I thank all the Senators who have contributed so far to this debate and those who are going to do so shortly. Many of the arguments that were made, particularly on the Sinn Féin side, are convincing and have great merit. I have absolutely no doubt about that. I have reservations, however, about spooking the entire industry when targeting it for what are undoubtedly wrongs, difficulties and, if Senator Paul Gavan is correct, abuses of employees. I find what the Senator says quite disturbing but I would like to have more concrete evidence of the widespread nature of the practices described.
I will not accept the amendment but I find there is merit in what the Senator says. If he can produce more evidence and send it on to me, and if it bears up to the independent scrutiny, I will consider the necessary measures that he talks about. When these details are produced on the floor of the House, it is difficult for me to simply accept what is said without having them forensically examined in a real way. The Sinn Féin amendment is a constructive and moderate amendment. When Senator Paul Gavan talks about issues of concern across the board, he is being extremely reasonable. The language of the amendment is constructive and addresses this matter in an undoubtedly bona fide way. I was thinking about the amendment and am not convinced about it, but not for the purpose of not accepting it. Undoubtedly, what the Senator is doing would spook the industry. Over the very short period of this debate, I have not been convinced, only because I do not have the evidence, that what the Senator believes to be widespread across the industry constitutes an overall abuse. If it is widespread and the Senator can convince me of it — I am quite happy to meet him in this regard — and if the practice is a kind of disease within the industry, as he is implying, I am quite prepared to address it in a different forum or subsequently.
I now wish to address the issue of the 9% VAT rate, which was raised by virtually everybody, including Senators Martin Conway, Kieran O'Donnell, Jerry Buttimer and Ned O'Sullivan. The rate should not be accepted immediately without criticism. Undoubtedly, there are one or two problems with it. The issue raised by Senators Kieran O'Donnell, Jerry Buttimer and Martin Conway concerned whether we have commissioned any studies to determine the real impact of the reduced VAT rate and, as raised by Senator O'Donnell, whether the reduction is being passed on to the consumer. To be fair, this issue requires further examination. I do not know whether the reduction is being passed on. It is difficult to know. The rate has obviously been beneficial to the industry, particularly the smaller players in the hospitality sector, in a large number of ways. It has been great in terms of employment. I do not know the answer to the question but I believe we will address that. It certainly should be addressed and the reduction should certainly be passed on to the consumer.
Fáilte Ireland recently commissioned a new study on the impact of the VAT rate on employment and competitiveness, particularly in rural areas. That builds on two previous studies that show the 9% VAT rate has considerable benefits. I do not think anyone is in any doubt about that. The question really is whether some of the hotels are gilding the lily and taking too much profit and whether some people are benefitting and do not need it any longer while others do. It is rather difficult to differentiate and say some hotels deserve it and others do not. A certain amount of fine tuning is required. Perhaps the Senator is correct. Basically, the 9% VAT rate has been a great success in terms of employment and if it needs fine tuning, that will be examined. The Government's position on it at the moment is that it is there to stay. To send out any signals that the VAT rate is under threat would be totally wrong, in particular in terms of Brexit, and that signal should not go out, but there is nothing wrong with examining it and doing a little bit of fine tuning.
Senator Ned O'Sullivan spoke about identifying the great potential of new tourism markets in terms of Brexit, which is coming up day in, day out in terms of tourism. He will be aware of the fact of the slowdown, which is taking place in terms of British visitors. The reduction currently is approximately 1.5% to 2% but we have only got figures for January. The anecdotal evidence in terms of bookings is that numbers will increase. The agencies are moving very fast to find new markets. They are aggressively looking for further funding as well in order to move into those markets with a certain amount of clout and leverage. They are looking for funding on the basis that some of the other State agencies have already received extra funding to cope with Brexit. The Government will examine the requests. In the Estimates which I am shortly due to bring before the select committee we will seek extra funding for that purpose as well. It is something that is worthy of consideration.
I have probably addressed most of the issues that were raised in the House. The tourism industry today is a very positive one. The year 2016 was a record year for overseas tourists to Ireland, surpassing all previous records. There were a total of 9,584,400 visits to Ireland in 2016 representing a 10.9% increase on 2015, or an additional 941,300 visits on top of last year's record. Good growth was recorded from all our market areas and Ireland has seen its market share grow ahead of its competitors. Based on official figures for the first nine months of 2016, we estimate that overseas tourism contributed more than €4.5 billion to the Irish economy, up approximately 10% on 2015. That helped to sustain an estimated 220,000 jobs in communities across the country.
I know that both tourism agencies, Tourism Ireland and Fáilte Ireland, are determined to maintain that momentum right through 2017 and into the future. The excellent performance of 2016 comes on the back of a number of years of very steady growth. I take this opportunity to thank all those involved in the tourism industry around the country who have had a hand in delivering this great result for Irish tourism and for the economy.
Tourism continues to be a priority for the Government, which has long recognised the contribution it makes and its potential to drive further economic growth. We are well aware of the challenges that faced the tourism industry in recent times. The combined efforts of all stakeholders - industry, the Government and the tourism agencies - are proving very successful and as a result it is very satisfying to see the growth in tourist numbers, revenue and jobs that have come about in recent years. Of course, it is essential that such efforts continue in order to maintain our competitive position, meet growing consumer demand and stand out in a crowded international marketplace. It is important to acknowledge the efforts of the tourism industry, which worked hard through the recent difficult times to manage costs while maintaining services and offering a high quality value for money product.
In terms of Government supports, the VAT cut was one of the first big jobs-oriented policy initiatives taken back in May 2011 and retained in subsequent budgets to sustain and grow employment in the sector. In accordance with the programme for Government commitment, it is proposed to retain the 9% VAT rate as long as prices remain competitive so as to aid the sector where required, such as in times of uncertainty, namely, a post-Brexit situation. Combined with reducing the air travel tax to zero, the temporary reduction in employers PRSI and changes to the visa regime, the Government has demonstrated its commitment to supporting this key sector.
Clearly, we move into 2017 in a position of some strength. The challenge for all of us now is to maintain this growth. There is no room for complacency, particularly given the highly competitive nature of the global travel industry and the uncertainty that exists in some markets. Our capacity to sustain growth will depend, among other things, on Ireland maintaining its competitiveness, on effective marketing and on the continued development of attractive and compelling holiday experiences.
The Government's ongoing commitment to tourism was again reflected in the budget. Despite growing demands on the public purse, the 9% VAT rate on tourism services was retained and funding of €122 million was secured. That will enable Tourism Ireland to continue its effective marketing overseas and Fáilte Ireland to continue to develop the industry on the ground. Looking to the future, the Government tourism policy statement sets out ambitious targets to grow employment in the sector to 250,000 by 2025 by attracting 10 million overseas visitors annually and generating €5 billion in associated revenue. Specific priority measures to support sustainable growth into the future are set out in the Tourism Action Plan 2016 to 2018.
In common with the rest of the Government there has been deep analysis of the challenges which tourism faces because of the outcome of the UK referendum. Even prior to the referendum result, there was a commitment in the Government's tourism policy statement, People, Place and Policy - Growing Tourism to 2025, to prioritising tourism marketing efforts towards those markets providing higher revenue returns. The programme for Government commits to implementing the policy objectives in the policy statement and achieving the targets for Irish tourism contained therein. The UK vote does not change that.
A key element of Tourism Ireland’s strategy since 2014 has been market diversification which has seen mainland Europe become the largest contributor of overseas tourism revenue and will see the United States overtake Great Britain as the No. 2 contributor of tourism revenue in the coming years. In 2017, Tourism Ireland will continue to implement its market diversification strategy and intends to maximise holiday revenue through investment in mainland Europe and North America. In addition, the depreciation of the pound against the euro since the UK referendum means that value for money will be a key message for Tourism Ireland in Britain this year. Looking to the medium term, Tourism Ireland is currently preparing its corporate plan for the period from 2017 to 2019. This plan will inter alia include the agency's response to marketing Ireland in Great Britain in the new situation that has developed following the referendum. On 23 January 2017 the Minister of State, Deputy Patrick O'Donovan, and I hosted an all-island dialogue on the impact of Brexit on the tourism and hospitality sector in Dundalk. The feedback from tourism industry participants at this event reaffirmed the Government's analysis on the implications of Brexit for tourism and I am committed to an ongoing dialogue with the tourism and hospitality industry as the Brexit negotiations proceed.
It is important to remember that Brexit is part of a global tourism and trading landscape and in that context I, along with An Taoiseach, the Minister for Foreign Affairs and Trade and the Minister for Jobs, Enterprise and Innovation, launched Ireland Connected: Trading and Investing in a Dynamic World. This is a cohesive, whole-of-Government strategy that builds on existing successes and sets ambitious targets for Ireland, including tourism performance. This new strategy will deepen Ireland's economic resilience and responsiveness in the face of highly changeable global conditions and sets out a vision of Ireland as an outward-facing, globally connected hub for business, research, innovation, investment and tourism.
Given what we know of the challenges 2017 may bring, it will be more important than ever that we create stand-out for Ireland in our markets by rolling out inspirational Ireland destination messaging. This essential destination sell will be supported by promotion of our iconic holiday experiences – the Wild Atlantic Way, Ireland's Ancient East and Dublin – A Breath of Fresh Air.
All three experience brands will be major themes for Tourism Ireland next year, as well as the promotion of touring holidays, city breaks, festivals, events and activities. Work will continue with airports and airlines to encourage the creation of new routes and the expansion of existing services to the regions. Ireland's Ancient East offers visitors a journey through 5,000 years of history in 500 miles of beautiful landscapes. Known for its castles, myths and legends, religious sites, great houses and green landscapes, it stretches from Newgrange in the Boyne Valley in the north east, through the midlands and along Kilkenny's mediaeval mile to Waterford's Viking quarter and Cork's many cultural gems.
The Wild Atlantic Way is the longest scenic tourist route in the world. It stretches some 1,600 miles from Donegal to Cork, taking travellers through one of the world's most dramatic coastal landscapes on the edge of Europe, which has shaped the development of its people, communities and settlement over centuries. It offers visitors an opportunity to connect with friendly welcoming people in towns and villages along the way, to experience our heritage and culture and to enjoy our great locally grown fresh food and freshly caught seafood.
Dublin is a key tourist destination and plays a pivotal role in the visitor experience, serving as the ideal showcase for Ireland's overall offering. The Dublin - A Breath of Fresh Air brand highlights the capital's distinctive offering, where city living thrives side-by-side with natural outdoors. Visitors to Dublin can experience the full offering of a vibrant modern city within very easy access of the beautiful surrounding bay and mountains.
My Department and the tourism agencies, Fáilte Ireland and Tourism Ireland, are committed to strong regional dispersal in tourism. This involves providing visitors with credible, compelling and attractive reasons to travel around the country beyond Dublin. It also involves providing targeted business supports to assist tourism businesses to capitalise on the further development and marketing of the key experience brands.
Fáilte Ireland is placing significant emphasis on assisting the tourism sector to increase the geographical spread of activity, and to lengthen the season and increase activity outside the peak summer months. The agency has been rolling out extending the season workshops developed to assist tourism enterprises in developing and growing business by addressing issues around seasonality and regionality.
Allocations for international tourism marketing are used to ensure that Ireland maintains its share of voice in key overseas markets. With specific regard to facilitating greater regional dispersal, in addition to general overseas marketing, the tourism agencies target overseas journalists and international travel operators to raise awareness of the new experience brands and encourage travel agents to programme Ireland's Ancient East and the Wild Atlantic Way into their itineraries.
The motion calls on the Government to continue investment in green tourism initiatives. Our tourism policy statement acknowledges that the quality of our environment is one of the most frequently cited reasons to visit Ireland. In this regard, the success of the Great Western Greenway has proven inspiring for communities across the country and I will continue to argue for investment in such initiatives.
The motion also calls on the Government to establish new funding streams to assist tourism entrepreneurs. While there are no additional resources for new funding streams in this regard this year, I am aware that Fáilte Ireland already provides a range of business supports to tourism enterprises and if Senators have particular initiatives in mind - Senator Conway mentioned this in his opening address - I am happy to hear further from them on this issue.
There is a direct correlation between tourism growth and ease of getting here for visitors from key markets. Encouraged by the Government initiatives on travel tax, we have seen very substantial expansion in direct air services to Ireland, including from long haul markets, in recent years. There were 537,000 seats a week onto the island of Ireland in summer 2016 and already Aer Lingus, Ryanair, Lufthansa, Iberia, Norwegian Air International and many other airlines have announced transatlantic and short haul expansion for 2017. I thank Senator Buttimer for his comments on my contribution to Norwegian Air International, but it would not have been done without prompting from him on a weekly basis in representing Cork. I could not have gotten away with not doing so, even if I had wished to which I did not. We anticipate further growth this year.
Ferry services are gearing up, and there is particularly good news from Irish Ferries which has commissioned a new €144 million state-of-the-art cruise ferry to come on stream in time for the 2018 season. All of that augurs well for tourism and investment by the carriers underlines their confidence in the future of our industry.
We also have in place a programme to support co-operative marketing activity at regional airports and ports to encourage new access and maximise the potential of existing air and ferry services to the regions. In this way, the aim is to grow visits to the regions, in particular the Wild Atlantic Way and Ireland's Ancient East, via points of entry outside Dublin. A sum of €1 million was made available to Tourism Ireland for this purpose in 2016 and again in 2017, and the tourism action plan 2016-2018 includes a specific commitment to continue the scheme until 2018.
In addition to the €1 million in Exchequer funding, the airports, ports and regional tourism stakeholders, including local authorities, make further contributions to the fund for routes serving their access points. This funding is then matched by carriers for campaigns targeting consumers in the overseas regions with connectivity to Ireland's regional airports and ports. For the 2016 tourism season, the Exchequer investment was €1 million and it realised total overseas marketing activity worth €2.6 million.
I hope this gives the House an overview of the great strides made by our tourism sector which has a proven track record in creating employment throughout the country and driving growth in the economy. Overseas visitor numbers are well up and tourists are spending more. While this performance is very encouraging, we are determined that the growth will continue in line with the ambitious targets set out in the tourism policy People, Place and Policy – Growing Tourism to 2025. Accordingly, strong Exchequer funding commitment to the sector is essential to achieve sustainable growth into the future, in line with the policy targets.
The 2017 allocations for tourism product development will provide for continued capital investment by Fáilte Ireland in the experience brands through the development of attractions and other tourism infrastructure. The current allocations will further enhance, animate and promote these key experience brands by funding business supports, training, festivals, events and other related programmes. The development and sustainability of Irish tourism will be further supported by funding targeted at growing high-yield event and business tourism, including supporting Ireland's bid for the 2023 Rugby World Cup. I look forward to lending my support to Fáilte Ireland and Tourism Ireland in the future.
It is a particularly useful experience to have this debate. I welcome the success of Irish tourism in what I can only describe as a non-political atmosphere. I address my remarks to Sinn Féin Senators in particular, because the goodwill and the serious manner in which they have addressed this problem is worthy of recognition even if we cannot support the amendment because of a lack of full evidence.