I repeat the thanks of our president to the Chairman and the committee. We recognise the important work of this joint Oireachtas committee and we welcome the opportunity to present our views on a number of items of extreme importance to our trade.
We represent approximately 6,000 pubs, mostly family run, outside Dublin city and County Dublin. Among that membership are some fairly large city establishments but they are primarily small rural pubs, most of which face extreme difficulties at present. Some of the more important ones are outlined in our written submission, which is before the committee. We recognise that the committee's time is precious and I do not presume to expect that all members will have had time to read it. I will not attempt to go through it. With the Chairman's permission, I will proceed to synopsise its contents as briefly as possible.
The first item covered by the submission is the impact of the smoking ban. I do not intend to dwell on that for long because almost everything that can be said on the matter has already been said. Our expectation, before the ban was introduced, of mass non-compliance by the public and our members was clearly incorrect. Unfortunately, our worst fears have been realised in all other respects. In the recent past, we have found that only the proprietors of licensed premises have been prosecuted if customers smoke, while the customers themselves are not prosecuted. One of our high-profile members was fined a total of €3,000 recently when one of his barmen was fearful of stopping approximately 15 revellers from smoking on the premises.
The Central Statistics Office confirms that the hospitality sector lost 7,500 jobs in 2004. That was at a time when the economy was booming generally. In 2003, pubs in the hospitality sector expanded and did so more rapidly than the economy in general. More than 200 pubs have closed in the Republic of Ireland since March 2004. More than 200 family businesses have gone, 26 in one county alone. Unfortunately, the promise that non-smokers would flock back to pubs has not materialised. Home drinking and home smoking have increased dramatically, with, we believe, negative consequences.
The rest of Europe has now learned from our mistakes. In appendix 1 to our submission, we set out the manner in which the smoking ban has been introduced, is to be introduced or will be introduced in the rest of Europe. In every other country it has been made possible for the hospitality sector to be hospitable. We are not seeking, nor do we expect, the ban to be rescinded but we want to be allowed to provide facilities for our customers, smoking and non-smoking, in the best possible atmosphere, with internal, well-ventilated smoking areas.
Our second item is a comparison between the price of drink in Ireland and that in the rest of Europe. With the greater mobility of Irish citizens and the transparency brought about through the euro, which we welcome, there has been much criticism of the relationship between the price of a pint or the price of alcohol in Ireland compared with elsewhere in Europe. Holidaymakers in Spain can compare the price of the half litre in a small rural pub in Spain with that of a pint of best-quality stout ale or lager in a Dublin city late-night bar. In the little place in Spain, there will often be a choice of one beer only. Rural Spain is not generally compared with rural Ireland. If people made that comparison, their story would be considerably different. Naturally, they ignore or are unaware of the underlying costs. The classic example is the bottle of Jameson Irish whiskey, which is available in a supermarket in Spain for less than the excise duty payable on the same bottle in Ireland. VAT is chargeable on the excise duty as well as on the product and the labour content and service associated with the product. Without labouring the point, we must draw attention to the high levels of beer, wine and spirit taxes in Ireland compared with the rest of Europe. We are unique in Europe in penalising home-produced indigenous product.
On price movement, I ask members to refer to the charts on page 5 of our submission. The latest figures available to us relate to the period from August 2003 to August 2004. The figures for alcohol increased by 2.2%, which is significantly below the increase in the consumer price index and most other price movements. The comparison between indirect costs, such as local authority charges and mortgage interest, on the one hand, and the price of alcohol, on the other, is quite stark. The perception abroad is that the price of alcohol increases almost monthly at the behest of the publican. The only increases on alcohol in recent times have been generated by Government, in the form of excise duty, and suppliers.
Members will be aware of the federation's efforts in 2004 to reduce or delay the price increase imposed by suppliers. Similarly, in 2005 it is working to reduce or delay a proposed increase in June because we know that should this increase proceed, publicans will again be blamed.
As Mr. O'Donoghue said, an issue of great concern to the Vintners Federation of Ireland is the proposed codification of the liquor licensing laws. Codification per se is welcomed within the trade and industry but the existing legislation is a minefield and needs to be codified. However, some of the proposals announced last week by the Minister for Justice, Equality and Law Reform appear to fly in the face of reason.
The federation stands on its record of more than 20 years of assistance in tackling the problem of under age drinking. It is fair to say that in the intervening years it has been subjected to assault rather than support in its campaigns. Each time a youngster is seen to be drunk, it is assumed he or she was given alcohol by a greedy publican. Yet all the indications and international and national information suggests that youngsters begin their drinking habits at home. Alcohol is more available in Ireland than ever before. The drink of choice in a pub is a pint, a short or a bottle. Previously, a take-away order consisted of a six-pack. It is now, with increasing frequency, a slab of 24 half litre cans of alcohol, the equivalent of in excess of 21 pints. There is no control over who consumes those 24 cans of alcohol, where or in what circumstances they may be consumed or when they will be consumed. Slabs, as they are called, are now available from supermarkets.
While listening to a debate on RTE 1 radio last Saturday on the issue of codification, I watched a group of people in a newsagent-grocery on the Malahide Road stacking, ceiling high, 24 slab cases to be purchased by youngsters that evening. The central provision of the codification is the addition of five new forms of licensed premises from which alcohol can be sold. This comes at a time when for every 260 adults or 340 men, women and children in the Republic, there is one outlet selling alcohol.
There are three times more people per pub in Northern Ireland and on the island of Britain than there are in the Republic of Ireland. It is proposed, however, to add an indeterminate number of new licences under five different headings: a café bar licence, which will be another bar irrespective of the caveats put in place; a caterer's licence, which will effectively become an itinerant licence with almost unlimited freedom; a distance selling licence, which inevitably will be impossible to monitor, control or police and may be operable outside the jurisdiction; a licence for public cultural venues, a sad reminder of the way in which theatre licences have been and continue to be abused under existing legislation; and a guesthouse licence, which will entitle a premises with five or more bedrooms to sell alcohol ostensibly to its guests only. However, the legislation does not specify that the five bedrooms must be for the use of guests. Under the current proposal, four bedrooms could be used by the family with the remaining bedroom being used for guests.
One can only speculate on the difficulties of controlling, enforcing or policing that type of licensing. The pub, the original licensed premises on the main street, is subject to detailed control in terms of when, where, during what hours in what quantities and to whom alcohol may be sold. The federation is aware that the Garda Síochána does not have the resources to control the activities of illegal shebeens that have sprung up throughout the country. It is also aware that two shebeens have operated with impunity in a small village in County Louth for a number of years. Many shebeens in the midlands have acquired notoriety by appearing in national newspapers, while others simply trade under the guise of inviting friends, seven days per week, to partake of substantial volumes of alcohol.
What hope is there that the café bar, caterer's, distance selling, public cultural events or guesthouse licences will be policed? The country is already over-populated with pubs and too many licences have been issued. The federation is not alone on the fence in terms of its belief in that regard. As late as today, one of the primary movers of the strategic task force on alcohol strongly acknowledged that the proposal to increase the number of licences in this country flies in the face of reason and of the recommendations of the task force.
It is simple to move a licence from one part of the country to another — from the most rural area into the heart of a city — subject to usual planning and legislation. It is true that the licence has attained an asset value as a consequence of legislation enacted more than 100 years ago by the Government of the day because of the proliferation of licences and the then abuse of alcohol. That legislation was subsequently reinforced by the 1925 Liquor Licensing Commission, which not only stated that too many licences had been issued but suggested they be bought back.
It is unfair, unjust and unreasonable to destroy with the stroke of a pen the asset value which has been built up in the pub licence over 100 years. That asset value of the licence is, in many cases, the pension provision for the family concerned. The impact of the erosion of that asset value for 5,000 or 6,000 families could be wide-ranging.
I will now deal with profitability in the licensing trade and with insurance. The figures in the chart on page ten may come as a surprise to most members. It is assumed that all pubs turn over millions of euro per annum and that all publicans are millionaires. The figures quoted in the chart illustrate that 52% of licensees in Ireland have a turnover of less than €200,000 per annum — that figure relates to total turnover and not total profit. More startling is the fact that 26% of licensees have a turnover of less than €60,000 per annum or €1,000 per week. We are not denying there are pubs that turn over millions of euro. Approximately 5% of pubs turn over in excess of €1.25 million per annum but they are scarcely representative of pubs in general and are not representative of the pubs that are members of the Vintners Federation of Ireland. However, they are the pubs most often referred to in public commentary. They are also the pubs that have been in a position to make enormous investment in their premises.
It has been suggested that growth in the super-pub, as it is often known, is somehow a consequence of the licensing regime. That is not true. The growth of the super-pub came about because a small number of entrepreneurs were in a position to invest an enormous amount of money to meet a demand they perceived to be in the market. The fact that they were right, speaks for itself. Youngsters voted with their feet because they wanted to be in such places.
Only 17% of the total number of employees in the industry are employed in premises with a turn over of in excess of €1.25 million, with 83% employed in the smaller pubs represented by the Vintners Federation of Ireland. The figure of 83% includes proprietor, spouse and family assisting. With the vast number of pubs having a small turnover, it is clear that we do not need more licences. Many licensees now have second jobs as they are struggling to remain afloat. Many work to protect the asset value of their licences. Approximately 74% of such premises have a turnover of less than €400,000 per annum. This is scarcely the stuff of which millionaires are made. The indicative charts in Appendix 2, on pages 15 to 18, tell the real story. It is assumed that when a person buys a drink across the counter, the proprietor puts the money in his or her pocket to do with as he or she wishes. The figures produced by O'Reilly Consultants indicate that the net profit, including remuneration of the licence, is generally speaking less than 10% of the retail price of a pint.
The president has already complimented the committee on its work on insurance and acknowledges that it will soon revisit that issue. The establishment of the Personal Injuries Assessment Board was, in the eyes of Irish business and those we represent, a massive leap forward. We have attached to Appendix 3 a copy of a letter we sent to the committee some time ago. The committee has partly addressed our request in that regard but we would like to revisit the matter because it is of vital importance to small business in this country. We would wish to see more progress, while recognising that the work already done has succeeded significantly in reducing some of the insurance costs for businesses in the Republic of Ireland.
I thank the secretariat of the committee for its assistance in putting together our submission. I also thank members for their time.
