Chairman, with your agreement perhaps the Committee could take sections 73, 74, 75 and 77 together as I am opposing them.
SECTION 73.
Question proposed:" That section 73 stand part of the Bill".
The Committee must address the Bill section by section.
These sections deal with the rises on direct duties in the budget. In the last two years the Minister did not increase drink prices in the budget but this year he made up for lost time by increasing the pint by 3p and a glass of spirits by 6p. While the Minster may, quite properly, frequent the watering holes in Dublin, the problem is that the number of pubs per capita in Dublin and the number of pubs per capita in the rest of the country are completely different. While the Minister may have large, valuable and thriving pubs in Dublin, one third of all rural pubs have a turnover of less than £500 per week. A monkey a week. I would bet it on a horse without turning around.
How can people live on this kind of money? A total of three quarters of these pubs are on turnover of less than £2,000 per week. This is a survival business. What is needed for the public house trade in the country is a massive redundancy and rationalisation scheme whereby vintners will get together, buy out and extinguish a number of pubs to ensure a reasonable livelihood for those left in the trade. Given these paltry levels of turnover — and you, Chairman, will be aware of the situation in rural Ireland I speak of — these pubs are very price sensitive.
Regarding section 75(2) and the Third Schedule of the Bill, the cider people in Clonmel are up in arms because they have received a rattle from the increase set out. Showerings (Ireland) Limited of Clonmel provide valuable employment. It is an area that was promised a lot of employment which has not materialised, for example AST and so on.
The drinks industry is indigenous and labour intensive. There are 25,000 people working full-time in the bar trade and it is reckoned approximately 19,000 part time. We have the dearest drink prices in Europe, if not the world. They are known as the old reliables. Like the guy in Singapore who got four or six strokes, where people may have been relieved that it was not more, the Minister has got away with the increases. However, the amount of tax absorbed in a pint is extraordinarily high and my party will be voting against these increases, starting with section 73, regarding beer, section 74, spirits, and section 75, cider and perry. Wine is dealt with under section 76 and petrol under section 77, which is a separate matter.
The drinks industry is, indigenous whether it be whiskey making or brewing, for which we are renowned for brewing. The industry uses home-based materials such as barley, sugar and hops, so there is a knock-on effect across the country and the Minister should not kill the golden goose.
While nobody wants an increase on most consumer items, Deputy Yates is clearly overstating the case on this issue. The difficulty facing many Irish pubs is not directly related to price increases but arises from more wide-ranging issues, not least being the economic climate in which they have to operate. The legislation on road traffic and the curbing of drink driving is having an impact on rural pubs and is changing their culture somewhat. In addition, there is the question of whether there is an over supply of pubs in rural Ireland. They are a supplementary element in the incomes of some people and they form part of an overall package of endeavours and so on.
In previous years the price of drink was not increased. To a certain degree the industry went to town. In this respect I recall that on the Finance Bill, 1993, the Minister advised that he was letting the drinks industry off from a price increase and he requested the industry not to go to town on him the following year. However, that is what has happened. Unfortunately, both the breweries and many publicans increased the prise of the pint quite considerably. Given this it is understandable why the Government would be anxious not to lose out in that regard.
To suggest, however, that the price increases this year will be responsible for a major crisis in the pub industry is overstating the case. Consumer spending is up and the most recent ESRI report suggests that spending on entertainment and related areas will increase from now until the end of the decade. In addition, because of demographic changes, smaller families and so on, the number of people drinking will increase. From this perspective, the future is not so bleak, although there is probably a need for some rationalisation of the drinks industry. However, this will take more than merely increasing or decreasing the price of the pint.
I am neither a drinker nor a smoker.
The Deputy should give it the full lash and tell the Committee he is not a publican.
That is correct. Everyone in politics visits pubs and the Minister has not imposed any increases on the price of drink over the last two years, yet in this period of time the price of drink to the consumers has increased. Often there is confusion in the minds of consumers on this issue as they regularly blamed the Minister, wrongly so, for such increases. Indeed the Minister said last year that he was giving the drinks increase a reasonable chance, yet price increases were imposed by producers and publicans. I appreciate they have to meet wage increases and so on, but I have never seen a rounding-down; it has always been a rounding-up by 3p to 5p.
Except for Beamish.
The Cork people will always defend their corner. I appreciate that publicans in rural areas are finding things difficult. This is because of demographic changes and changes in the drink driving law, which will probably have a great effect. I agree with Deputy Martin that prospects are good from a consumer spending viewpoint. I hope than any negative attributes in relation to price sensitivity will be overcome due to people having more disposable income and that the extra 3p or 5p in price will not deter them from enjoying a pint or 20 cigarettes. In the past such increases have not resulted in a major decline in overall consumption.
Deputy Yates identified the problem facing many pubs in rural areas. They are competing for a declining population of drinkers. Younger people are pursuing other activities and there may not be the volume of turnover to sustain the existing number of pubs. This matter relates to licensing and is a topic for another day and a different Minister. While I have sympathy for Deputy Yates's argument, over the years the Minister has shown great restraint in increasing prices. This has not been reciprocrated by the trade itself.
Does the Minister not agree that the time has come to look at the licensing restrictions in urban areas, especially in Dublin? My constituency, in which there are 100,000 people, has only eight pubs.
Bunclody, a small village in County Wexford, has a population of less than 1,500 and 15 pubs.
We have 300 people and four pubs.
It is time to look at the licensing arrangements, which are such a constraint in Dublin, where publicans must resort to building huge barns to cater for customers, rather than neighbourhood pubs, which could serve a more useful purpose.
Or extinguish two licences to get one.
Deputy Yates argued that the increase of 3p this year, which is the first increase since 1989, is hard on the industry. I have had difficulty over the years trying to get it to pay tax. Between November 1991 and 1993, during which I imposed no increases, publicans increased the price of the pint by 17p. There are usually price increases early in December or Christmas week.
I was talking to a contractor recently, who is well known in Dublin for extending the barnhouses about which Deputy Rabbitte spoke. I agree with him that they keep getting bigger. Holes are knocked out of walls and roofs and building work takes place across lanes to extend these premises. The contractor told me that by the second weekend of June all his contracts come to an end. We need to monitor what happens to drink prices coming up to the first match of the World Cup. I have no doubt the Revenue Commissioners will be vigilant. I have noticed that a pub which I visit now and again has put in a new carpet in the last few weeks and increased the price of the pint by 2p. They must be using Government accountants if they have to pay for everything in one year. If one buys a carpet one must make sure its cost is written off in the first year.
I have no sympathy for the industry, either in cities or the country. Governments may have slipped up in recent years. In 1983 the tax on a pint accounted for 48.5 per cent of its price. It has declined to 37.9 per cent. The committee on another occasion should discuss what should be done to restore this. In 1983 the tax on a glass of whiskey accounted for 54.3 per cent of the price. It has collapsed to 38.3 per cent.
That is more reasonable.
I noticed recently in a pub in Deputy Rabbitte's constituency that a pint of lager costs up to £2.15. I work on figures like £1.78 and £1.85 for a pint. I think it is only in Bunclody one would find prices like this. The extension of licences is not a matter for me. I often thought that it would be ideal to remove the Naas Road restriction, so that a licence could be moved to any other part of the country. I told a story this morning about people climbing over scaffolding to avoid inspections by officials of the Department of Social Welfare and the Revenue Commissioners. I can imagine what would happen if such inspections were carried out in pubs.
Deputy Ferris is usually here for debates on the Finance Bill. I send my regards to him. If he were here today, he would congratulate me for only applying the same increase to cider this year as was applied to the pint, unlike last year. The cider industry lobbied me to seek to be kept on level terms with other drink products. If the industry continues to ignore the leniency of successive Governments and itself applies exorbitant increases, particularly at times of the year when we are not watching, we will have to deal with the problem. In the meantime I am sorry I did not give Deputy Yates something to really give out about by increasing the price of the pint by 10p.
In another context one would say that the proof of the pudding is in the eating, in this case it is in the drinking. From my experience of dealing with pubs, I see no reduction in the volume of sales since the changes in the budget. This answers the question as to whether these changes are affecting people's consumption. Publicans I know seem to be doing well, despite the changes which were introduced. Deputy Yates is trying to make a ball of smoke out of this.
I wish to turn to VAT, which we must deal with extensively between now and 6 p.m. Before I do so I must say that I regret the Minister is dismissive of my point of view. We must consider the tourism aspect. The industry employs 50,000 people. The rate of tax on drink is 50 times higher here than in France and 16 times higher than in Germany. We should be mindful about discriminating against an industry. There is general agreement among the members of the committee that there is a huge regional variation in both the turnover and profitability of pubs. I would be happy to put these matters to a vote.
Nobody can accuse successive Governments — including Deputy Yates's party when it is was in power in the mid 1980s — of putting huge increases on pubs. What happened was that for ten years successive Governments have been very helpful to them and have not increased the excise duties but the publicans doubled the increase anyway. Instead of increasing the price by 3p or 4p a year they increased it by 8p, and the figures are there for anyone to see. It is an important industry in terms of employment but it should have a look at what it has been doing for the last number of years.
The percentages which the Minister outlined are perhaps more reasonable than they would have been ten years ago. There was a perception that things had gone too far the other way. For example, 48 per cent or 50 per cent tax on any pint is too high. I am glad to see that it is down to around 37 per cent which is more reasonable.
It should also be borne in mind that there is a huge variation between prices in urban and rural areas. The Minister is right that in a number of urban areas publicans charge way above the odds and their customers do not seem to be too worried about it. In certain rural, isolated areas or in keenly competitive areas where a person is very conscious of the price of a pint, if it goes up by a penny the customers desert the pub. Prices are far keener in rural areas.
When one is contemplating one's pint it is nice to know that one is making a significant contribution to the Exchequer. It adds a certain pleasure to the whole exercise.
Question put and agreed to.
Sections 74 to 76, inclusive, agreed to.