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.