Select Committee on Enterprise and Economic Strategy debate -
Wednesday, 20 Apr 1994

Page 2

Chairman

There is a suggested timetable and it is up to the Members to accept or reject it. It will allow the Minister to make an opening statement of ten minutes, followed by ten minutes for each party spokesperson. The question and answer session will last 20 minutes and there will be five minutes for the Minister's response. When dealing with a Supplementary Estimate last week, there was some misunderstanding as to whether party spokespersons could contribute during Question Time. I have no objection to that, despite the fact they would have already had some time as party spokespersons. It is in order as far as I am concerned.

Vote 35 — Tourism and Trade (Supplementary Estimate).

Minister for Tourism and Trade (Mr. McCreevy)

When I spoke to this Select Committee on 16 February last, I outlined planned marketing initiatives for Irish tourism. I am glad of the opportunity to discuss further tourism developments. Members of the committee will be aware that the purpose of the Supplementary Estimate is to enable the payment of a 3 per cent subsidy to the ICC Bank in respect of loans made to tourism projects under the small business expansion loan fund.

The purpose of the £100 million fund, which was announced in the budget, is to provide loans at low, fixed interest rates to small and medium sized businesses. The fund is aimed at the creation of long term jobs and the stabilisation of existing employment. Business in the tourism, manufacturing and internationally traded services sectors employing less than 50 people are eligible to apply. Loans of between £50,000 and £500,000, repayable over ten years, are available for capital purchases and working capital requirements. The initial rate of interest is 6.75 per cent, that is 3 per cent below the normal commercial rate.

Following the announcement of the fund, I agreed with my colleague, the Minister for Enterprise and Employment, that an indicative ceiling of 25 per cent of the fund, or £25 million, would be allocated for tourism projects, with my Department picking up the subsidy payable to ICC in respect of these loans. On the basis of this ceiling, the cost to my Department over the ten year period will be approximately £4.6 million. It is estimated that £500,000 will be sufficient to cover the interest subsidy due in 1994.

Following consultation with the industry, the Minister for Enterprise and Employment and Bord Fáilte, I have devised eligibility criteria for loans from the fund for tourism projects. Eligible projects are Bord Fáilte registered accommodation and Bord Fáilte and Shannon Development approved tourism products and services. In the case of accommodation, this includes hotels, guesthouses, caravan and camping sites, holiday and youth hostels, holiday camps and subject to certain conditions, selfcatering accommodation. Eligible products and services include boat, cruiser, passenger boat and water craft hire, equestrian centre services, sailing and yachting centres and marina services, sub-aqua centre services, sea angling boats, outdoor pursuits and activity centre services, luxury coach tour services, car hire services, visitor attractions, horse drawn caravan operations, motor home operations and English language and craft learning facilities. In addition, certain golf and racecourse facilities may be eligible for loans on a restricred basis. The small business expansion loan scheme had generated a great deal of interest within the industry. So far, the ICC Bank has received a total of 249 inquiries or applications for loans for tourism projects to the value of £58.8 million. Some 42 tourism projects have been approved for loans totalling £7.3 million, of which £4.7 million has been committed in respect of 24 projects.

While hotels and guesthouses account for half the approvals so far, loans have also been approved for a wide range of other tourism products, including boat and cruiser hire, equestrian centres, coach services, visitor attractions and so on. The tourism ventures for which approval has been granted employ 531 people at present, out of which 111 jobs would, without the loans, be at risk. In addition, they are expected to generate a total of 169 new jobs in the next three years. In this context, it is also important to remember that tourism revenue plays a significant role in terms of employment sustained in the wider Irish economy. The level of interest shown in the scheme to date suggests that it will be fully subscribed.

The fund will make a valuable contribution to Irish tourism development and the level of interest it has generated within the industry bears out this view. As Members know, tourism is a highly labour intensive industry and has been targeted for the creation of 35,000 new jobs over the period of the National Plan. The jobs safeguarded by virtue of these loans, together with the new jobs created, will help us to achieve that target.

These loans are playing an important role in terms of continuity of investment and ensuring confidence within the tourism sector. As Members know, finalisation of the Operational Programme for Tourism 1994-1999 must await the conclusion of negotiations between the Government and the European Union Commission. I am, however, making arrangements to ensure that, following the agreement of the programme with the Commission, eligible expenditure in respect of tourism projects can be backdated to 1 Janaury 1994. While I am confident there will be no undue delay in finalising the tourism programme, I am conscious that there is a need within the industry for interim funding arrangements. Like the £8 million marketing provision which I discussed with the committee in February, the small business expansion loans will help to meet that need.

It is fair to say that this development is one of a number that have contributed to the air of quiet confidence now evident in the tourism industry. Even at this early stage of the year, bookings from most markets, particularly North America and Britain, are up on 1993 levels. New scheduled and charter air services are being introduced, significant improvements are taking place in our sea access and fares are being kept at competitive levels.

The fiscal environment is crucial. The thrust in this year's budget was towards job creation and retention and, apart from the small business expansion loan scheme, it provided for a number of measures designed to stimulate tourism. Changes in capital allowances, capital acquisition and capital gains tax will encourage investment while competitiveness will be improved through changes in the PAYE and PRSI codes, special vehicle registration tax arrangements for the care hire sector, and additional VAT relief for luxury tour coaches.

I am pleased that our new innovative marketing efforts are progressing well. The special marketing initiative which I launched in co-operation with the private sector to attract more American visitors shows early signs of being a resounding success. I am confident that after a number of years of stagnation we will see the beginning of a new surge in the number of US citizens coming to sample the many attractions of Ireland.

I am finalising arrangements with Bord Fáilte to give an added impetus to our promotional efforts in Britain and mainland Europe. We are seeking to build on the recent success in attracting continental visitors and our intensified campaign will also endeavour to bring tourists from countries and regions where people have not shown a great propensity to visit Ireland. I have also increased promotional expenditure in Japan and Australia. While the increase in monetary terms is not enormous, it represents a firm commitment to tap the growing potential of tourism from long haul destinations.

The Sporting and Artistic Promotions Fund is showing signs of giving good value for money. We have succeeded in attracting the 1998 World Equestrian Games to Ireland and this event will bring 3,000 to 4,000 competitors, officials, etc. and up to 100,000 spectators. The sponsorship deal with Eddie Jordan's Grand Prix team is also bearing fruit and it was encouraging to see the "Discover Ireland" logo featured prominently in coverage of the Pacific Grand Prix last Sunday. That the race took place in Japan is also significant. Although still small in comparison to our other tourism markets — 14,000 visitors in 1992 — Japan has been growing steadily in recent years and has great potential. I hope to be in a position to announce further initiatives under this fund in the near future.

These initiatives, which are showing clear signs of bearing fruit, must be supported by continuing and ongoing investment in tourism and product development. The Small Business Expansion Loans will help to ensure that investment and I am pleased to commend the Estimate to the committee.

Mr. Deenihan

I welcome this debate and I agree with the Minister that the Small Business Expansion Loans scheme has aroused considerable interest in the tourism industry. This is manifest in the large number of applications received by the ICC. On 29 March, the Minister informed the Dáil during Question Time that to date the ICC had received 224 applications for tourism projects to the value of £54 million. This figure increased over the last number of weeks to 249 applications, to the value of £58 million. By 29 March, 15 projects had been granted approval at a cost of £3 million, while up to now 42 projects have been approved at a cost of £7.3 million. On 29 March, the Minister also informed us that £1 million had been disbursed for five projects, while now £4.7 million has been disbursed for 24 projects. This demonstrates the success of this scheme.

The Minister for Tourism and Trade and Enterprise and Employment told this select committee that a ceiling of £25 million was imposed by the Government for the funding of tourist related projects. During Question Time on 29 March the Minister indicated that the £25 million ceiling could be adjusted upwards, depending on the demand for the funding and for the remaining £75 million. Because of the weight of applications, the Minister should consider raising the ceiling for tourism projects to at least £50 million to allow as many projects as possible to go ahead. As the scheme has been successful, perhaps the Government could also consider increasing the overall figure from £100 million to £150 million.

As the Minister said, it makes good sense to invest in tourism, provided the investment is on a sound commercial basis. The tourism industry has a proven track record in job creation. For example, in the last four years 6,000 jobs have been created in the hotel sector as a result of the large investments made by hoteliers in expanding and upgrading their premises. I am convinced the same number of jobs could be created in the tourism sector over the next four years if small to medium sized hotel operators were encouraged to invest in their premises. If a factory owner builds an extension for a new machine, it usually results in a reduction in the workforce. However, if the same amount of money is spent on an extension to a hotel, a guest-house or to provide a coach it results in more employment. It is profitable to invest in the tourism industry because it is labour-intensive and demands a high level of individual involvement at the coalface — housekeeping, making beds, cleaning rooms and serving customers. If a hotel expands, it will need extra staff.

Government expenditure in the tourism industry is estimated at £92 per existing job, compared to £2,060 in the manufacturing industry and £1,645 in the agriculture and food industries. Despite the Minister's stated commitment to the tourism industry and his recognition of its employment potential, the Government is not matching this goodwill with money and help for the industry. The provision in the Estimate is a positive move in that direction.

The small and medium sized hotels and guest-houses are the backbone of the Irish tourism industry. Under the last tourist operational programme, only those hotels with more than 35 rooms were grant-aided for the provision of recreational facilities. This excluded the majority of medium sized accommodation and all small hotels. Under the next tourist operational programme, I hope EC funding will not be restricted to large premises, and that small hotels and guest-houses can get assistance to upgrade their facilities and improve their competitiveness. I hope this scheme will also have that effect. I appeal to the Minister to ensure that Structural Funding will not go only to large hotels, and that small and medium sized hotels will be able to avail of it to upgrade and extend accommodation. Given the large number of applications for this scheme and the viability of grant aid this scheme will prove that low interest loans are as important, if not more important, than grant aid for stimulating economic activity. The Government should consider introducing further schemes along the lines of this one. The ICC is applying strong commercial criteria for qualifying applicants, therefore it is unlikely that projects, which have little hope of succeeding, will be granted loans under this scheme. When one considers that the present scheme will cost the Government approximately £15 million over the next ten years — an average of £1.5 million per year — and the level of economic activity which will result from it, then it must be regarded as a positive development.

I welcome the scheme and I acknowledge its potential contribution to the development of the tourism industry. I am disappointed that the full details were not available sooner, although I thank the Minister for providing them today. I cannot understand why we could not get information from the ICC or the Minister's office about what will qualify under this scheme. It was not available. When the Minister was questioned in the Dáil he gave little information. He referred to projects that would qualify under Bord Fáilte recognised schemes and SFADCo schemes but never pinpointed what qualified. As a result there was confusion among potential applicants as to what would qualify and whether they should apply.

This scheme was probably constructed as the Minister drew it up. In future when schemes like this are announced projects or headings qualifying for grant-aid should also be announced. This would eliminate all the uncertainty and doubt created. There was a veil of secrecy which is hard to explain. In most cases the Minister is forthcoming with information but there was secrecy in this case and I hope that will not prevail in the future. Perhaps the policy was to keep the floodgates closed and prevent large numbers of applicants. That should be cleared up and the criteria for qualification for aid should be published immediately. I hope the papers will do that.

The Minister in his reply should also expand on funding for golf courses. Is there a ceiling within the £100 million on total funding for golf courses? There seems to be a cap of £250,000 and if a course has received that amount it will get no further funding. Will the Minister clarify if that money has been spent?

On the last occasion the Minister mentioned the term "pay as you play". Most golf courses have this facility, even clubs with membership. I am aware of one golf course developed by a private individual who is not sure whether he will have a club membership structure and he has applied for assistance under this scheme. I have not inquired whether he has qualified but he will be developing the concept of "pay as you play". He has not decided yet what structure he will adopt but I hope this scheme will not exclude people like him.

Opposition was built up against golf courses principally because women were not allowed to be full members or were excluded in some cases. Where there is a need for golf courses they should be allowed. Golf is a great way to attract tourists to Ireland. Where golf courses are environmentally acceptable there should be no objection to them. At the height of the tourist season in Ballybunion almost 100 people are employed in the golf club and in associated businesses in the town and throughout Kerry and west Limerick. The spin-off from golf clubs is enormous and those people who knocked them on the basis that they consider golf is exclusive are wrong from an economic viewpoint. Most golf clubs are making amends and allowing women to become full members.

Craftshops have been excluded from the scheme. These shops can be lucrative business for people servicing the tourist industry. I can see no reason grant aid or loans will not be provided for the development of craftshops. Local people can leave crafts there to be sold at these shops which are an important outlet for local craft workers. I ask the Minister to clarify that.

The Minister mentioned the quiet confidence now evident this year in the tourist industry. I share some of that confidence because of feedback I have received from America. However, I have some concern about the German market. Despite the earlier good trends the industry is concerned that this market may not be as lucrative as it was last year. If that is the case I ask the Minister to use some of the £5 million to carry out a marketing campaign in Germany to ensure that there is no shortfall in German tourist numbers this year. That is an important issue.

Miss Quill

Like the previous speaker I welcome this Estimate. The purpose of the £100 million fund was to provide low fixed interest rates to small and medium sized businesses. It is wise and sensible that a percentage of that fund should be allocated to hotels and tourist related businesses. Since we are looking for an increase in employment in the next ten years we can look to this sector confident that it will generate jobs in the numbers needed. I am glad this decision has been taken.

I would have been happier if the ceiling could have been raised because the category of hotels and guesthouses included in the eligibility list for financial assistance must cover almost 80 per cent of hotels in the medium and small range. My fear is that this might be spread too thinly and I ask the Minister to bear that in mind. If an opportunity arises or a justifiable demand emerges, perhaps the 75:25 share ratio of the fund could be adjusted.

The most important objectives in tourism are, first, to increase the number of overseas visitors and, second, to extend the tourist season. In so far as the Minister can influence the manner in which these funds will be spent, it is important that they be spent in ways that would extend the facilities to attract tourists in traditional off-peak tourist times. It is crucial to bring overseas visitors to Ireland and encourage home tourism in those off-peak times. We must extend the shoulder of the season. Our aim should be to have a bustling tourist season from April to October.

In so far as it is possible to monitor the manner in which any financial measure we extend to the trade is spent, we should ensure it is expended on facilities that would help extend the season. That is important if we are to meet our targets. It is also important if we are to create in the tourist industry the kind of sustainable jobs that we need. If there is a two month tourist season there will not be sustainable jobs, only casual and poorly paid labour and there will be no training input into the tourist trade whereas if the season can be extended by six months there will be a totally different type of employment content. That must be our aim and I hope these moneys are spent for that purpose.

Not alone would a longer tourist season help to create sustainable jobs, it would also help to sustain the local economy through hotels, restaurants and tourism facilities. It is great to see the level of trade and commercial activity in the summer months in towns in west Cork and Kerry where there are thriving hotels. Unfortunately, once the tourists go the economies of these towns go into recession. There is a long period when no extra money goes to grocers, butchers and bakers who supply goods to the hotel trade. Every measure we adopt must be with the aim of extending the tourist season.

At this juncture, would it be possible to again consider the impact on the tourism industry of a possible 21 per cent VAT rate if it is brought into operation in 1996? I noticed with satisfaction in this morning's newspaper that my colleague, Deputy Cox, and other members of the European Union yesterday staved off an arrangement whereby the VAT refund on tourism related and craft industries would have been tampered with by an EU regulation to the detriment of those involved in these industries. That was achieved with skill and, happily resulted in success in Brussels as a result of activity in recent months. We must bend our energies to ensure that the tourism industry enters at the lower rate of VAT after 1996.

A great deal of emphasis — rightly — has been placed on marketing. If we depend on overseas visitors, we must market vigorously and aggressively abroad. At the end of the day the best ambassador for Irish tourism abroad is the satisfied customer. The best ambassador for selling Ireland to the German or American market is the German or American tourist who had a good experience in Ireland and relates that to his friends, colleagues and family on his return. If a product does not represent good value, then it is difficult for anybody, including the client or the consumer on the one hand, or those in Bord Fáilte on the other, to sell the product abroad. It is important that our VAT rate remains at a level which will enable the tourism trade to expand, to deliver jobs and to give the type of service which will maintain a vibrant trade in the remaining years of this century.

A good deal of discussion has taken place about the provision of additional golf courses, which I welcome. Although I do not want to be a spoilsport — whether the sport is golf or otherwise — we must not develop golf courses simply because money is available to act as an incentive to embark upon such programmes. I suspect that we may be left with golf courses at the end of this century with nobody to play on them. We must develop other features which are attractive to overseas tourists as well as golf. Emphasis has been placed worldwide on cultural tourism and we must keep that development apace with that of golf clubs.

Other aspects of our heritage which are of interest, attraction and appeal particularly to continental and American visitors, must also be developed. I do not want to see a situation where we have rabbits grazing on golf courses and nobody to play on them. If we continue with this unbridled development such a likelihood exists. Having said that, the Estimate is good and worthy and my party gives it its full support.

Mr. Crawford

I welcome the Estimate and I congratulate the Minister on his efforts in regard to the tourism industry. He will visit my constituency of Cavan-Monaghan on Friday and I hope he will see some of the fishing ports on the roads — I do not mean the lakes, but the potholes — and the difficulties we face in promoting tourism.

Mr. Sheehan

There is a pothole at the entrance to Leinster House.

Mr. Crawford

The Minister spoke about a fixed rate, but he then referred to the initial rate of 6.75 per cent. I ask him to clarify that because the main problem in industrial growth in recent years has been a lack of certainty in regard to interest rates. I hope these rates will be fixed.

In recent years small family-owned hotels have not done well from the different funds available. It may be good to provide sizeable job promotions in larger units but if numbers are lost and small family-owned hotels go out of business, little will be achieved in the long term. Over the past 15 years, German fishing groups appreciated staying in small family-owned hotels in Ballybay, County Monaghan. We must ensure these hotels are not put out of business because help is given to others.

I am worried about the number of applicants. I understand the Minister is tied to a figure regarding the amount available. Approximately £25 million is available, yet the Department has already received applications to the value of £58.8 million. My figures may be incorrect, but the chance of anyone new applying is small. As my party spokesman, Deputy Deenihan, said more money should be made available, if necessary, because it is a good scheme and there is no reason to limit it.

As regards taxation — this relates to the Bill before the House — Deputy Quill and others mentioned VAT. The problem in regard to the taxation of part-time employees is also serious. In the past week some people had their tax reliefs cut by 50 per cent because they are in part-time employment. This provides little incentive for them to work. Unfortunately the meat and tourism industries in my area are not year round ones and part-time employment is part of the trade. We must look at this situation also. Although I have some concerns, I welcome the Estimate.

Mr. B. Fitzgerald

I refer to groups eligible for loans. Last week we spoke about the county enterprise partnership boards and the limitations on sectors which do not qualify. We suggested that loans might be the best way forward for them. This list does not provide for the development of restaurants and coffee shops, for example. Racecourses were referred to and I would like the Minister to clarify whether horse and dog racing will be included.

Mr. Broughan

I commend the Estimate. I ask the Minister — this is an ongoing topic — if he is happy with the performance of Dublin Tourism. I understand consultants are examining Bord Fáilte. Is he aware that elected representatives in the Dublin region are unhappy about the promotion of the capital city? Although there have been small programmes to market Dublin in places like Reykjavik, Iceland, we do not market the capital city in the same way as our EU partners market their capital cities, for example, Copenhagen, Paris, London and elsewhere. This determination and initiative does not exist in regard to Dublin. Many of us felt recently that in regard to one of the highlights of our early tourist season, St. Patrick's Day, the opportunities offered by the enormous number of visitors who visit the country, particularly Dublin, on St. Patrick's Day were not fully utilised by a rather worn and perhaps less innovative parade than we have had in the past. In the late evening of St. Patrick's Day we had a distressing situation in the Grafton Street area involving youths where a near riot developed. There is disquiet in the Dublin region among all parties and all representatives about the way the capital is marketed and we wonder why when we pick up a British paper we do not see Dublin marketed as other capitals.

Mr. Deenihan

Deputy Quill and I raised a number of questions in our contributions. I thought the Minister would respond to them first and then respond to other questions, but as that is not the way the committee is operating I will ask a few more questions and I hope the Minister will answer some of them.

The Minister made a statement regarding the backdating of projects which will qualify for grant aid under the operational programme. I appeal to him to provide some indicators as to what will qualify and what will not be in the programme, otherwise it will be unfair to some people who are holding back projects because they do not know what will be in the programme. Certain things seem to have been signposted, the provision, improvement and extension of accommodation for example. I ask the Minister if it would be possible to give certain guidelines on the major issues like accommodation, leisure facilities, and marketing to the industry so that they can be confident that they will be able to recoup this huge investment at the end of the year and that they will qualify for grant aid.

Regarding the Jordan Grand Prix team, the Minister seems to be on a winner already. It would be interesting if he could indicate how much sponsorship he is giving the Jordan team and whether this will be over a period of time or just for this year. How is he to measure the benefits to be derived from that substantial sponsorship? Has he plans to use any other sporting figures to promote Ireland abroad? Are any other avenues like sport to be used to promote Ireland abroad?

Chairman

In view of the number of questions coming foward from the Members and the fact that the four other Members present have also indicated that they wish to put questions to the Minister, we should allow the Minister to respond to the questions that have already been put.

Mr. McCreevy

I will answer Deputy Deenihan and Deputy Quill, the Opposition spokespersons. The question of the volume and amount of applications was raised by them and by others. As I said in a reply in the Dáil, the figure of £25 million was indicative. If we found at the end of the period that the Department of Enterprise and Employment was not going to take up its £75 million it would be changed, but it looks at this stage as if we will definitely reach our figure of £25 million. From the figures given by the manufacturing and internatonal trade and services sectors it looks as if they will definitely reach their indicative allocation, so I do not hold out great hope that we will increase the figure of £25 million.

I will give some figures in that regard. I gave the figures of the applications, inquiries, approvals, commitments and disbursements relating to tourism, but the corresponding figures for manufacturing, international trade and services aid are as follows. There have been 779 inquiries or applications relating to manufacturing or international trade and services as against 249 relating to tourism. The value of manufacturing and international trade and services in those inquiries came to £134.2 million. The number of approvals given is 100, valued at £17.7 million. It looks as if the whole of the £100 million will easily be disbursed, so I do not hold out any hope that more money will be available for tourism. The Minister for Finance, speaking on the budget, and the Minister for Enterprise and Employment in a subsequent speech to the Dáil, said there may be other money coming on stream in the future for low interest loans.

Questions were raised regarding grants and various areas of activity in the new operational programme. Members here would readily agree that if business people in Ireland whether in tourism, manufacturing or whatever had access to low interest loans for long periods of time, the grant mentality would be lessened and that would be in line with the Culliton report. Owners equity working capital and the total dependence on high cost borrowed moneys is stifling business in this country at all levels.

To answer the general question regarding this fund, we will easily reach our target and so will my colleague, the Minister for Enterprise and Employment. Deputy Deenihan made a point about low interest loans and I agree that low interest loans are more important than grants. He raised the question of secrecy. The Minister for Enterprise and Employment announced the whole scheme and the details are available from the ICC. They are not secret. Anyone can apply and the criteria are available.

The Deputy asked about grants for gold courses. The reply I gave in the Dáil answered these questions. I said that there will be restricted criteria for golf courses. The figure is £250,000 per application and it is restricted to working capital requirements. That is not to anticipate what will be in the operational programme regarding golf courses. Deputy Deenihan was wondering whether £250,000 is the total sum for golf courses in this development fund. The figure is £250,000 per application and it is restricted to pay and play courses which will be assessed by my Department, the ICC and Bord Fáilte. Pay and play courses are courses which are open to the public. They are not confined to members as were the majority of courses up to five or six years ago. These are new.

Regarding craft shops, Deputy Deenihan asked why we did not make some changes in that regard. My view is that this matter was considered and my reason for not including them, having taken some advice, is that if more people come to Ireland as tourists and the tourism industry develops, craft shops and restaurants will benefit in any event. They will be one of the first areas of economic activity to benefit by the increase in tourist traffic. That was one of the reasons that we ruled them out. If I am convinced in the future that there is a need under a new scheme to bring them in, I will do so.

The question of the German market was raised. I will certainly have inquiries made with Bord Fáilte. One advantage of having a committee like this is that it enables me to hear from people who are in touch with their constituents as to what is going on in the real world. I set up the tourist council to give me the opportunity to listen to people who are involved in the industry and making their living from it put forward their views, and so that I can meet them often. Whether Ministers like being queried in such fora I do not know but I find it of advantage to have those discussions and it allows me to take up issues in the Department and with Bord Fáilte. One of the great disadvantages of being a Minister — and I am not a Minister that long — is that one could get cocooned and might only listen to the officials, good as they may be — Ministers always listen to their officials — but it is also important to listen to the ordinary person.

Deputy Quill raised an interesting point about golf courses——

Mr. Deenihan

I suggest that she have a word with Deputy O'Malley.

Mr. McCreevy

I was about to make that point because I said to him recently in the Chamber, in reply to a question about golf courses and the new operational programme, that one's view was probably coloured to the extent that one was involved or interested in golf. I said that perhaps Deputy O'Malley and I would be in favour of golf courses and Deputy Theresa Ahern, who was asking the question, might not be so interested in them. I accept that criticism but, as Deputy Deenihan said, Deputy Quill should perhaps speak to the former leader of her party, Deputy O'Malley.

However, I agree with Deputy Quill that a balance has to struck. There is the danger in the new programme that what she is afraid might happen will happen. Some of the many golf courses built in recent years will not survive. I draw an analogy with the private local radio stations — not all of them will survive. It would be a pity to waste public funds in that regard. There is without doubt a great market for selling Ireland as a golf tourism attraction. The sport can attract high-spending tourists and we are competing with such well known golf attractions as Scotland and Sweden. We have to sell Ireland more and more as a great country to come and play golf. I am conscious of the Deputy's point that a balance has to be struck between what Deputy O'Malley and I might like and what Deputy Quill would like.

Mr. Deenihan

It would be worth looking at the difference between Scotland and Ireland in the proportion of golf courses to population. Scotland has become a mecca for golf and is benefiting considerably.

Mr. McCreevy

Deputy Quill raised the question of the danger of spreading this fund too thinly and upping the criteria. I tried to strike a balance in the criteria and be flexible enough so that everyone got a fair share and, as I said in giving the figures for the demand for this low interest scheme, it will be easily met. We may have got the balance wrong in some instances but there is great demand for the scheme.

The Deputy also made the point that tourist facilities should be extended to cater for the off-peak traffic. A target of the national plan to the end of the decade is that up to 67 per cent of tourists — as against 60 per cent now — would come in the off-peak season. All those involved in the tourism industry agree that the season can be extended at both ends. It would create more employment and costs for a variety of products would come down because the load factor could be spread over a greater period.

On the Deputy's point about the 21 per cent VAT rate, as Minister for Tourism and Trade I would be anxious that the lower rate of VAT should continue to apply for as long as possible. The Deputy is right about the satisfied tourist being the best ambassador for the country.

Deputy Crawford raised the question of the 6.75 per cent rate and whether that will continue over the lifetime of the scheme. As announced in the budget, and afterwards, it is intended that the 6.75 per cent rate will apply for the first £30 million of the £100 million, and after that there may be some slight variation up or down depending on the interest rates in the world economy. At present it seems, as far as economists can predict, that for the rest of the year interest rates should stay more or less as they are.

That said, every time I hear experts agreeing about interests rates I get a little worried because my experience over the past 15 years has been that every time they predicted the rate would go one way they went the other. Deputy Dukes might agree with me on that point. However, according to the best estimates it appears that for the rest of this year interest rates will not fluctuate greatly, and if that is the case the 6.75 per cent will not change.

Deputy Crawford also asked how the operational programme would operate in regard to family hotels. In the Chamber I promised to give some consideration to flexibility on the matter, but it is also a question of trying to balance whether it is a better to attract more people to the country through marketing than giving grant aid at all levels. I am not a great believer in grant aid. Perhaps it is the part of the country I come from and maybe people from other areas would think otherwise. It is better to give people low interest loans and let them go out and "strut their stuff", if that is the appropriate phrase, and do better. I accept that sometimes a low level of grant aid to prime the pump may be best. We tried to strike that balance in the new programme.

Deputy Crawford also asked about the taxation of part-time employees in his constituency. He may be referring to the mushroom industry but I do not think he is referring primarily to the tourism industry. Deputy Fitzgerald asked about restaurants and coffee shops. The answer I gave about the craft shops applies in this case. If tourist number increase and more revenue is generated they are the first people who should benefit.

My officials tell me that ICC has not had any applications from racecourses but if the regulations should be changed greyhound stadia could also be included. We have no applications from either. Deputy Broughan asked about Dublin Tourism. Many public representatives raised the issues the Deputy put forward. People from Kildare would similarly complain and every area could make its own case. There has been some criticism by public representatives in Dublin that Dublin does not get its fair share of being marketed as a tourist destination. The increasing trend in tourism is for short city breaks and Dublin benefits from that. If we could have peace on this island the part that would do best is the east coast, and Dublin more than anywhere else.

Strange as it may seem, although the UK is our major market only 4 per cent of the British people have been to Ireland. If we could increase that by I per cent we could get an extra one million people to Ireland. If we had peace, without Bord Fáilte or the Minister spending another shilling on promotion, the numbers that would come from the UK would be colossal, and Dublin and the east coast would benefit more than anywhere else.

I have announced a seasonality campaign and Dublin will benefit from that. Dublin has many natural advantages. Perhaps it is not so obvious in the city but there is a large number of tourists in Dublin during the summer and at other times. I have noted what Deputy Broughan said about the St. Patrick's Day parade. I had a proposal from individuals, not representing any group, on a different idea regarding St. Patrick's Day. They may have approached the local authority in the meantime but I have not had a chance to follow that up. I will see if it can be implemented next year because we could turn the St. Patrick's Day parade in Dublin into a bigger event to attract more tourists. I will take up some of the other points raised with Dublin Tourism and Bord Fáilte and have my Department examine them.

Mr. Dukes

I can give some consolation to the Minister in stating that there does not appear to be any confusion about the figures for this scheme. The figures are simply not big enough. Lest that may sound somewhat curmudgeonly, I say this because the scheme was well conceived and it has every appearance of a scheme that will work well but that will be the Minister's and the ICC's problem with it.

It would help the committee if the Government Departments and the Ministers, with their programme managers, spin doctors and so on, could agree on a title for the scheme. The last occasion the committee discussed this scheme it was called the Enterprise Fund. This was when the Minister for Enterprise and Employment, who is a grand man for a snappy title, attended the committee.

I was somewhat taken aback when I discovered that the committee was dealing with "a loan subsidy for small business expansion scheme — tourism" and I wondered if this was the BES, a tourism scheme or an ICC scheme. My confusion on this was not enlightened but confounded by the fact that wherever it originated, the Estimate which was first circulated to the committee with the documents for this meeting was not the Supplementary Estimate the committee is now considering but a previous one.

It would assist clarity at all levels if the Government could decide on a title for the scheme and if the committee could be given the correct documents dealing with it. The Minister will agree with me on this issue. I am aware that he has not the time to attend to these matters as he is so busy travelling elsewhere. In this respect, the committee is always delighted to see him when he attends.

It is silly that the committee should discuss this matter, and that the other part of it was discussed by the committee last week with the Minister, "Vladimir Ilyich Lenin Quinn", without knowing the nature of the operational programme applicable to either part of this scheme. The Minister mentioned the new operational programme for tourism several times this afternoon. I understand that it is to be published shortly. There has been some controversy about it in recent days. It is another controversy not at all enlightened by the Government or the Taoiseach, but it is silly that the committee should discuss a Supplementary Estimate for a scheme such as this, and consider all these various kinds of schemes which the Minister wishes to include, without knowing what the operational programme for tourism will include.

Will this programme, for example, include anything on golf courses and race course facilities? Will it include the type of project that the Minister has mentioned to this committee, for example, an equestrian centre services or marina services? The recent history of marina services projects has not been the happiest and this would require some attention. The committee does not know what will be in the operational programme for tourism so it does not know how this scheme will fit in with what should happen over the next five years under the terms of the programme.

Regarding the race courses, I note the Minister's advice that there is no application from any race course. The debate will commence tomorrow on the Irish Horseracing Industry Bill, 1994. Given the terms of the Bill and its provisions for the authorisation of race courses by the new authority, there will not be many investment programmes from race courses over the next few years, with one exception to which I will refer, because the provisions for the authorisation of race courses contained in the Bill are subject to the most appallingly arbitrary decisions by the proposed new authority. This will put a damper on expansion plans by almost any race course.

The one exception to this, as the Minister is aware, is the race course at Punchestown which is anxious to make an application for an expansion programme under the operational programme for tourism. Perhaps the Minister could advise the committee, without divulging any confidences, whether the proposal being considered by Punchestown Racecourse is likely to qualify under the operational programme for tourism? The Minister knows as well as I, that if it does, it will be a desirable state of affairs because the Minister deserves the congratulation of the committee, together with all others involved, on securing a major equestrian games event for this country in four years time.

I am delighted that this event has been secured, not only because a big part of it will take place at Punchestown, although that would weigh somewhat in the balance, but because, in order to prepare for the event, Punchestown Racecourse has set out a major development programme. In view of this, the race course is anxious to know whether it will come within the terms of the operational programme for tourism. It would not qualify in any way under the scheme before the committee because the amount of investment would be too big. However, it is nonsense to consider these matters when the committee does not know what the operational programme will contain.

When the committee discussed the Supplementary Estimate last week, I made an important point to the Minister for Enterprise and Employment. There have been some indications that the ICC may not be implementing this scheme quite in the manner envisaged by the two Departments. Last week, I brought the attention of the Minister for Enterprise and Employment to a case, which I am aware is not the only one, where an appliation was made under this scheme by a firm that appeared to qualify in every respect but the ICC indicated that it would treat the firm's submission as a normal commercial application. In other words, the benefit of the reduction in interest rates under this scheme would not be made available to this applicant. The Minister's response was that there would be difficulties in the sense that there are more applications that there is money. I realise this and there has to be some kind of rationing. However, the Minister indicated to the committee that he was not entirely happy that the scheme was being administered in the way his Department had intended. I ask the Minister for Tourism and Trade, Deputy McCreevy, to be mindful of this. Perhaps, in the course of one of his conversations with the Minister Deputy Quinn he might raise this point with him and ensure that there is a concerted approach from the two Departments to the ICC.

I was delighted to hear Deputy Deenihan mention the Jordan team. We all mention the sports dearest to our hearts, and there are several which are dear to mine. Incidentally, I was not practising to get onto the Jordan team on a recent occasion. That happened in October 1993.

Chairman

I believe you would do better than third, Deputy.

Mr. Dukes

It happened in October 1993, Chairman, when the Minister and I had a run around the track at Mondello Park, although the Minister did not stay for the race, as I did.

Chairman

I must remind you Deputy Dukes that this is a questions and answers session. I would not like to see you usurp your party spokesman and it is in the interests of harmony within your party that I make this point.

Mr. Dukes

Although it does not always work, I am a born usurper, but that is another days work. Will the Minister pay particular attention to the way the scheme is being operated by the ICC, bearing in mind the objectives that the two Departments have set out for it? Will the Minister advise the committee when we will see the operational programme for tourism, and specifically, if the type of development envisaged by Punchestown Racecourse will be included as it would be a major element in preparing for the games which the Minister has secured for this country in 1998?

Miss Coughlan

The Minister referred to Bord Fáilte registered accommodation and the other approved tourism products. Is the Minister aware of a problem whereby many establishments, especially hostels are not registered, but are approved, yet the ICC continue to use the word "registered"? This is causing some confusion as hostels, hostel accommodation and self-catering accommodation are normally not registered but are approved and are on the same level as registered accommodation. This problem which can be easily resolved is causing difficulties.

I am glad the Minister has ensured that existing hotels and guesthouses are eligible under this scheme. This is most welcome. Is he completely satisfied with standards and their equalisation? A grade B hotel in Kerry or Donegal may have different standards from hotels further inland. We must deal with this. I know the Minister is developing new proposals on accommodation standards. The standards and services provided are not equal. There has not been enough investment in upgrading, particularly in existing establishments. En suite accommodation is not the norm. A number of years ago it was beginning to become part of the normal package but still has not reached the norm in grade B and some family run hotels.

The scheme has worked well. I hope it will lead to additionality and that there will be a new tranche of funds. When the money runs out, many people who would have been eligible for low interest loans will be disappointed. Such loans are justified and are better than grant aid. If one is given a loan, one will certainly go ahead with a project whereas there is no guarantee that those who receive grants have everything in place. The grants ethos is completely wrong. The attitude is to obtain the grant first and then make sure that the money for the project is organised. Low interest loans will lead to a better quality product.

Mr. Sheehan

I congratulate the Minister on his enthusiasm for boosting one of our natural industries. We have only three of them: agriculture, fisheries and tourism. Tourism is the only one which is not limited by quotas. I hope it will be developed to its fullest extent in the not too distant future as it can be of great benefit to the economy.

What conditions does the Minister envisage being applied to self catering accommodation? I hope he is not putting too many impediments in the way of those providing such accommodation. Could the Minister elaborate on motor home operations?

The Minister stated that the tourism ventures, for which approval has been granted, employ 531 people. Without loans, 111 of these jobs would be at risk. These ventures are expected to generate 169 new jobs in the next three years. This is a very small number. The Minister should insist that more emphasis is placed on job creation in tourism.

Yachting centres and marina services will also be eligible for aid under this package. These services are essential, provided that marinas are sited in the correct places. I fail to see how a competent yachtsman, who was a popular Member of the Dáil, ran into difficulties along the rocky western shoreline and was lucky to escape with his life. Marinas should be planned in areas where they would be accessible and of immense value in encouraging tourism development. I have in mind my own area of west Cork, which is crying out for such a development. When the Minister receives an application, I hope he will be generous in funding it.

The Minister has made no provision for what is making the headlines in many of the national daily newspapers, that is the development of nudist beaches.

Mr. Deenihan

That would not be expensive.

Mr. Sheehan

This new idea of attracting tourists seems to be getting great——

Miss Quill

Exposure.

Mr. Sheehan

——exposure in the papers in the past week.

Mr. Ferris

In what part of west Cork should it be?

Mr. E. O'Keeffe

That would become famous.

Mr. Sheehan

Have the promoters of this tourism initiative taken into consideration that we are too far north of the equator for this type of attraction for visitors?

Miss Quill

Maybe we should have a pilot scheme.

Mr. Sheehan

Is Deputy Quill prepared to take part in a pilot scheme?

Miss Quill

I am always ready.

Mr. Dukes

This is barefaced opportunism.

Mr. Sheehan

We should look again at the question of golf courses. Deputy Quill said we have a great many golf courses along the eastern and western seaboards but with no people to play on them, especially in the west. I predict that if the present policies are continued, vast tracts of land in the west, from Malin Head to Mizen Head, will be used for wildlife parks. Safari trips will be the order of the day in the next decade because there will only be foxes, rabbits and badgers living there.

Miss Quill

And the nudist bathers.

Mr. Sheehan

We would have to shift further south to attract that type of visitor. I approve of the Minister's views on promoting tourism and compliment him on what he has done to date. I hope his efforts will reap success in the coming tourist season and that there will be an increase in the number of visitors. I agree that we are only scraping the surface in exploiting the tourism potential of the Far Eastern countries. Many people have not yet heard of Ireland but let us hope before this year is over and the World Cup matches are concluded that we will have projected our tourism industry. I hope when our matches are being played in America that the Minister's Department will do its best to have as much exposure as possible for the industry. It would be a good idea to have advertisements in some of the stadiums where Irish teams are playing depicting the beauty and culture of Ireland to the millions of people who will be viewing those games. I urge the Minister to explore the possibility of getting as much information as possible about Irish tourism on television screens throughout the world.

Mr. McCreevy

Deputy Deenihan's questions relate to the operational programme, the backdating of applications referred to in my speech and the Jordan Grand Prix team. With regard to the backdating of applications, the old programme finished on 31 December 1993 and it will be probably June before the full details of the new operational programme for tourism are known. The National Plan will be finally agreed by Brussels and the operational programme will then come on stream after that.

We could not wait for the National Plan to be approved before starting to work on the operational programme and having discussions with officials from Brussels. In recent months we have been having discussions with officials in Brussels but the full details of the operational programme will not be known until a few weeks after the National Plan is agreed. I decided that whatever projects qualify under the new operational programme, expenditure will be incurred from 1 January 1994.

Deputy Dukes asked if we are going to give details of the whole operational programme. I referred to the problem of discussing this Supplementary Estimate and last week's Estimate for the Department of Enterprise and Employment in the absence of the new operational programme for either Department. I can see the difficulties in that regard but, as I said in reply to questions in the Dáil, it would not be appropriate to give details of the operational programme until we have agreed them with Brussels, which will not be for a short time yet. We will get the National Plan out of the way first.

Regarding the general question raised by Deputy Dukes and other Deputies on the operational programme, it is my intention that the programme will be as flexible as possible. We will not box ourselves into very strict, inflexible criteria which may look all right in 1993-94 but will not perhaps be appropriate in 1997-98. Shortly after I became Minister for Tourism and Trade, when discussing the operational programme I told my officials to design the programme in such a way that we have as much flexibility as possible and to include as many ideas as possible with the overall objective of increasing the number of jobs in tourism.

The Deputy asked more specific questions and he can take it that most of the items which were included in some form or another in the last programme will be covered in this programme as well. He referred to the question of Punchestown racecourse and the equestrian facilities there, something I know very well. He cannot expect me to give a reply to that specific question. However, I spent a great deal of my life in that part of County Kildare and he can take it that it will be very favourably considered and the operational programme will hopefully be in a position to benefit such an area.

Deputy Deenihan asked about the cost of the Jordan Grand Prix sponsorship which I announced some time ago. For this year, 1994, it will be £400,000. Deputies asked what other sporting items will be covered under the programme announced recently. We have put aside £250,000 this year for the World Equestrian Games. We have made an agreement with a prominent Irish jockey in the UK, Adrian Maguire, who will receive sponsorship of £21,000. Details will be announced shortly of other sporting and artistic promotions to which I hope to give some funds. Deputy Deenihan was a very well known national sportsman and is very interested in sport, as I am, and I believe that often the success of an international sportsperson can do more to attract tourists and raise the profile of Ireland than much of the ordinary promotional work. What we are trying this year is an experiment. I love sport but I also believe that there is also an economic spin off which hits a new target market.

Deputy Dukes also raised the question of the name of this scheme. It is the small business expansion loans scheme and it has recently been referred to in the Department as "S-BELS". There has been confusion as it has had different names in the past couple of months, but I think this is the one which is going to last.

Regarding the ICC, he raised a question about certain inflexibility and said the ICC would be more appropriate to our ordinary loans scheme. I have come across at least two cases of problems in connection with tourism and we tried to iron them out. The running of this scheme is a matter for the ICC and, as Deputy Dukes would appreciate, it would not be appropriate for the Minister or the Department to get involved in the day to day running of the scheme. I am conscious of the problem which he raised but I know of only two cases in tourism and I hope the ICC will be able to work it out.

Deputy Coughlan raised the question of having hostels approved and registered. My officials will take it up with the ICC.

Miss Coughlan

It is a matter of language.

Mr. McCreevy

It is a matter of language more than anything else and we should be able to resolve it quite easily. She raised a very interesting question about standards. It is not part of this particular Supplementary Estimate. However, it is the remit of Bord Fáilte to improve standards as it is one of the statutory functions given to it under the tourist traffic Acts. It has embarked in the past couple of months upon a new grading system. It has given some initial teething problems because Deputies and people in the industry are inclined to make representations to the Minister about problems which they are having in that regard. Hopefully, they are just teething problems which will even out over a period of time.

Deputy Coughlan's second point is whether the grading standards are the same in different counties. I am not sufficiently expert to say that is the case but I would have to say as a layperson, aside from being the Minister, that there is something in what she said. It appears to me that they are not the same. I hope that will work out in time and that the new grading system which Bord Fáilte has introduced in the last year will resolve that. I also hope, as I have said in reply to other questions in the Dáil, that equalisation of standards will not mean over regulation. We have a range of accommodation that can cater for all sectors of the tourism market. Tourists who come to Ireland do not always want to stay in the most expensive hotel in counties Dublin, Kildare, Kerry or Donegal, but want to experience a wide variety of accommodation and meet different types of people. The low interest loan scheme will be taken up and it will be a boon to tourism and business in general.

Deputy Sheehan raised some interesting points, apart altogether from suggesting that the committee should fund a pilot project for a nudist beach. On yachting and marina services, we have not yet worked out the specifics of the criteria on them, but we are trying to introduce a measure of flexibility so that people can qualify. Deputy Sheehan also asked about self-catering accommodation and how it will be defined. This will include the provision of schemes in areas where there is a proven need and demand for such facilities. In the case of existing schemes, significant capital improvements and the provision of allweather facilities will be eligible for loans under this scheme. He also asked about dormobiles. Indeed, there is a company here who specialise in that activity.

Deputy Sheehan echoed the views of Deputy Quill on golf courses. I have already dealt with that matter. Bord Fáilte will use the opportunity of the forthcoming World Cup to take on board some of the ideas the Deputy mentioned. As I said in the Dáil, the good reputation the Irish soccer fans gained from Italia '90 was mainly due to their spontaneity. One could not plan for this. Bord Fáilte will give T-shirts and so on to any supporter going to the World Cup, but it was the spontaneity of the Irish fans which gladdened the hearts of the Italians. This may be the main reasons why the number of Italian tourists coming here has grown out of all proportion since Italia '90. I hope it will be a similar case after their World Cup. I thank the Deputies for their contributions and their worth while points.

Report of Select Committee.

Chairman

I thank all of the Deputies, the Minister and his staff for their contributions to the debate. I also thank the Clerk of the Committee, Ms Aileen McHugh.

I propose the following draft report:

The Select Committee has considered Vote 35 — the Second Tourism and Trade (Supplementary Estimate). The Supplementary Estimate is hereby reported to the Dáil.

Is that agreed?

Report agreed to.

Ordered to report to the Dáil accordingly.

The Select Committee adjourned at 4.5 p.m.