main airlines — Ryanair and Aer Lingus — both carried more tourists but did not carry them to Ireland.
It is beyond me how this tax was conceived and then imposed. It is the same, and as damaging, as taxing exports. It could only have been allowed to slip through the net of good sense by a Government totally devoid of an aviation policy or any grasp or interest in what an island must do to remain competitive in the tourism market. I am aghast at the Government's countermotion which offers absolute and final proof that the Government — and, worryingly, the Minister for Finance — has simply not grasped the problem at all. According to the countermotion, the impact of the travel tax "has been considerably overstated in the context of overall purchasing decisions by visitors". That argument is a nonsense because it is not visitors who make those purchasing decisions. It is the airlines that pay this tax and they, unlike the Government, know that if they pass it on, they will lose even more customers. The direct impact is on airline pockets, not on visitors' pockets. The impact on them is indirect in that they are losing flights into Ireland. The reality is that consumers at home and abroad have lost all connectivity. There are now 24 fewer destinations to which one can fly from Ireland than was the case 18 months ago.
The advice from everybody with knowledge of the industry is that this tax is damaging Ireland. The Government's own adviser on tourism, the tourism renewal group advised against it, as have the Commission on Taxation, IBEC, ITEC, Fáilte Ireland and the National Competitiveness Council. It is time for the Government to take its head out of the sand, swallow its pride and axe this tax before any more jobs are lost. It is particularly worrying that the Minister for Finance has not grasped the nature of the problem, particularly as he has taken in between €30 million and €40 million from Aer Lingus, which is losing money hand over fist. This tax is endangering the viability of that airline.
The Government has also sat on its hands on the issue of the zombie hotels. Tut tutting and shaking of heads in disapproval is not action. Insolvent hotels should not be kept artificially alive by banks which themselves are being kept artificially alive by taxpayers. We have blatant examples of predatory pricing, reckless trading, below-cost selling, unfair trading and grossly anti-competitive practices from both the banks and the hotels they are propping up. Why does the Government remain silent when the laws of the land are being flouted, good businesses deprived of credit and all the normal laws of the market turned on their head? The reality is that for good hotels to survive, insolvent ones must fail. There is no good outcome to this situation of oversupply of hotel beds. We all know how that came about and I will not go into it. There is only a least worst scenario. Postponing the normal market correction is destroying businesses that might survive and propping up those that are clearly not viable.
The least worst option is to allow the creditors in and to have the hotels sold off for change of use or as going concerns. Inevitably jobs will be lost and hotels will close, but the sooner the correction takes place, the sooner normal trading can return to the sector. It is vital that NAMA does not prolong the agony by nursing failed businesses along. Rescuing the banks should not be at the expense of destroying good businesses. The oversupply in the hotel sector is a salutary lesson on the folly of maintaining tax reliefs when they are no longer appropriate and of allowing vested interests to dictate tax policy against the advice of experts.
An issue of extraordinary urgency as the season begins is car hire. Some 30% of visitors to Ireland hire a car, and 40% of visitors from the United States do so. If such visitors cannot hire a car, they will not come. Already this year there are reports of Americans cancelling holiday bookings because they cannot hire a car with automatic transmission. If they have not booked by early summer, any further inquiries will have to be turned away. This is absolute madness and, once again, a self-inflicted difficulty on the part of the Government. In 2006 the car rental fleet was 31,000 cars. This year it will be between 10,000 and 12,500, as a direct result of Government budgetary measures. In part, this was due to the scrappage scheme and, as such, was an unintended consequence. However, it is also the result of two calculated decisions. The first of these was the imposition of a penal tax on automatic cars, apparently for environmental reasons. The reality is that, in general, drivers of automatic cars in this State are either disabled or are visitors from the United States. Second, the vehicle registration tax advantage that was in place for years — including, perversely, during the Celtic tiger years when it was not needed — is being withdrawn at the worst possible time and with the worst possible consequences for the industry.
The Minister ignores this issue at his peril. The damage it will do this year is incalculable, but it will also do long-term reputational damage and will send out a clear message that Ireland is simply not geared up for tourists. The notion that potential visitors from the United States would find in March or April that there are no cars to hire is absurd. That is the last message we should be sending. The Minister for Finance knows about this problem but has chosen to ignore it. He will effectively write off an entire season and cause long-term damage if he does not take immediate measures to address the situation.
Another issue that has received considerable publicity in recent months is that of visas. The cost and complexity of getting a visa is a deterrent to those areas where we expect the travel market to grow in the coming years. A tour company bringing people from China or India to Europe must get a Schengen visa, a British visa and an Irish visa if it wants to come here. The €60 cost is a deterrent, but if one had to answer all the questions required for entry to Ireland, one would lose the will to live, much less travel. I understand that the Department of Justice, Equality and Law Reform needs to protect the integrity of our borders, but it also has a responsibility to pursue the wider national interest to protect jobs, to promote Ireland and at the very least, not to frustrate the efforts of other Departments and agencies. We spend millions every year marketing the country, yet there seems to be almost a concerted plan on the part of other Departments to thwart and frustrate tourism efforts. There is a visa issue with the Department of Justice, Equality and Law Reform, a car hire issue with the Department of Finance, a travel tax issue with the Department of Transport, while the OPW's attitude to the broader tourism drive is another issue.
The OPW has control over many of our national monuments, gardens, buildings and historic sites. It is second to none for conservation and restoration, but if it denies access or makes access to visitors difficult, it is a sterile undertaking. What is the point of conserving things if nobody can see them or use them? It seems as if the OPW does not see it as its function to facilitate visitors. The OPW alone was the only facilities provider in Ireland to increase prices last year. It is slow to publish opening schedules, provide guides when required or even to open sites to visitors at reasonable hours. The OPW just does not see itself as part of the national tourism effort or the national recovery drive, and neither do many of the other Departments. I do not altogether blame the OPW for this, because there is no commercial incentive to open longer or sell itself better. When its budgets are cut, the inevitable response is to cut staff and opening hours. There is a real case to be made for outsourcing the management of OPW sites and to leave the OPW with the upkeep. There should be no conflict between conservation and tourism, and national treasures should be marshalled to operate in the national interest.
The Government-imposed barriers to business, the lack of co-operation between Departments and agencies, the examples of Departments actually working at cross purposes to one another, can only happen if an industry is not taken seriously at the top. It seems to me that this is the case and that the Government just does not rate tourism or recognise its huge potential to be not just a direct provider of jobs, but to be a real driver of the national economic recovery. An opportunity was lost today by not putting tourism in an economic Department.
The industry itself, despite all its difficulties, is trying to respond to the very changed climate. It is becoming more competitive. Restaurants and hotels are offering reduced prices and deals, but we still have a long way to go if we are to compete with the many other attractive and cheaper holiday destinations available worldwide. We have to remember we are competing for tourists in a global market. They can only bring their prices down further if, in turn, the price of their inputs come down. I do not have time tonight to deal with prices but my colleagues will speak about industry costs, and I hope to return to the issue tomorrow night. Wages and rates are big issues for the tourism industry, which is very labour intensive. I have said many times before that tourism is a fragmented and geographically dispersed industry. It consists of many small and disparate businesses, but they all have one thing in common. They need tourists. That means Ireland, as an island, needs better air access than any other competing country. However, as a direct result of the air travel tax we are becoming increasingly inaccessible, and that spells death to Irish tourism, to Irish jobs and Irish businesses.