We are dealing with the Estimates for the Department of Tourism and Trade. I welcome the Minister for Tourism and Trade, Deputy Enda Kenny, and the Minister of State, Deputy O'Sullivan, who is a former Chairman of this committee.
Vote 35 — Tourism and Trade (Revised Estimate).
I am happy to attend the committee with the Minister of State and the officials of my Department. I have just returned from Washington where I participated in the conference in the White House on trade and investment in Ireland. This conference provided us with a wonderful opportunity to raise the profile of Ireland as a good place to invest in, to trade with and to travel to. The message that violence is over was driven home time and again at the conference. In particular, the Secretary of State, Warren Christopher, put it very well when he told the conference that bombs and bullets have given way to ballots and business.
It is, therefore, with a sense of confidence and a happy frame of mind that I come before the committee today to share some of the hopes and ambitions I have for the future in respect of this Department. I have no doubt that with careful planning and courageous leadership we can exploit the favourable climate which now prevails and reap benefits and rewards for the years ahead.
The economic importance of the tourism sector is well recognised at this stage. Earlier this month I had the pleasure of launching a major consultancy study of the economic impact of tourism in Ireland by Tansey, Webster and Associates under the auspices of the Irish Tourist Industry Confederation. Among the findings of this report were the following. In 1994, for the first time, the number of overseas visitors coming to Ireland at 3.68 million exceeded the size of the domestic population. The total Irish revenue comprising earnings from foreign and domestic tourism doubled in cash terms between 1985 and 1993. Total international tourism and travel earnings rose to almost £1.5 billion in 1994.
Tourism's contribution to GNP has risen from 4.8 per cent in 1986 to 6.4 per cent in 1993. This means tourism now accounts for over half of all export earnings from services. Tourism supports employment for approximately 90,000 people at present and is rapidly closing the gap on primary agriculture as a source of jobs in Ireland.
This report and its findings give clear proof that tourism is the growth sector in the Irish economy with a major potential for further development and expansion. In respect of performance, 1994 was a good year for Irish tourism. Recently released Central Statistics Office figures show the number of overseas tourists was estimated to have increased by over 10 per cent. Revenue spent by overseas visitors also increased by 10 per cent. Much of the 1994 growth was attributable to especially improved performances in the American and British markets.
In respect of the prospects for 1995, from the visits I have undertaken to the marketplaces in support of promotions by the trade this year I am optimistic that 1995 will also be an excellent year. Figures released by the CSO last week show that the number of overseas visitors to Ireland in the period January to March represented an increase of almost 17 per cent on the same period last year. In order to achieve the ambitious medium term growth targets set out in the European operational programme for tourism for 1994 to 1999 we have set specific targets for each of our principal markets for 1995.
The new structures and initiatives which we are putting in place within Bord Fáilte in our international marketing effort in this year's Finance Bill and through EU development grants will provide an added boost for achieving our goals in 1995. The ongoing peace in Northern Ireland is, of course, also of tremendous benefit.
I am proceeding with the implementation of the Arthur D. Little review of Bord Fáilte. I can report to the committee that the change process is well advanced and is progressing satisfactorily. The committee will recall that the review concluded that Bord Fáilte should concentrate in future on marketing Ireland abroad as a tourist destination, helping the less mature elements of the Irish industry to develop and providing information to industry decision makers. The proposals envisage Bord Fáilte strengthening its marketing capability and, with a view to filling skill gaps, introducing new blood with industry experience. As part of that process Bord Fáilte will transfer or cease some of its existing functions.
A high level steering committee under the chairmanship of the secretary of my Department and including the chairman and director general of Bord Fáilte is overseeing the change process and has already met on nine occasions. We are at this stage beginning to see the clear evidence of the much needed internal organisational and cultural changes within the board. A new mission statement and organisational structure has been put in place. A new dynamic intenational marketing director has been recruited who has an impressive track record in private industry.
An attractive voluntary severance package has been put to staff which will enable the organisation to be revitalised and reinvigorated through staff movement and through some limited recruitment of new blood. A special provision of £2.2 million has been included in this year's Estimate, under subhead B1, to cover the cost of this package.
As regards existing Bord Fáilte functions to be divested, the tendering procedure for the registration and grading of accommodation is well advanced. Tenders are now being assessed by an evaluation committee. I have secured Government approval for the legislative changes which are needed to subcontract these functions and I hope to introduce the necessary Bill within the next few days. My Department has also completed a consultative process with the key groups of accommodation providers affected by the proposed changes to ensure they understand exactly what is being done and to take their concerns on board.
On the product approval side, a number of the key associations — for example, in the B&B sector — have taken up the challenge of accepting a greater level of responsibility for enforcing their own standards. I hope to be in the position to announce the details of these new arrangements in the next few weeks. The tenders for Bord Fáilte's EU product development grant administration role have been received and are being assessed.
The Tidy Towns competition has been transferred to the Department of the Environment and the Discover Ireland brochure series has been put out to tender. The Gulliver computerised information and reservation system is being fundamentally reassessed to see if it can be satisfactorily reconfigured with the possible help of an external commercial arrangement. As I said at a recent ITIC forum, these are indeed a dramatic series of changes which, taken together, will mean a new and exciting chapter in the history of Bord Fáilte. I know that the management, staff and unions are taking up the challenge with enthusiasm and they have my full support. I also wish to acknowledge the support and patience of the industry in regard to the various changes being put in place.
Shannon Free Airport Development Company Limited will continue its tourism role in the development and improvement of tourism facilities in the midwest, in marketing and promoting the region and in providing visitor servicing, that is, tourist information offices. In 1995 Shannon Development will get £1 million in grant aid to carry out this activity. It will also get capital from the Exchequer to draw down European Regional Development Fund funds, to develop the tourism facilities in the region, such as Bunratty Castle and Folk Park.
CERT is the State Tourism Training Agency. Its mandate is to promote high standards in tourism through professional training in the industry workforce and business advisory support. The year 1994 saw a 14 per cent increase in employer demand for CERT trainees. Both the unemployed who finish CERT courses as well as school leavers are very successful in the jobs market. With a growing tourism sector there will be an even greater demand for trained tourism staff in 1995. CERT will train approximately 12,000 tourism personnel in 1995, including programmes for first time job seekers, unemployed adults, the existing workforce and managers.
Under the B3 Estimates provision this year, I have allocated £4 million to the OTMI — the Overseas Tourism Marketing Initiative. When complementary finance from the tourism industry, North and South, is included, the total budget for this campaign in 1995 amounts to £6.3 million.
The OTMI represents the continuation of the consumer marketing partnership between Government and the private sector which was pioneered in last year's US Marketing Initiative. The USMI was, by any standards, extremely successful. CSO estimates show that an overall increase of 17 per cent in North American visitors was achieved by Ireland last year, compared with an average 8 per cent growth by our European competitors. Ireland also reversed its decline in market share for the first time in eight years. The USMI generated over 130,000 queries and a subsequent survey has established that one in five of inquirers travelled to Ireland.
This year's OTMI campaign in aimed at increasing tourism numbers and revenue from our four most important markets, the USA, the UK, Germany and France. An exciting new dimension has been the involvement of the Northern Ireland tourism industry. For the first time ever all the tourism interests on the island have come together in a large scale programme to market Ireland as a single entity and as a single destination — one of an increasing number of marketing co-operation initiatives being pursued on a joint North/South basis.
The strategy again consists primarily of generic "Visit Ireland" advertising on television and in newspapers and magazines. Inquirers in each market receive a custom produced brochure which features the product of the participating companies and organisations together with the Bord Fáilte and Northern Ireland Tourist Board literature. As with the USMI, the disbursement of funds for this initiative is subject to very rigorous controls. In addition, ambitious targets have been set for each market territory. A management board has been established, chaired by a senior official in my Department, and comprising representative from the tourism industry, Bord Fáilte and the Northern Ireland Tourist Board.
To complement Bord Fáilte's normal promotional and marketing activities under the B1 Estimate provision, I have also made £1 million available this year to Bord Fáilte under the B3 provision to give an extra boost to their promotional, advertising and publicity activities in a number of our main European and long-haul markets. The latter include Australia and Japan — at £100,000 each — which will enable Bord Fáilte to build on the success achieved in recent years in developing the potential of these two important, if distant tourism markets. Co-operation with the Northern Ireland Tourist Board will be a significant feature of the extra promotional activities through this allocation.
Work on the development of a brand for Irish tourism was initiated in 1994 through the Tourism Council and continues to provide me with valuable advice and assistance with regard to policy formation. This is a very exciting and significant project, which I am especially enthusiastic about, and is part of a comprehensive re-look at Ireland, the brand and its communication. I believe that it has the potential to bring new dynamism to our international marketing effort in conjunction with the industry. Consultants were appointed to develop the visioning process of the brand development and have recently reported their findings. The intention is that Bord Fáilte's new International Marketing Director will lead an industry partnership group to take the process forward with the target of gradually re-launching the Ireland brand progressively in 1996. It will be essential for all elements of the industry to get behind this project as early as possible if it is to be brought forward to the development stage at an early date.
The Operational Programme for Tourism, 1994-99, under which an investment of £650 million is envisaged, with associated grants of £370 million, has been up and running now for the past six months. I am pleased to report to the committee that interest in the programme is very intense and over 1,000 applications for grant assistance have been received. The management boards, which decide on individual grant applications under the programme, have already established an excellent record for independent and rigorous appraisal of projects.
Under Sub-Programme 1 — Natural/Cultural Tourism — the Department of Arts, Culture and the Gaeltacht and my colleague, the Minister for that Department, Deputy Michael D. Higgins, have received a significant number of applications for cultural tourism projects and project evaluation for these is underway. Seventy-two heritage projects, sufficient to absorb all of the funds allocated to the Office of Public Works, have been identified and will be approved shortly. The major project is the redevelopment of the former Collins Barracks on Dublin's North Quays for use by the National Museum with a view to providing expended visitor facilities.
In Sub-Programme 2 — Product Development — 50 of the 250 applications received have been decided to date. The approvals cover a wide range of tourism product, including visitor information, visitor centres, tourism angling, cruising, walking and adventure sports. One of the major flagships projects in this sub-programme is the establishment of a National Conference Centre. While various national and international investors have expressed interest, no satisfactory proposal has emerged solely based on the development of the centre. Most of the proposals received have included the development of a major casino, the establishment of which would require prior legislative change. My intention is to bring the funding options for the centre before the Government very shortly in order to obtain clear support to proceed with this development at an early date.
The Marketing Sub-Programme — Sub-Programme 3 of the operational programme — is also well under way with decisions made on some 100 of the 400 applications received to date. The most significant initiative undertaken has been the OTMI campaign, to which I referred earlier.
Almost 8,000 people completed training on over 600 ESF sponsored training courses under the Training Sub-Programme — Sub-Programme 4 — in 1994, and of the 1,380 unemployed persons receiving certification, almost 1,000, or 72 per cent, gained full-time employment, with the balance obtaining part-time work or progressing to further education or training or to sheltered employment. Of the 1,074 persons completing initial training, most again found employment or proceeded to further education or training.
In the area of continuing training, over 5,000 enhanced their qualifications at management, supervisory and technical levels. Some 421 CERT and industry trainers benefited under the 1984 training programme. In summary, therefore, I am well satisfied with overall progress under the tourism operational programme. I am conscious of the need to ensure that EU funds are spent wisely with a view to putting in place the industry infrastructure which will carry us well into the next century.
Another important incentive for the development of tourism is the small business expansion loan scheme, SBELS, which was introduced in the 1994 budget and made a £100 million loan fund available to small business in the manufacturing, tourism and internationally traded sectors. A sum of £25 million of this fund was allocated for projects in the tourism sector. The scheme, which was administered by the ICC Bank, provided subsidised low fixed interest loans.
The scheme was very successful in the tourism sector and all available funds were allocated by September 1994. In all, 124 tourism projects have been approved. The scheme represented a unique opportunity, in advance of the launch of the operational programme for tourism, for the tourism industry to expand, develop and significantly improve the country's stock of internationally marketable tourist accommodation and other facilities.
Based on the success of last year's scheme, I have strongly supported the inclusion of the tourism sector on a similar basis to 1994 in a further small business expansion loan scheme in 1995. The introduction of such a general scheme is proposed by my colleague, the Minister for Enterprise and Employment, who, in the context of the operational programme for small business, has initiated a tendering process with the financial institutions for a larger fund with much wider eligibility.
A provision of £500,000 is being provided in the B8 Estimates for the subsidy which will be repayable in respect of tourism loans under the fund in 1995. I am confident that the new scheme in its application to the tourism sector will build on the success of the previous scheme and will complement the tourism development measures contained in the operational programme for tourism.
This year's budget and Finance Bill will help to strengthen the Irish tourism industry through a variety of both general and specific measures. I was delighted that the pilot renewal scheme for traditional resort areas was included and I am confident that this measure will have a revitalising effect on the specific towns and areas to be covered. The scheme is based on the very successful urban renewal scheme and it incorporates many of the features of that scheme, notably, accelerated capital allowances, double rent allowances and rented residential accommodation relief.
The details set out in the Finance Bill are known to Members and the scheme will now be promoted by Department and the tourism support agencies. Ultimately, the success of the scheme will depend on the commitment and energy of the investors and entrepreneurs who come forward with development projects. The tourism industry will also benefit greatly from a number of general taxation provisions under the Finance Bill, 1995, such as PRSI reliefs and reduction in corporation profits tax.
My objective in the trade area is simply to maximise the return from the State's investment in export promotion and marketing, thereby making the best possible contribution to the Government's overall objective of creating jobs. Recent employment trends suggest that our efforts are bearing fruit and that indigenous export growth is playing a crucial part in this progress.
Last year was, once again, an excellent one for our exports. Total exports are estimated to have increased by nearly 14 per cent to £22.4 billion, while the performance of the indigenous sector was, once again, very satisfying. Overall, there was a continuation of the first class performance of recent years.
In the years preceding 1994, Irish exporters faced tough and challenging conditions, with recession in many of our major markets. Despite these conditions, exporters still managed a pattern of steady growth, not only maintaining their market position, but also making gains when many countries were importing far less in overall terms. Last year's performance was a result of the commitment and investment by companies during these difficult years.
As markets began to improve, Irish exporters were well positioned to take advantage of the greater opportunities. This was particularly noteworthy in the case of the indigenous sector which was generally well ahead of the upswing in the markets. For example, Britain increased its total imports by less than 5 per cent last year, while the indications are that our indigenous exports there rose substantially more than that. A similar pattern of exceeding overall import growth was also evident in Germany. In these trends we see the real measure of the recent export performance, that is, the ability of Irish companies to win increased market share, which they have been consistently doing in recent years.
It is due to this ability and the more buoyant outlook for trade in our main markets that I expect a further dynamic export performance from Irish companies in 1995 and beyond. With this potential in mind, I have reviewed An Bord Tráchtála's target for indigenous export growth and revised it upwards. This new target is for a doubling of our 1993 level of indigenous exports, excluding food, by 1999. I am aware that it is an ambitious target, but I am also confident that it is achievable, especially in the light of what has been achieved to date in the 1990s in both bad times and good.
There are other key factors which make me confident about the future. GATT and the Single Market are principal among these and I will deal with some of their aspects in more detail. GATT, which came into effect on 1 January 1995, is the culmination of a long series of negotiations which began with the Uruguay Round in 1986 and concluded at the end of 1993. The main changes to world trade rules as a result of the agreement are as follows: a 40 per cent reduction in tariffs, mainly over five years; the extension of trade rules to cover new areas such as services and intellectual property as well as fuller coverage of agriculture and textiles; stronger rules on non tariff barriers and in areas such as dumping and subsidies; an improved dispute settlement procedure; and the formation of the World Trade Organisation to implement the agreement.
As a small country dependent on trade, Ireland has consistently supported trade liberalisation on a multilateral basis, that is, involving as many countries as possible with each undertaking commitments consistent with its level of development. This was the general approach taken in the Uruguay Round, in the expectation that a successful round would boost investment confidence and economic growth in all markets, including the European Single Market, and at the same time provide a stable basis for trade and a reduction in trade disputes.
In the negotiations we were also anxious to minimise any adverse effects in the sensitive agriculture and textile sectors. The agreement on agriculture is considered to be consistent with the reform of the CAP, which had already been agreed with the EU. The extension of the normal trade rules to textiles and clothing, including the abolition of quotas on imports to the EU from low cost countries, will take place over ten years and should allow our industry time to restructure and to take advantage of market opening by other countries.
All major countries have ratified the agreement and have become original members of the World Trade Organisation; the remainder of the 125 GATT members are expected to do so soon. Negotiations are under way which may lead to further accessions to the WTO, including China, Taiwan and Russia.
We look forward to the smooth functioning of the WTO. If it is to work well, it is important that its stronger dispute settlement mechanisms are adhered to and respected by all members and that a unilateral sanctions approach is not attempted by stronger countries as an alternative to the agreed multilateral procedures. I am confident that the new system will be used properly and in good faith by all countries. As long as that happens, it will provide the confidence and stability necessary to under-pin growth in the world and European economies in the years ahead.
My intention is to ensure that there is a clear understanding on the part of Irish business and industry of the implications of GATT, that the concerns of industry are fully met and that any impediments to the smooth operation of GATT are eliminated. To this end, my Department has published a booklet entitled Understanding GATT and its effects in Ireland, which is available free of charge to the public. A seminar was also organised in conjunction with IBEC to inform industry on the outcome of the Uruguay Round.
We are now part of an enlarged Single Market, with the welcome accession this year of Austria, Finland and Sweden. While this offers greater opportunities with a market of some 370 million people, further effort is required to make the Single Market work more effectively and successfully for the business sector, particularly our exporters.
The Commission's strategic programme for the effective management of the Single Market is being successfully implemented, but barriers to trade are still being identified. A recent IBEC survey pointed to problems in this area and my Department is following up all valid complaints passed on by IBEC.
The Single Market is one of the great successes of the European Union and is greatly supported by European business. We need to retain their confidence and to build on the successes achieved. I am committed to doing everything possible to make the Single Market work better so that the expectations of both the business community and citizens can be met.
The Single Market provides Irish exporters with enormous new business opportunities in continental Europe and I, for one, am committed to an accelerated "Opportunity Europe" campaign. To this end, I have asked ABT to intensify the support available to the 800-plus Irish companies already selling in Europe and, at the same time, encourage those exporters who are successful in the British market to expand their market reach into other markets in Europe. ABT will provide the fullest support and backing to those companies, in particular to those who are prepared to invest in increasing market presence, which is a vital ingredient if the new opportunities in Europe are to be fully exploited. In the provision of this support, ABT will have recourse to a significant grant-in-aid allocation in 1995 of £34.5 million. This allocation reflects the continued commitment of the Government towards the development of the small indigenous sector, upon which ABT focuses its efforts.
Of course, in talking about funding for marketing, we must not forget that there is also the EU dimension. The marketing element of the operational programme for industrial development envisages a total spend of almost £450 million in the period 1994 to 1999 from national, EU Structural Fund and private sources. The marketing sub-programme aims to provide a continuum of support to Irish exporters, from the provision of information on market opportunities and, through support in exploiting these opportunities, to direct financial assistance.
I said at the outset that my aim in relation to trade is to ensure a maximum return on the State's investment in trade promotion, thereby making the best possible contribution to the Government's job creation programme. To achieve this, I will explore all possibilities and will leave no stone unturned in my efforts. This process had already started. ABT is intensifying its efforts on behalf of companies exporting into Europe. The potential for the development of exports from the services sector, which has been much neglected, is being examined by my Department in conjunction with ABT. I am hopeful that an appropriate strategy will be in place shortly. I will, of course, continue to ensure that Irish industry gains the maximum benefits from the opportunities arising out of the conclusion of the GATT agreement and the completion of the Single Market.
Looking closer to home, we should not forget the important market which exists on our doorstep. I am, of course, referring to the Northern Ireland market, which undoubtedly provides untapped potential for exporters from the South. The climate of peace has already created a surge of interest in the market, with new business opportunities emerging in the consumer, industrial and public sectors. Every possible support will be provided to firms who wish to avail of these and other opportunities. However, we must also remember that Northern firms will be looking south in this new era of a single Irish market and this will result in a more competitive environment all round. Overall, I am confident that the effect of this new environment will be positive, with an increased share of the all-Ireland market being held by Irish firms and a more effective overseas presence for many sectors, from North and South, through the enhancement of existing cooperative ventures.
It is my intention to continue the good work of recent times in giving the promotion and development of our tourism and trade sectors a new focus. I look forward to providing the drive and the leadership which I spoke of earlier to ensure that there is a real and significant improvement in foreign earnings. It is in this manner that we can secure the economic growth which will form the foundation on which employment for our young people can be created and a better standard of living for all can be obtained. I will be happy to respond to any views, comments or questions which the Chairman or Members of the committee may have. I thank the committee for the opportunity to present this case here today.
I thank the Minister for a comprehensive introduction to the Estimates for his Department and compliment him for staying within the time schedule laid down in the programme.
I do not want to be argumentative or disputatious but, for the chairman's information, the Minister started at 3 o'clock and has ended at 3.35 p.m.
I would like to correct the Deputy. The Minister started at 3.05 p.m. and he finished at 3.35 p.m.
He took half an hour.
That is what is in the programme.
The suggested timetable states: "3.10 p.m.-3.30 p.m. Opening Statement by the Minister". that is 20 minutes.
And five minutes beforehand. The Deputy is being argumentative.
I am sure the chairman will be flexible in relation to the time. I hope he is a reasonable man. I will begin my opening statement with trade. For the last five months Irish exporters have been under sustained pressure. This was brought about by the sterling's sharp fall on the international currency markets, which caused serious problems for Irish manufacturers, operators and exporters. At one stage Irish traders had to cope with a situation where the punt moved up to over £1.03 sterling. This pushed some companies beyond the limit of their viability. No company can withstand sharp movements or strengthening in the currency that is not reflective of economic fundamentals. The capacity of companies to cover the surge indefinitely is in doubt, especially since the crisis has gone on for so long. There is also a serious problem because, even at parity, price competitiveness on the UK market makes it difficult to sell. Above parity, it is virtually impossible for many companies.
The sudden surge in the currency requires the Government to acknowledge that large and important setors of Irish industry were, and are still, in severe difficulties. However, the Minister and the Government have completely ignored this crisis for industry in Estimates and in all Financial Statements, including the budget. For example, in the Estimate under discussion here today, the allocation for trade is down by 1 per cent. This is in spite of the currency crisis. At the very least, the Minister should have index-linked the trade allocation. Is an Bord Tráchtála somewhat immune from inflation? If the board is inflation-proof, then it is the only body in the State that is. While the Minister may argue that the total allocation is increased because the food brief if removed from ABT it is to be remembered that this was a small area of ABT's operations. It is also to be noted that none of An Bord Tráchtála's head office-based food marketing advisers appear to be joining the new An Bord Bia. They are still staying put and those who are transferring are from information technology and other support areas.
I will now deal with the market development fund. The response of this Government to the currency crisis was in contrast to the action taken at the end of 1992, during the last turbulence on the market in that regard. The market development fund was introduced at that time and it was an effective measure. While I am not asking the Minister to introduce a fund at this stage, I am keen to hear what he has to say in relation to plans he may have in place, so that swift measures can be introduced to assist exposed sectors if there is a worsening of the crisis or if it continues for an unbearable length of time. The Minister might consider outlining his plans to the committee in that regard. I would also like to suggest a number of initiatives to him that he might adopt if he is, as I believe him to be, keen on the trade aspect of his brief.
An Bord Tráchtála makes a charge for assisting exporters to find new markets. These charges for marketplace services are hefty for small business. The rates currently charged are £250 a day for Britain, £350 a day for Europe and north America and £500 for other markets. Surely, in a time of currency difficulties, it would make sense to waive these fees, especially for Europe, north America and other markets. Unless Irish businesses are encouraged to adjust their focus away from over-dependence on the UK market, each time there is a currency crisis involving sterling we will have industrial casualties. The Minister has just announced "Opportunity Europe" to intensify the export drive to Europe. What is the logic there for charging a fee for companies who take up this initiative? Waiving the fee for a period would at least be an incentive to look at Europe. What is the sense in charging a higher rate for Europe than that for Britain if one is promoting continental Europe?
These marketplace service fees only generate a relatively small sum of money for ABT. According to the 1993 annual report of the board, income from these fees was about £990,000. Small exporters fees are too high. It effectively represents a double payment by businesses as the taxpayer is already funding ABT to the tune of £35 million annually with its grant in aid. Exporters also argue that finding new markets is a normal part of trade promotion activities for which ABT has responsibility. There is a case for a smaller user fee of some sort to discourage abuse of ABT services, but the current charges are prohibitively high and should be reviewed.
I also wish to raise a point on the provision for export credit insurance. I gather this operates on a reimbursement basis with £103,000 provided in the Estimate representing the amount paid in claims in 1994. This low level is impressive. However, can the Minister maintain it at this level in 1995? If not, where will the Minister find additional resources to fund the political risk cover, or will there be another rise in spending by this Government? What are the Minister's views on using export credit insurance as an active instrument to give competitive advantage? Already, greater cover appears to be available in the United Kingdom, Germany and France. In Britain, substantial reinsurance cover is available to private sector companies as well as flexible cover for difficult risk and a reduction in premiums.
My final point on the trade area relates to policy. Has the Minister a mission statement for trade development and what are its details? The Minister may already have indicated that he has and I respectfully suggest that he might give the committee greater and more expanded details of what he has in mind.
The last Government commissioned a major report on Bord Fáilte, which is in the Minister for Tourism and Trader's remit. That review, carried out by the consultants Arthur D. Little, was radical. Will the Minister commission a similar study of ABT, as it appears to have been many years since a major review and an evaluation of its services was conducted.
The potential for our tourism sector, as the Minister properly pointed out, is immense. However, to realise that potential there must be consistent activity and skilled management. Tourism is part of the dynamic services sector that can produce economic growth to cut into unemployment numbers. As the Minister said, with the peace process in place, there are few sectors that can match tourism with its potential for growth as its labour intensive revenue growth translates directly into job generation.
There are also funds available to put tourism plans into action. Under the Operational Programme for Tourism, £650 million is available for tourist facilities, training and marketing. However, little activity has taken place on this programme. This is in contrast to the activity of the Minister's predecessor, Deputy McCreevy, who quickly got to grips with the problems. He established a tourism council, which is now an important forum for the industry, introduced additional marketing measures in the US, Australian, Japanese, British and continental European markets and also commissioned the Arthur D. Little report on Bord Fáilte. We have no major statement of intent on tourism. I do not say this out of any disrespect to the present Minister because he has not been in his portfolio that long, but I believe that his recent announcement is based on the tourism figures relating to the work put in by the last Minister.
Ambitious targets were set in the operational programme for the tourism sector. Does the Minister expect these targets to be achieved by 1999 and has he completed any analysis of the trends? I can understand the Minister's desire to assist his county. Many of us who have been Ministers have been guilty of that weakness and I also admit that guilt in relation to Dún Laoghaire. However, I understand that Bord Fáilte is currently planning only one familiarisation trip around the country for journalists this year and it is to County Mayo. I do not object to this — Mayo is a wonderful county — but there appears to be no plans for trips to Cork, Kerry, Galway or other tourist hotspots.
We also take our share of responsibility for what has not been done in improving tourist roads, especially the secondary and tertiary roads which tourists use far more often than the major roads. The Minister has been quick to forget the issues that were so important when he was in Opposition. Less than 12 months ago the Minister was berating the Government, and properly so, about the state of rural roads. The Minister said that citizens who pay high insurance and taxes are entitled to decent roadways, and so say all of us. The Minister's party was concerned about the roads to tourist destinations. The Minister of State at the Department of Agriculture, Food and Forestry, Deputy Deenihan, singled this out as a major issue during the Estimates debate last year. Now that the Minister is at Cabinet and Deputy Deenihan is a Minister of State, one would have expected them to have pushed for the upgrading of rural roads which are so vital to our national tourism industry.
The Government, as the events have shown, has a short memory and cares little for what its Ministers and Taoiseach said in Opposition about rural roads or any other matter. For example, it has not increased the funding for tourist roads. It has not even maintained the funding at the 1994 level. It cut funding for rural roads by £4 million. On top of that cut, it has used £8 million of funds from the INTERREG rural development programme for the roads allocation. Government spending on non-national roads, which are a vital part of out tourism industry, is down by £15 million in 1995.
Has the Minister any plans to improve the system of road signs, which are most bewildering. In many counties, signs appears for a location but then there is no further sign. This must be most perplexing for tourists, as it even confuses the local people.
The Minister's predecessor, Deputy McCreevy, began the review of Bord Fáilte. The agency has served the country and State well, but as many within it would acknowledge, it requires refocusing for the next decade. Deputy McCreevy began the work with great pace. For example, while new positions and functional changes have been announced in Bord Fáilte, there has yet to be appointments made to most of these positions, with the exception of the positions the Minister has announced now and previously. When can we expect more appointments?
I also ask the Minister to explain why there has been a change in the production of Ireland of the Welcomes. This was supposed to go out of Bord Fáilte, but it now appears it will be retained. I also would like to know what progress has been made on the grading of hotels and accommodation and what agencies or organisations would carry this out? The Minister said some time ago that he is fundamentally reassessing Gulliver information, which is our reservation system. What plans has the Minister got on this matter?
The Minister properly addresses the peace process in a fundamental, serious and important way. The peace process is now Ireland's greatest opportunity to sell, as the Minister said, a single tourist destination. The signing last week in Washington of a joint tourism plan with the US and Northern Ireland is a most welcome development and the Minister is to be congratulated in that regard. However, the Minister has yet to give details of his initiatives to capitalise on the peace dividend. What is the Minister doing, for example, in encouraging US airlines to establish transatlantic services into Ireland from parts of America that are not directly served at the moment? What action is planned by the Minister and the Minister for Transport, Energy and Communications to assist Aer Lingus to increase capacity on the US route? This year there has been a 13 per cent rise in tourists from the US, yet the capacity on the transatlantic route is likely to increase only 9 per cent. This shortfall in capacity is providing an opportunity to London and other destinations.
I am concerned about the 37 per cent cut in the allocation for tourism promotion by Shannon Free Airport Development Company. Shannon Airport and the region requires aggressive promotion following the change in the status of Shannon Airport. A recent report conducted for my colleague, Deputy Killeen, has said that Shannon faces a serious threat from low cost routes between Dublin and London. Therefore, Shannon Airport now requires additional marketing. While it has other sources of funding, the £584,000 cut is enormous and should be reconsidered by the Minister.
The Minister did announce a number of welcome initiatives arising from the budget, particularly on PRSI and other areas. In Business and Finance on 23 March 1995, the Minister said that he expected the next budget to go “much further” in addressing the tax rates for the services and tourism industries. Will the Minister give details of his plans to the committee and what plans he has to reward risk takers in the tourist industry?
Several groups have expressed an interest in building a casino in Ireland. Could the Minister give details of the casino bids and when will they be dealt with by the Government? Could the Minister also give details of plans for a national conference hall? The Minister will recall that I raised this matter on a few recent occasions by way of parliamentary question. The Minister was satisfied in his mind that the location of this conference hall was to be Dublin. I welcome that, as a person from Dublin. However, I wonder, as a national politician, if the Minister is bound by this? My colleague, Deputy Killeen, would have a different point of view on this issue. As I have stated, Dublin would suit me perfectly. I ask the Minister for certainty in relation to this issue.
With regard to the matter of the casino, will there be a casino or not and will it remain in the public domain or be funded by private interests? Presumably the conference hall will be financed by EU and other funds and will remain within the State's control. I do not necessarily disagree with this. I would like the Minister to give details of plans for a national conference centre and its possible location. The Minister comes from County Mayo and is, quite properly, doing his best for his own county. On that type of "Kenny principle" of constituency preference I urge him to consider Dún Laoghaire for a conference centre. There is ample space available for such a building. Will the Minister be linking the casino and the convention centre? In the operational programme for tourism it was planned to establish a separate conference centre. Will the European funding available for the centre be available if it is linked to plans for a casino?
The coastal areas scheme, the Government's scheme of tax incentives for traditional seaside resorts, is a welcome development, as are the locations included in it. Will the Minister be urging the Minister for Finance to give consideration to the inclusion of other resorts when the Finance Bill is debated in the Seanad? I genuinely congratulate the Minister on this scheme. It was an imaginative scheme outside the usual run of the mill budgetary statements. The more of this kind of thinking there is, in tourism and other areas, the better it will be for the country.
In conclusion, I would like to pay tribute to Mr. Seán Dorgan, Secretary of the Department of Tourism and Trade, who has given outstanding public service in both the Department of Tourism and Trade and the Department of Industry and Commerce. I know the Chairman and other Members will join me in wishing him well in his new position. This is the first time that I have contributed to this committee and I thank the Chairman for his indulgence. I again congratulate the Minister for Tourism and Trade, Deputy Kenny, on attaining the dizzy heights of the Cabinet table. I empathise with him in that regard. I hung around long enough to reach those heights myself and when I attained them I was pleased to do so.
You did not become dizzy?
No.
I thank the Deputy for his kind remarks. We join with him in wishing the former Secretary to the Department every success.
We are faced with a situation where the opening statement was to be made by the Progressive Democrats and the Technical Group, but neither group is represented.
On that point. Deputy Molloy, the spokesman on Tourism and Trade for the Progressive Democrats, has travelled to the North to attend the funeral of his brother-in-law's mother. That is the reason he is not here and he asked me to apologise on his behalf. I will be going to the same funeral myself tomorrow morning.
I was actually about to make that point. As neither group is represented, I call on the Minister to comment on the points raised by Deputy Andrews. We will deal directly with the subheads thereafter.
Chairman, you were somewhat lenient with Deputy Andrews, with whom I have had a long association. The Deputy raised quite a number of points in his rapid-fire address to the committee. I would like to address briefly some of those points.
Deputy Andrews stated that we had no major statement of intent in respect of tourism. This is untrue. Our statement of intent is very clear. It is laid down in the Government objectives of creating a further 35,000 jobs in the tourism industry by the close of the operational programme at the end of 1999 and bringing about an annual expenditure of £2.25 billion. In achieving these targets, heavy emphasis has been placed on marketing Ireland on an international basis and on providing a quality service and quality range of products for visitors to our shores. This is, in essence, the statement of intent in respect of the tourism area.
The Deputy also referred to a kind of Bord Fáilte roadshow travelling around the country to give information and dispense facts and figures about the tourist resort scheme. There is no such roadshow. The information available through the Department and the Department of Finance is available to all Members of the Oireachtas and interested organisations. Quite a number of these have already organised seminars in the areas chosen for the benefit of business people etc. That information is available to everybody. Several of the commercial banks have arranged seminars and public sessions. One bank has already provided a substantial figure of £25 million to assist in the development of this particular scheme. There is no roadshow travelling around the country, but the information necessary to hold public meetings on the matter is available. I organised public information forums myself in Westport and Achill which were very well attended.
The matter of county council roads is a matter of concern to everyone. The Government recently decided to have the Minister for the Environment produce a factual report to discover how serious the problem is. There will be reports from every county and representative in the country. This problem has not arisen in the past six months or ten years. It has been in existence for a very long time. I hope that the Minister for the Environment's report will be put before the Government shortly and that decisions will be taken to deal with it. There are questions to be asked about value in respect of expenditure on county roads, the way the problem should be tackled and the methods of dealing with drainage and clearance of side roads etc. These roads are very important for the livelihood of rural folk, those involved in farming and for tourist access to forest, beach and cliff areas. This is not a matter of concern to a particular party only, it is a matter of concern to all representatives in the Dáil, the Seanad and at local level. I look forward to the report from the Department of the Environment so that the Government can see the exact extent of the problem and proceed to deal with it.
The issue of road signs, raised by the Deputy, is always a source of concern in any country one visits. Many of these road signs change direction themselves because of high winds, particularly in the west of Ireland. A person can actually drive ten miles and find themselves travelling back in the same direction again. There were occasions when people turned these signs around deliberately. There is an amount included in the operational programme for tourist signposting. These signposts are clear and unequivocal and are provided for specific tourist locations. While it is difficult to locate one's way in rural Ireland, particularly at night, it is even more difficult to do so in the vast conurbation of Deputy Andrews' constituency, where no signposts appear to exist at all. If a person does not have a map with road numbers it is very easy to become lost, as many people do.
I can inform Deputy Andrews that we did appoint the international marketing director for Bord Failte. This person, who has an outstanding qualification in marketing from the private sector, will be taking up duty shortly. The Department and Bord Fáilte will be providing the assistance of 20 people with marketing experience in order that his focus might be concentrated on international marketing. These appointments will be made as soon as possible after he commences duty. There has been a substantial take-up of the voluntary severance package which was approved by the Government and put to officials in Bord Fáilte. Changes are being made. The Director General has already made a number of significant internal changes in recent weeks.
Deputy Andrews indicated that there was a change in the production of the Ireland of the Welcomes magazine. This is not so. It was originally intended that there would be a tendering process for it. However, as it was considered to be a worthwhile magazine, it was decided that in the context of the appointment of an international marketing director it might be of benefit to retain it under the existing structure and perhaps expand it through producing it in various languages and so forth. It is a quality magazine and there has not been any change. Deputy Andrews also referred to US airlines. If we are broadcasting Ireland through consumer advertising in the US and getting increased numbers as a result, obviously we have a responsibility to get people here. I had a meeting recently with the Minister for Transport, Energy and Communications. We agreed to encourage US airlines, both at the Washington conference and in the future, to look at the commercial viability of flying into Ireland and, in the context of them being encouraged to do so, we would speak to them about it. We are making contact with US carriers and we hope for a response. If they believe it is commercially viable to deal with Ireland we will be prepared to speak to them.
The Deputy also referred to a severe cut in the Shannon development budget. In October 1994 it was agreed with the Minister for Finance that £800,000 would be transferred from this Department's Vote for 1995 to the Department of Transport, Energy and Communications for the use of Shannon Airport marketing. This is supplemented by other funds from, for example, Aer Rianta under the aegis of the Department of Transport, Energy and Communications. That allocation is in subhead B5 for 1995 and is of the order of £1 million.
With regard to the national conference centre, there is a figure in the operational programme for tourism — which is also referred to in the programme for Government — for the provision of a national convention centre to be sited in Dublin. After carrying out an analysis on the feasibility of providing the convention centre for the figure allowed in the operational programme, a number of queries arose with regard to the running, maintenance and professional management of the centre. It was in that context that other organisations came forward with a proposal that if a casino licence were granted they would provide the conference centre and/or other facilities. However, granting a casino licence to an operator would require a Government decision and it is essentially a matter for the Departments of Justice and Finance. Given that there is a special figure in my operational programme and given my responsibility as Minister for Tourism and Trade, I intend to bring before the Government at an early date a specific memorandum dealing with the options in respect of the provision of a conference centre. This is an important matter. Up to £30 million worth of business per year can be lost to the economy as a result of not having a facility where we can cater for conventions or conferences with in excess of 2,000 participants. Edinburgh and Belfast, for example, are in the process of completing major convention centres and already international conferences have been booked for those centres. Since the peace process and the change in attitude towards Ireland a great deal of business can be secured.
Deputy Andrews also mentioned Dún Laoghaire. I am not sure about the Dún Laoghaire site but I am sure that if he has a site available he will mention it to the Minister, Deputy Barrett, who will take it into consideration. He also mentioned the pilot areas and the inclusion of other areas. This pilot programme was introduced in the budget — and I thank the Deputy for his comments on its imaginative quality — and is due to run for three years. It is operated by the Department of Tourism and Trade and the Department of Finance. I am grateful to the Minister for Finance and his officials for their consideration of the scheme. I hope, like Deputy Andrews, that the industry and interests in the selected areas in each maritime county will avail of this unprecedented opportunity to benefit their areas.
The Deputy also referred, in his initial remarks, to trade and a decrease in the grant-in-aid for ABT. While it does reflect the lost responsibility for food promotion, £500,000 was transferred from ABT's originally approved grant-in-aid figure of £35 million to An Bord Bia. This transfer was to take account of all salary, travel and overhead costs of the 10 staff who would be transferring to An Bord Bia —£300,000 in respect of salary costs and £200,000 in respect of non-pay costs. On this basis the 1995 figure represents an effective increase in the 1994 allocation. Of course, An Bord Bia has substantial other new resources provided in the Vote of the Minister for Agriculture, Food and Forestry.
Deputy Andrews mentioned exchange rates and referred to a currency crisis. I regret references to this being a crisis. In late 1992 and early 1993 a crisis did exist. However, the conditions that existed then, such as historically high interest rates, a rapid and substantial increase in the value of the Irish punt against sterling and depressed conditions in many of our major markets, do not apply now. Deputy Andrews, during the last Dáil question time, referred to the Irish punt as being at its highest rate against sterling for several centuries. This is simply not so. In 1992-1993 the rate was in excess of 110 pence for several weeks. While I do not want to minimise the present difficulties for exporters, in particular for small and medium enterprises, I do not favour saying there is a crisis where none exists. I have met the chairman of the exporters' association and the IBEC trade council. I am always available to them, as are the officials in my Department, to listen and to pass on their concerns to the Minister for Finance who has primary responsibility for exchange rate policy. It is Government policy that, in order to have a solid, clear and co-ordinated line on matters of currency fluctuation, statements in that regard will be issued through the Department of Finance.
I will move to subheads A.1 to A.8.
I wish to make some general observations on this area. With your permission, Chairman, I wish to make it clear that neither I nor my party would wish to talk of a crisis in the currency market as far as this country is concerned. We all have a duty to remain calm in that area. I was referring to one specific matter in my opening statement. It is something that might become a danger to industry. However, to suggest that I was talking of a crisis would be quite wrong. It would be quite unpatriotic to do so. I would strongly support the Government — or any Government — on the currency front, as would my party.
With regard to administration under subheads A.1 to A.8, inclusive, it appears from the figures presented by the Minister that administration expenditure has increased by 10 per cent, which is three times the rate of inflation. Despite this there has been no increase in service. Only one job has been created for the princely sum of £300,000. Travel in this area, which is the key to keeping in contact with market places, has been cut by £60,000. External advice which is necessary to keep up with the market has been decreased by £103,000. I am not certain whether the Minister in his comprehensive response quite addressed this cut of £103,000 and I ask him to do so.
The provisional out-turn for advertising and publicity in 1994 was £23,000 and the estimate for 1995 was £30,000. Regardless of what Government is in power, would the Minister agree that this figure is pathetic in the context of an industry worth somewhere in the region of £16 billion? Would the Minister look at this? I know it is not as simple as that but the provision for advertising and publicity under subhead A.8 seems, to say the least, a poor response to this major industry. I predict that tourism will outstrip agriculture in due course if it is not already doing so.
Incidental expenses amount to £120,000. I am sure there is a simple explanation and there is nothing sinister in my question but I would like a little clarification on that figure. No doubt my colleagues will have something to ask arising from the answer.
The figure of £30,000 for advertising and publicity in subhead A.8 refers only to advertising and publicity from within the Department. It covers notices in the paper regarding regulations and matters internal to the Department and has nothing to do with overall advertising and publicity for tourism nationally or internationally. Those moneys are contained in subhead B.1 and B.3. I am sure the Deputy will understand exactly what I meant when he examines them.
As regards the increase of 10 per cent in the administration subhead, Members should note from the footnote to the Vote that this figure includes a carryover of £238,000 in respect of savings under the administration headings in 1994. Deputy Andrews's comments about the Secretary, Mr. Dorgan, are absolutely correct. Other factors contributing to the increase are salary increases under negotiated wage agreements and some additional staff. The decrease of £60,000 in travel costs largely arises from a change in the treatment of travel to European Union meetings the cost of which is recoupable from the European Union. Heretofore the cost of such travel was included in subhead A.2 but that is no longer the way such travel costs are dealt with. The apparent reduction in the allocation for subhead A.2 will not result in decreased promotional activity in the tourism and trade areas.
The reduced allocation in subhead A.7 for consultancy services reflects the anticipated need for such services in 1995. Members will be aware that the 1994 out-turn figure includes the substantial consultancy exercise relating to the reorganisation of Bord Fáilte Éireann. Finally Deputy Andrews referred to subhead A.3 and incidental expenses. This covers staff training and development, an element of entertainment which all staff need, newspapers, publications and so on. I have to stress that emphasis is being put on staff training and development.
Excellent.
I will move to subheads B.1 to B.8.
I agree with the Minister about the economic importance of tourism as a revenue earner and job creator. For many rural dwellers at present, especially small farmers, it represents an opportunity to augment income. It is coming at a time when farming patterns are changing greatly. Many people who were getting reasonable incomes are no longer able to do so. Tourism is growing even in areas such as my own which was not traditionally oriented towards tourism but has much to offer by way of its fishing, mountain walking, equestrian centres, canals and so on.
The peace initiative gives people an incentive. Even before the peace initiative, there was great development in community groups throughout the entire Cavan-Monaghan constituency. There are now between 40 and 50 community groups which come together and are networking with communities across the Border. This is very useful and happens on a regional basis. The amount of money and assistance these community groups are getting does not compare with their own input.
Last Friday night I attended a meeting where a community group on the Border was launching a parish audit. A rural development officer from Dublin University came down to speak about the audit which examined every aspect of social, industrial and retail outlets in the area. There was a general discussion of all the funding available including the IFI, the Delors package, the urban and village development plan and the INTERREG. The IFI is very useful but must be backed pound for pound which rural areas cannot do.
We went to the Minister for Finance with good cases and pointed out that if we wanted to avail of money, we would have to get somebody to help. In the North, this is done very effectively and they can avail of the money. We also have INTERREG II. Mention was made of roads, and basic infrastructure is necessary if tourism is to be developed. Tourists will not come to get their cars wrecked on a bad county road. I am not one to talk about roads or potholes because one can do more damage than good by pinpointing them. The roads are not as bad as they were. I am getting into trouble for saying there have been reasonably good improvements compared with five, six or seven years ago.
Under INTERREG, £8 million was allocated to the six Border counties. There was £10 million but £2 million regrettably went to my friend here for Dún Laoghaire pier. It was completely substituted. We did not get an extra penny. In actual fact we got less funding than we did last year and we were also restricted in so far as it was for designated roads along the Border. I regretted very much that this should happen. I had all the documentation on the various schemes at the meeting. Those people had worked for years and were going out the following day with tractors and spades to make walks across the Slieve Beagh mountain range and improve culvert and bridges.
They received only two small grants from the county enterprise board, one for a boat house and the other to help them in the work they were carrying out. That was all the money available. I could not put my hand on my heart and say there was more money there. I said that the Delors package was supposed to be coming into place, we were promised money from INTERREG funds and the renewal fund. The Minister should know that these areas must be developed if they are ever going to make a success of tourism.
The Shannon Free Airport is mentioned in this report and it reminded me that 20 years ago when I saw how weak we were in industrial development generally I asked that SFADCo set up a section along the Border region. The development CO in SFADCo at that time was a neighbour of mine. To get the proper development in that Border region, which the area deserves, a proper structure should be set up. The INTERREG I allocation, from 1991-93, stated specifically that a special administrative unit could be set up to deal with INTERREG funding. The Department of Finance never wanted to do that but the Departments of Tourism, the Environment and Agriculture should do so to ensure that the best possible use is made of this money. A structure should be set up which would at least monitor spending, if not administer this money completely. I hope I am not taking time from somebody else.
You will be if you go on much longer.
I will finish as quickly as possible. About five years ago in Monaghan we talked about establishing a trade and conference centre in Monaghan town. We felt that a conference centre would be beneficial to the town, but we suddenly realised that the area did not have the accommodation necessary if a conference centre was to be successful. Three weeks ago the Federation of Health Boards, which is a national body, held their annual conference in the Hillgrove hotel in a new conference centre, which was one of the most successful conferences they have held. They facilitated about 500 to 600 people at this conference.
People saw the opportunity over the last five years, so now we have a good supply of guesthouse accommodation, adequate to cater for those people. This is an indication of what people are doing to meet the demand and that is why I say they should get all the assistance possible in that respect. I ask the Minister that people in those areas would get extra help to ensure that they can make the best use of the available funding.
Members should keep in mind that we are dealing with the second section of the Estimates, B.1 to B.8. I ask them to restrict their comment to that section of the Estimates.
I will try to follow your guidance there, Chairman, but there might be a slight grey area in respect of one point. I join with my colleagues in wishing my constituency colleague, the Minister, Deputy Kenny, every success with his new portfolio. I know that Deputy Andrews did a very good job for his constituency and I am pleased to note that the Minister is doing a similarly good job for tourism in Ireland and is not forgetting his native heath. We have high expectations of him, I am sure he will continue the good work to ensure that Mayo tourism is brought up to the level of other counties. We have missed out on massive expenditure in this area for many years, so I look forward to him holding the brief and doing a good job for tourism in general and also for his own constituency. I was amused when the Minister referred to the severe winds on the west coast, because it would be very hard to stop him at this stage in his new car.
Perhaps the Minister would comment on one or two points which I wish to make. While great efforts are made to get tourists into the country we do not give the same thought to what happens to them when they arrive, the value they get for money or the standards which are applied in service industries.
I note the comments in his speech about developments in the grading systems but we must recognise that hostel business particularly has grown tremendously in the last couple of years. Many backpacking tourists now come to this country and they are very welcome. They use the holiday hostel infrastructure around Ireland. In the main it is of a very high standard and this type of accommodation has grown tremendously. Those running hostels are accommodating many people per night and one would expect that they will come back in future years with their families. Are there regulations to govern the growth of the hostel business?
Nobody can set up a hotel in this country by using the word "hotel" as it is a prescribed term. Nobody can open a hostel and call it a holiday hostel as that is also a prescribed term. However, anybody can open a building and call it a hostel, providing the term "holiday hostel" is not used. This ensures that the building is not subject to the same standards as an establishment using the term "holiday hostel". I appreciate that all such public premises can be visited by the officer and the health officer. It would be desirable, unlike the unlicensed bed and breakfast business, which is vast in this country, that in the hostel business, the definition of hostel being an establishment accommodating from 20 to upwards of 100 persons a night, should be highly regulated. If it is simple to avoid regulation by not using the word "holiday" in the description of their property, then there is a lacuna there which must be rectified.
The Minister and his officials will be aware that a number of years ago in Australia a fire in an unregulated hostel caused many deaths. I am aware of hostels which are not of a very high standard. This aspect of the trade must be examined. I was led to believe at one stage that it was being looked at closely, I am not quite sure if regulations have been promulgated in that regard.
I am somewhat concerned about grading and the lack of a grading system for restaurants and eating places. There is no system whatsoever in operation. One of the main reasons tax clearance certification for the licensed vintners' trade has been introduced was the growth in the number of fly-by-night operators who leased pubs for 11 months or two years, paid no VAT, did not pay their suppliers and disappeared. I welcome the new system of getting tax clearance in advance. The same is also happening in the restaurant trade, admittedly only on a small scale. However when it occurs it occurs in prime tourism centres around Ireland.
Some people rent a premises for two or three months and open a restaurant. Tourists use these places and are not satisfied. These places are competing with established restaurants in towns. This problem must be looked at. I received legitimate complaints from people who pay all their taxes 12 months of the year. It appears health officers have grave difficulty tracking defaulters down. I appreciate it is only a minority but it is something we have to be aware of and discuss openly to see what we can do about it.
I congratulate the Minister on the tourist resort initiative. However, I have certain reservations about it. This initiative has been located in secondary tourist towns. It is fashioned on the urban renewal initiative and its variations since that scheme was launched. Since it is directed at secondary tourist towns, the Minister will not get hotel investors and developers involved in that type of substantial capital requirement, tourist-related trade as has been happening, and we have come to expect, in Dublin, Cork and Galway. The Minister is quite correct and it is incumbent on all public representatives to encourage people in towns like the 7 to 8 mentioned to use the reliefs in the scheme. I believe mainly self-catering accommodation or extensions to guesthouses will benefit. The main capital investment will be in self-catering accommodation.
Whoever fashioned the scheme and suggested its detailed terms imposed a condition which will ensure that the uptake, particularly in relation to self-catering accommodation, will be much slower than is desirable. I question the legal requirement that a house must be rented on short term letting from April to October when, as we approach the month of June, the people in the west in the self-catering business are expressing grave concern as a result of the peace dividend we keep talking about. I appreciate the tourist operators often change their opinions week by week; tourist operators say the tourist trade from the north is down. Inquiries from people whom, we have been used to seeing coming to self-catering accommodation and such like are down.
Developers or investors are expected to hold their apartments, townhouses or cottages vacant from April to October. While I accept it is desirable to extend the season, we have recognise that the self-catering market operates in the main in July and August with maybe a week or two in June and September. I do not see why that burden should have been placed on it when you consider that the scheme is similar to sections 23, 27 and 29 investment. There was no such restriction on the category of occupant of those places. While I accept it is a tourism measure, if at all possible now the Minister, in the first tranche of thought——
We are dealing with an Estimate, Deputy. It is not a Second Stage debate. The main spokesperson has already made the contribution on behalf of your party.
I will conclude on this point, Chairman; I appreciate your indulgence. I want to be constructive and congratulatory to the Minister while pointing out certain issues.
There will be opportunities in successive Finance Bills but the period should be shortened on the first tranche of towns which the Minister announced. If necessary, if the tourist season lengthens, as the Minister's market development hopes it will, it can then be extended. It will dampen investment confidence having houses available and free of tourists for that period.
Finally, the Minister referred to the cultural tourism projects and 72 heritage projects. Can the Minister confirm that one of those is Turlough House in Castlebar, which we consider would be a flagship tourist project if established? I have followed this for some time. I am concerned as to——
I know that. I have seen the Deputy's comments.
Yes. I am trying to give the Minister as much support as possible in coming to the right decision. I am somewhat concerned as to the prized position that Collins Barracks has taken vis-�-vis the national folk-life collection. I would have thought the right place for that to be located would be in rural Ireland where those items which have not seen the light of day for 30 years were first collected.
On road structures, the Minister knows well the two main tourist routes into Mayo. It is not that the Mayo end is suffering but the Galway end never co-ordinated or gave the same emphasis to the movement of tourists northwards. Once they get them to Galway, they like to keep them there.
I join my colleague in wishing the Minister well presenting his first Estimate and I include the Minister of State at the Department of Trade and Tourism, Deputy O'Sullivan. I know Minister O'Sullivan better and I have a high regard for him. Indeed, I congratulate the Chair and the convenor on your elevation following the December revolution.
In relation to subhead B.1, which shows an increase of approximately £3 million, I understand the £2.2 million package arising from the Arthur D. Little report is included in that. Was it wise of the Government to adopt the report in full? It is one thing to commission a report. It is quite another to be seen to implement it in toto without, perhaps, having it considered by people in the trade and at some length. I accept that there were elements that needed immediate action but I find a lot of people in the trade quite concerned and confused arising from the implementation of the report. They are worried about the implications for the level of service which would be available to them over the coming years.
Do you want us to know who they are?
There are five important areas that are not broken down so it is difficult to comment on subhead B1. Maybe there is a breakdown elsewhere that I have not found.
Under subhead B3, if I read the situation correctly, there is quite a substantial diminution of funding there. It seems to be the area which requires extra funding, the marketing area which has the greatest potential for attracting visitors. I look forward to the Minister's comments on it.
Obviously, subhead B5 is an area that concerns me greatly. The Minister explained that part of the cutback here arises from the provision of £800,000 to Shannon Airport Marketing. That was announced in October of last year before the present Government came to power but I had the undertakings from the Minister at the time that it was a provisional figure that would be looked at carefully. The intention of the Government at the time, I was assured, was to ensure that Shannon Airport Marketing had adequate funding. I know that is not directly in the Minister's control but I believe the reduction in funding to Shannon Development, which is proposed here in subhead B5, will be enormously damaging. I have reason to be concerned at the overlap of functions between these different marketing bodies in the Shannon area: Aer Rianta in the airport, Shannon Airport Marketing and SFADCo. I believe the Minister and his colleague in the Department of Transport, Energy and Communications need to look carefuly at the effects of this in the short term. There is grave concern at this reduction.
In relation to subhead B7 and perhaps subhead B8, the Small Business Expansion Loan Scheme is important. It will be more important in the context of 1,000 projects seeking funds, which I think the Minister mentioned in his speech. I am quite sure no matter now generous the EU benefactors are, there will be a lot of disappointed people among those applicants. Ultimately, if they are to be in a position to pursue their plans, they will need to be supported from either the loan subsidy or subhead B8, the EU support measure for small business.
Under subhead B8, the provision of £0.5 million, which is new and welcome, is small. I forget what heading it was under last year, but I believe the Minister referred to it in his speech to it being taken up by September 1994. Is that a different one?
Mr. Kenny
As a subsidy.
If 1,000 good projects come from the industry, many of which will be impossible to support, it will be important that other means are found through taxation, etc., to help them and ensure they get the necessary support. It is not helpful in terms of tourism generally that so much of the capital budget is outside the Minister's control and under that of the Department of the Arts, Culture and the Gaeltacht and, to a lesser extent, the Department of the Marine as regards the tourism angling measure. We have a difficulty as regards over-diversification and in the short term, it would be politically and in business terms advisable and helpful if those major areas were to under the Minister's remit.
With the committee's agreement, we will take subheads C to F. The Minister could then reply to all the points.
I made the point in my opening remarks that £39 million is poor for a sector creating over 100,000 jobs, £3 billion in revenue and nearly £1 billion in taxation. This spending represents £392 per job and an investment of only £13,000 per million pounds generated in this sector.
I refer specifically to subheads B1 to B4, as set out in the Estimate. I do not want to be pedantic, tedious or to repeat myself because I understand the Chairman's view as regards tedium, but Bord Fáilte's spending is undoubtedly disappointing. It has only increased by approximately 13 per cent to £24.7 million. This increase will result in an improvement of service as £2.2 million will be spent on the redundancy scheme which will involve the loss of jobs in Bord Fáilte arising from the proposals set down in the Arthur D. Little report.
Spending on overseas promotion has fallen to £7.5 million, a fall of £300,000, while the tourism promotion and development fund has fallen to £7.4 million, a loss of £400,000. In other words, £0.75 million has been wiped out of foreign promotion, while tourist development measures have been increased by £900,000. This situation is strange because it will allow for more facilities to be created while the State's capability to attract tourists will have been cut.
The grant of £1 million to the Shannon Free Airport Development Company Limited is far too low and has been cut by 40 per cent. In the light of falling tourist numbers in the mid western region and the loss of status for Shannon Airport, as so ably set out by Deputy Killeen, this cutback will mean that at least 25 per cent of staff will lose employment and that promotion will fall to just £1.1 million. This figure represents the marketing expenditure of just two of the local leading hotels in the region. Yet SFADCo represents the interests of a region which is highly dependent on tourism and where, as I understand, 15,000 are employed in tourism.
There have been some glaring omissions and subtractions under the other services for tourism heading. Perhaps the Minister will address and correct them in due course. All parties have a special affinity and dedication to the Shannon Free Airport Development Area. It is an historic operation and it should be supported and we feel very deeply about it. I ask the Minister to reassure the people of Shannon that this Administration will not engage in cutbacks which terrify and frighten people unnecessarily. We would like to reassure the people of that region in that regard. When one sees a reduction of 37 per cent for 1995 over 1994 for the Shannon Free Airport Development Company Limited, administration and general expenses, grant-in-aid and so on, it certainly causes raised eyebrows and concern. I would be grateful if the Minister would reassure the people in that regard.
Will the Estimate be completed by 5.15 p.m.?
Yes.
Will that be the last opportunity to deal with this matter or will there be a further meeting?
The Estimate will be completed today.
When will the EU support measure for small business be in place?
As there are no further questions or comments, I ask the Minister to sum up and reply to points raised.
Is that in relation to subheads B.1 to B.8?
We agreed to take any questions under subheads C to F and the Minister could reply to both rather than having two sessions.
I agree with that, but I would like to make a few comments.
It was for efficiency.
The Council for Education, Recruitment and Training for the hotel catering and tourism industry or CERT, to give it its acronym, is doing an excellent job. It has brought up the standard in the hotel industry tremendously. I salute those who in the past and in the absence of this particular organisation — I know about it because I had a brother who was involved in the hotel industry and in the Shannon school many years ago — maintained a high standard of hotel accommodation and catering in this country. I have great respect for this organisation which is doing a great job for the young men and women coming into the hotel industry, and long may it continue.
As regards trade, it is rather strange that funding for our only export agency is being cut by £281,000 to £34 million. It generates over £16 billion for the country and £3 billion in tax revenue. It is almost in the realm of obscurantism. It represents expenditure of £150 per job created. The cut of 1 per cent in marketing investment is particularly serious considering that it will lead to cuts in future export growth. I already indicated in my opening remarks that a cut of 98 per cent in the export credit insurance scheme to just £103,000 is very serious. Most major non-EU export contracts stipulate the existence of export credit insurance. This cutback will put Irish exporters at a disadvantage compared to their British and EU competitors, who have continued their export credit insurance schemes.
The Minster is asking us to approve figures, particularly in the capital area, without explaining what these figures are for. The Office of Public Works has specified in its Estimates the projects it is sponsoring. This begs the question whether the Minister has any control over the present EU operational programme for tourism, for which his Department is named as a principal administrator.
We have detected that major elements of funding are being placed with State authorities without a clear explanation of what these allocations are for by way of answers given in the Dáil and to the taxpayer who has to match the funding. The Office of Public Works has allocated £14 million for the cultural tourism budget. Bord Fáilte has allocated £16 million to it. What are these allocations for? Where in the State sector are these funds going? What is left for the private sector? The Minister seems to be overemphasising the intrusion of the State sector to the exclusion of the private sector which is unfortunate. The Minister has stated that Bord Fáilte will be the promotional wing of the State's tourism activity. He has cut real spending in foreign promotion by nearly a £1 million in the case of Bord Fáilte and probably a couple of million pounds — a reduction of 23 per cent — in the case of the regional tourism organisations.
We in Fianna Fáil have noticed a major problem with the 1995 capital programme for tourism and trade. The existing capital programme of £76.979 million is out of line with the operational programme for the tourism Estimate for 1995, which amounts to £72.835 million. Within the capital allocations to Bord Fáilte, ICC, SFADCo and the Office of Public Works, it is not clear what role the privsate sector will play. Under the operational programme for tourism the Estimate of £72.835 million for 1995 includes contributions from the private sector of £18.15 million. The Office of Public Works allocation of £27.490 million is above the operational programme's allocation for cultural tourism projects for 1995 of £22.086 million. The A.D. Little report suggests a concentration of State funding into the non-capital marketing area. Why is capital expenditure this year 28 per cent more than last year while at the same time expenditure in the current account in the marketing area has fallen by £700,000?
After the fiasco of the Mullaghmore and Luggala interpretative sites, why are Office of Public Works interpretative centre projects being provided for from an EU budget which was designed to develop our living culture as a tourism product? Would it be correct to say these figures indicate that private sector involvement in the present EU operational programme for tourism has been dispensed with by the Government?
In light of the upcoming mid-term review of EU funding in 1996, is the Minister confident that with the existing dominance of State spending in tourism he will be able to convince the European Commission not to cut our allocation of Structural Funds for tourism? In this regard I genuinely hope the Minister will succeed in obtaining an undertaking from the Commission not to cut our allocation of these funds.
The tourism industry is fundamental to this country. The Minister has a marvellous opportunity. I believe he will undertake this mission properly and efficiently. We on this side will do anything we can to make his path a smooth one. In the meantime there are questions to be asked and answers to be given and we look forward to hearing from the Minister in that regard.
I wish to ask some brief questions on the trade area arising from the Minister's speech and in support of points made by Deputy Andrews. The Minister stated that the extension of normal trade rules for textiles and clothing will take place over ten years and this should allow our industry time to restructure and take advantage of market openings. I am very concerned on this front. The withdrawal of supports, which has been mentioned by Deputy Andrews and in some instances has resulted from EU regulations, is a matter of concern. Other countries have got around this difficulty by having private institutions help out by providing support. What plans has the Minister in this regard?
He also referred to complaints by IBEC that the Single Market still has trade barriers in operation which are not legal. Is the Department in a position to pursue these complaints and does it have European support in this regard?
The Minister spoke about the maximum return on the State's investment making the best possible contribution to the Government's job creation programme. He would have support for this on all sides of the House. This area, unlike many areas of Government spending, brings a return on investment. One of the returns is additional employment. Another is undoubtedly an improvement in the balance of payments and this is very important in terms of overall governmental budgeting. I urge the Minister to be more than forward in urging the Minister for Finance, the Taoiseach and his other colleagues in Government to increase the budget of his Department because it is one which gives a return on investment.
The Minister indicated that Northern firms will also gain trade opportunities from the peace initiative. Deputy Hughes referred to this in tourism terms. Some of our exporters and trade groups are very concerned that they are at a substantial disadvantage in some instances vis-�-vis their Northern neighbours. What plans do the Minister and the Department have to redress this balance?
I congratulate the Minister and the Minister of State. I have no doubt they will excel in this Department. Both of them are affable and likeable. Bord Fáilte will be true to its name after they have put their mark on the industry.
I congratulate the Minister for his wisdom in including one of the coastal towns in south-west Cork in the pilot renewal schemes for tourist resorts. I advocated the inclusion of 26 others. I hope that in future the Minister in his wisdom will cast his eyes further west along my constituency because Skibbereen, Bantry and Castletownbere could also do with what has been given to Clonakilty. However, we are thankful for small mercies and are delighted to be included in the scheme.
I congratulate the Minister for the way he is handling European Regional Development Fund grants. I hope the projects now on his desk will be given urgent consideration, particularly those pertaining to hotels, which are making vast strides in promoting swimming pools in their complexes, and golf courses throughout the country which are expanding. We are told that tourism will be the biggest industry in the country at the turn of the century and we must cater for it. This is why I am delighted the Minister and the Minister of State are taking energetic steps to ensure the industry will be put back on a sound footing. I emphasise to the Minister the necessity to deal with the applications which have been made to his Department so that they can get funding from Europe as quickly and expeditiously as possible.
The deep sea angling projects should be aided because if we are to enlarge our tourist season it will be through activities such as deep sea angling, golfing, etc., which will bring in people in the off season. That is most important in keeping the industry going. Hostels are an up and coming business and should be promoted by the Department.
I congratulate the Minister on keeping his balance sheet to the point as far as last year is concerned. A reduction of 1 per cent in overall expenditure has been brought about by the Minister and his Department. This decrease of £1 million has come through a reduction of £630,000 in travel and subsistence, of £105,000 in office machinery and of £427,000 in tourism promotions. The Minister is on target; I hope that continues and that he expands the schemes he has initiated, such as the pilot renewal scheme. I extend a warm welcome to everyone to come to the sunny south west for the Whit weekend.
I ask the Minister to briefly reply to subheads B1 to B8 and C to M.
A broad range of issues were raised by Deputy Leonard, who has been an outstanding representative for his people over the years. He voiced a common sense and pragmatic approach to problems others might tend to overstate.
Last week I attended the international conference in Washington on investment in Ireland, organised by President Clinton. The conference specifically related to Northern Ireland and the Border counties. When one considers that at any one time 100 Prime Ministers want to meet the US President but for two days he, the vice-President, the Secretary of State, the Secretary of Commerce and Senator Mitchell, the President's economic adviser, devoted their attention and concentration to investment and trade in the area represented by Deputy Leonard, one could not ask for a greater endorsement from the wealthiest and mightiest nation in the world. Links have already been established since that conference closed. I hope that north and south of the Border, especially in the Deputy's area, joint ventures and interest groups will benefit from that conference.
The Deputy also referred to funds from INTERREG, the IFI and ESF funding. INTERREG 2 has a total funding of £72 million, of which £10 million in EU funds has been allocated to tourism development in the South. President Clinton said a further $60 million was being allocated to the IFI for the next two years and this is welcome. To date the IFI programme devoted to tourism development North and South is of the order of £50 million. In respect of the ESF programme there is a proposal for £240 million in EU funding from 1995 to 1997. While the operational programme may be accepted by the Commission by July, it may be some months before it is put in place.
The Deputy referred to local initiative, enterprise and flair. The Shannon-Erne development, the Hillgrove Hotel, the Nuremore Hotel, the Slieve Russell and the inclusion of Bundoran in the special resort scheme are success stories and I hope they continue to be. They give the lead to others with ideas, iniative and motivation.
It is not possible to have 100 per cent funding from EU or State sources; that type of system has never worked. Projects succeed when there is motivation from the ground up and the small business expansion loan scheme assist that. As Deputy Killeen said, the £500,000 included here is only a subsidy to that scheme when it emerges.
Many of the issues raised by Deputy Leonard refer to the Department of Finance although the county enterprise boards could be a nucleus for the strategic business he mentinoed. If these were spurred on by the regional authorities there could be something in what he said.
Deputy Hughes referred to the value of money and quality of what visitors get here. We try to promote this at all times so the thread of quality runs through everything — service, comfort, facilities and opportunities — and visitors get a flavour of the Irish personality.
He also referred to hostels. It is fair to say hostel promoters are anxious to do business and wish to be promoted in the best way possible with the highest standards. While planning conditions and fire officers' reports are associated with the provision of such accommodation the commercial value is in being promoted in the official Bord Fáilte guides. Hostel operators who intend to stay in business and want to give good value for what they offer would be only too anxious to be included in those guides.
The Deputy mentioned the grading system for restaurants. There has been a huge increase in value for consumers and an enormous improvement in the standards of restaurants over recent years. A number of international guides are on offer, such as Egon Ronay and Bridgestone, which outline the quality of restaurants available. Many towns, whether maritime or inland, have facilities of international and world class standard, which is evidenced by people returning to them.
Deputy Hughes requested a shorter pilot period for reviewing the tourist resorts. The process of obtaining planning permission, conditions, etc, can take time. He also mentioned the Turlough House development in Castlebar, which is under discussion between ourselves and the Minister for Arts, Culture and the Gaeltacht. I agree that where there is a large volume of rural artefacts, in respect of the sensitive commemoration of the Famine it would be more important to display them in a rural setting.
Deputy Killeen referred to the Minister's acceptance in toto of the A.D. Little report. I paid tribute to my predecessor Deputy McCreevy who commissioned that report and it was his Government who accepted it in November 1994. We have gone on to implement its recommendations and what will emerge is a leaner, more efficient, focussed and concentrated Bord Fáilte, which will do a first class job.
The Deputy referred to the difficulties he perceived in the Shannon area, it was the former Minister, Deputy Cowen, who was responsible for implementing this aspect of development. I met SFADCo officials and am aware of their concerns. I mentioned the reference to the subsidies.
Subhead B1 shows an increase of 13 per cent; even when the £2.2 million for the voluntary severance retirement scheme is not counted it still represents an increase of 3.3 per cent over 1994. The subhead also includes more than £10 million in market promotion activities and subhead B3 is additional to this.
Deputy Killeen referred to complaints in respect of IBEC. He is aware, of course, the Single Market unit was established in early 1993 to ensure the concerns of Irish business and industry are fully met and any impediments to the smooth operation of the internal market are dealt with. This unit is available as a contact point on Single Market issues and it helps to resolve any difficulties in an informal way, where possible, with other national administrations or, if necessary, through the European Commission. I referred to the £800,000 in respect of the Shannon area development. I have replied to most of the points raised.
I thank you, Chairman, for your courtesy and the efficient way the committee has dealt with the Estimate. I thank Members for their contributions. I wish to pay tribute to the officials who prepared the material in respect of this Estimate. In particular, I wish to pay tribute to the Secretary of the Department, Mr. Dorgan: this will be the last occasion he will deal with an Estimate in respect of this Department. I thank him for his courtesy, efficiency and outstanding ability. I wish him every success in his new position.
I join in the Minister's good wishes. I thank the Minister and the Minister of State and Members who contributed. I concur with the Minister in thanking the staff for their efficiency. Our next meeting is tomorrow at 2.30 p.m. to resume Committee Stage of the Casual Trading Bill, 1994.
The Select Committee adjourned at 5.15 p.m.