The purposes of the Bill are, firstly, to raise the statutory limit on the aggregate amount which may be paid to Bord Fáilte for the giving of grants for the development of holiday accommodation, secondly, to raise the statutory limit on the aggregate amount of loans which may be guaranteed for the development of tourist projects and to extend the time limit on the giving of such guarantees, thirdly, to provide for the registration of approved holiday cottages and, fourthly, to increase the number of members who may be appointed to the Board of Bord Fáilte Éireann.
Grants for the development of holiday accommodation were first introduced in 1959 and provision was made in the Tourist Traffic Act, 1959, for the payment to Bord Fáilte of sums not exceeding an aggregate of £500,000 for the purpose. As the tourist industry developed and accommodation needs expanded this limit was successively raised to £1.5 million by the Tourist Traffic Act, 1963, to £3 million by the Tourist Traffic Act, 1966 and to £5.5 million by the Tourist Traffic Act, 1968. The total amount issued to Bord Fáilte for accommodation development grants up to 31st March, 1970 was £4,930,000, which leaves a balance of £570,000 before the statutory limit of £5.5 million is reached. The amount which the Government have agreed to provide in the present financial year is £1.5 million and amending legislation is therefore necessary to authorise payments in excess of £570,000 this year and to provide for payments in future years.
From the funds provided for the development of holiday accommodation, Bord Fáilte operate a scheme of grants with the approval of the Ministers for Transport and Power and Finance. The scheme provides for the payment of up to 35 per cent of the total construction cost of new hotels in the western counties and up to 25 per cent in other areas. Where the total construction grants do not apply, grants up to a maximum of 50 per cent of the cost of new hotel bedrooms are provided in the west and 40 per cent elsewhere. Grants up to 30 per cent are provided for dining areas, kitchens,et cetera in hotels in the west and 20 per cent in other areas, subject to the exclusion of certain locations such as Dublin and Cork. Twenty per cent grants are provided throughout the State for hotel staff accommodation and for the provision of recreational facilities for hotel guests.
Guesthouses in all areas are eligible for grants up to 20 per cent of the cost of new bedrooms subject to the condition that at least five guest bedrooms are available on completion of the project. Caravan and camping sites are eligible for grants up to a maximum of 50 per cent of the cost of the site development and amenity works subject to a maximum grant of £20,000 for each project. There are grants also for the provision and improvements of youth hostels and for improvement works in colleges and similar institutions providing accommodation for visitors during vacation periods.
I would emphasise that the percentages which I have mentioned represent the maximum grants which Bord Fáilte are authorised to pay. Each development is, however, examined by Bord Fáilte on its merits and it is the responsibility of the board to determine the actual level of grant appropriate to each case having regard to various factors, including the location of the development, type of accommodation being provided, the cost of development, the price level, the market demand, the volume of existing accommodation in the area and other relevant tourism criteria. Thus the grants are operated on a flexible basis so as to provide maximum encouragement to projects which best meet tourism needs. Hotel and guesthouse owners and other promoters of accommodation have responded to the incentives provided and the £5 million expended by Bord Fáilte in grants since the schemes were introduced must be related to a total investment of £36 million in accommodation development. Thus the grant element in the total development programme has been 14 per cent. The number of bedrooms in hotels and guesthouses has increased from 17,800 in 1960 to 27,890 in the present year, an increase of more than 56 per cent. There has also of course been a significant improvement in the standard of accommodation.
Policy in relation to accommodation development is designed to achieve a flow of accommodation to match the growth in demand and the standards tourists seek. It is clear that this balance is difficult to achieve and grant schemes were introduced so that accommodation growth targets could be realised. The effectiveness of the incentives is assessed on a continuous basis and the schemes are revised in the light of experience. For a number of years, although grants had been provided, it had not been possible to secure adequate accommodation growth. So in April, 1967, the accommodation incentives were improved, but in deciding on the level of funds to be provided for this purpose the Government have to have regard to the overall demands on the Exchequer. The improved incentives coupled with an easing in the availability of credit for holiday accommodation development resulted in an atmosphere conducive to investment in the hotel industry. By late last year it became clear that the rate of growth in accommodation was beginning to outstrip targets and the level of funds which the Government could make available for this purpose. Bord Fáilte, accordingly, found it necessary to introduce a moratorium, the effect of which is that the board are not entering into any new grant commitments for the time being.
Since the introduction of financial assistance for accommodation development in 1959, income from tourism and travel has risen from £39 million to almost £98 million. Apart from its important role in the balance of payments, tourism has proved to be an effective stimulus to the economy through the additional spending power it injects, through the enlarged market it provides for Irish foods and other goods and through the employment it generates. Tourism has been particularly valuable as a means of improving the economy of western areas where prospects of industrial development are limited. I am confident that tourism will continue as a strong force for economic development.
The growth of tourism over the past decade could not have been achieved without a considerable expansion of the volume of accommodation and the improvement of standards. For various reasons, including high construction costs and the problem of seasonality, investment in hotels and other forms of holiday accommodation, particularly outside the main urban areas, is not as attractive commercially as other types of investment and financial incentives have been necessary to ensure that the expansion of tourism is not retarded by a shortage of the right kinds of accommodation.
Financial assistance will continue to be necessary to ensure that accommodation expansion keeps pace with the needs of tourism and particularly to encourage development in the less populated areas now being reached by the growing volume of motoring visitors. In December last Dáil Éireann voted an additional £500,000 by way of supplementary estimate to enable Bord Fáilte to meet grant commitments that had matured more quickly than expected. This brought last year's provision for accommodation grants to a record £1.5 million and this year I am providing a further £1.5 million. To provide the necessary statutory authority for this year's payments and to provide for the continuation of the grant schemes I propose that the present limit of £5.5 million on accommodation grants be replaced by a new limit of £11 million. The provision in the Bill is of an enabling nature and the amounts to be provided for accommodation development in each year will fall to be debated and voted by the Dáil in the normal way under the Vote for my Department.
The financing of tourist development projects usually includes an element of borrowing. The State does not provide any direct loan facilities but, to assist developers in raising loans, Ministerial guarantees can be given in respect of repayment and interest on loans raised from banks, insurance companies or other lending institutions to finance the cost of holiday accommodation or other amenities or services for tourists. The Tourist Traffic Act, 1952, provided that the aggregate amount of loans which might be guaranteed in respect of such borrowings was £3 million. The Tourist Traffic Act, 1961, raised the limit to £5 million. Guarantees have been given to date in respect of some 70 loans accounting for an aggregate of approximately £2.6 million and approval in principle has been given for guarantees of further loans which will bring the aggregate above the £5 million level. Amending legislation is therefore necessary to increase the limit.
Section 21 of the 1952 Act provided for the giving of guarantees during a period of five years, i.e. up to 1957. This limit has been successively extended—by five years at a time—by the Tourist Traffic Acts of 1957, 1961 and 1966 and the present limit will expire in 1972.
The guaranteed loan scheme has proved to be a valuable instrument for promoters of tourist development projects and it is considered essential to retain it. I am accordingly proposing that the limit of £5 million imposed in the Tourist Traffic Act, 1961 be raised to £8 million and that the time limit imposed by the Tourist Traffic Act, 1966 be extended by five years to 1977.
The third element in the Bill arises from the development of a new type of holiday accommodation, that is, the holiday cottage, of which the Shannon Free Airport Development Company have been the pioneers. This company in association with local interests in the Shannon region have promoted a "rent-a-cottage" scheme under which 12 cottages were provided at Ballyvaughan, County Clare, last year and a further eight will be available at Corofin this year. Cottages are also being provided at other locations in the region. In 1969 there was a heavy demand for the cottages and bookings for 1970 show that there is a strong demand for this type of accomodation.
Provision was made in section 64 (2) of the Finance Act, 1969, to enable the initial and annual tax allowances applicable to capital expenditure on hotels and holiday camps to be claimed in respect of holiday cottages. It is a condition of this provision that the cottages must be registered with Bord Fáilte and it is therefore necessary to authorise the Board to set up a register of approved holiday cottages similar to the existing registers of hotels, guesthouses,et cetera. To secure registration, accommodation must comply with standards, which will be prescribed by Bord Fáilte in regulations made with my consent, and proprietors will have to file with the board a statement of maximum prices. However, the use of the titles “approved holiday cottages”, “approved holiday house” and similar descriptions will be confined to registered premises. This is in line with the present registration schemes for hotels, guest-houses, caravan parks, et cetera.
The rent-a-cottage scheme promoted in the Shannon region is designed to bring visitors to villages and rural areas which have so far been unable to share fully in the benefits of tourism because of the lack of suitable tourist accommodation. It is an imaginative scheme which has proved very popular with visitors and I hope that it will be followed by projects on similar lines in other parts of the country. The development of this type of accommodation is in line with my concern that tourism should be used as an instrument of economic and social development in rural areas, particularly in the western counties. The setting up of a register and the publication of registration standards at this juncture will guide promoters or local groups who wish to embark on development of lettable accommodation of this kind and should ensure that development takes place on the right lines.
There has been a good deal of comment and speculation for some time about the prospects for tourism in 1970. In view of the importance of the matter, I feel I should say something on the subject on this occasion. As relevant statistics and returns become available, Bord Fáilte make assessments in relation to the season. These assessments or estimates are revised as more up-to-date information becomes available. The most recent figures showed June as a disappointing month with declines in all our main markets. Despite the drop in June, however, the overall situation for the first six months showed an increase of 4.8 per cent in tourist numbers for all markets except Northern Ireland, for which it is not possible to make an estimate at this stage. Traffic from Northern Ireland is, however, likely to be down on last year for obvious reasons, and Bord Fáilte have increased their promotional activities in that area in an effort to alleviate the trend. It is impossible at this stage to be more specific about likely tourism returns for 1970.
Over the years the Government have provided funds for the development of tourism on an ever-increasing scale. In 1960, £500,000 was provided for Bord Fáilte, whereas in the current year the board will receive more than ten times that amount, i.e. £5.55 million, an increase of £300,000 over last year. In recent months a number of people advocated that special additional funds for marketing be made available to deal with the unusual situation which had developed. Senators, however, no doubt also recognise the need for realistic marketing and that any substantial diversion of funds to counteract short-term adverse factors at the expense of long-term plans for the permanent building of our tourism industry might not represent the best use of tourism funds or be in the best interests of tourism.
I met the board of Bord Fáilte on 8th July last, and asked them to carry out a full appraisal of their activities in the light of the problems facing the industry with a view to making any changes which appear necessary to ensure the continued expansion of our tourist income. On 10th July, I met a deputation from the Irish Hotels Federation to discuss the planning and proper organisation of tourist development for the coming years. At both meetings, we had a constructive exchange of views, as a result of which, the board and the federation undertook to submit to me, as soon as possible, reports in relation to the development of tourism, not only for next year but for the next five years. I shall be reviewing the outlook for tourism in the coming years in the light of these reports.
In the course of my discussions, both organisations were agreed that it would be unrealistic, at this period of the year, to embark on a special marketing campaign for the 1970 season. Bord Fáilte, however, are now making a special effort to encourage Irish people to holiday in their own country this year.
The expansion of the Irish tourist industry has gradually become more difficult as our tourist interests have to compete for business on an international basis, and the competition has become keener. In an exceptional year, such as the present one, with an unprecedented combination of adverse factors, the industry is working under exceptionally difficult conditions. It is, accordingly, essential that tourist interests gear themselves not only to recover any ground that may be lost, but to secure an increase in tourism income in the years ahead. Having considered the matter. I have come to the conclusion that it is necessary to increase the membership of the board of Bord Fáilte in order to enrich the expertise and experience available at board level. The existing board has done a magnificent job, but I am convinced that it would benefit from an expanded membership in preparation for the challenges of the future. I, accordingly, propose to increase the maximum membership of the board from seven to nine.
I would emphasise that our policy on tourism has been to encourage the development of the facilities and services at home and to prepare marketing strategies abroad which will ensure a continuing and increasing tourist traffic to Ireland. Tourism is sensitive to many events over which neither the Government nor the industry can exercise very much control. Each year brings its own crop of problems and I believe that the continued pursuit of steady development represents the best use of our resources and is in the best long-term interests of tourism. This Bill is designed to assist in maintaining the tourist industry in the important position it now occupies in our economy, and I, therefore, confidently recommend the Bill to the House.