The Minister has 30 minutes and every subsequent speaker will have a maximum of 20 minutes.
Supplementary Estimates 1987. - Vote 40: Tourism and Transport.
I move:
That a supplementary sum not exceeding £1,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1987, for the salaries and expenses of the Office of the Minister for Tourism and Transport, including certain services administered by that Office, and for payment of certain grants and grants-in-aid.
The introduction of this Supplementary Estimate gives the House an opportunity to discuss trends in and prospects for the two important sectors of our economy for which I have responsibility. I welcome this opportunity to articulate clearly the Government's views and plans for these sectors. I look forward to the constructive debate which I know will ensue, given the wealth of experience and knowledge in these areas available within this House. I can assure Deputies that I will, as I have always done, take full cognisance of their views in formulating future policy in areas for which I have responsibility.
On assumption of office, the Government announced a series of administrative changes to reflect the economic and social priorities which they had been elected to implement. One of these was the formation of a new Department of Tourism and Transport which combines the tourism functions of the former Department of Tourism, Fisheries and Forestry with the transport functions of the former Department of Communications. The revised Estimates before the House relate to these functions.
The tourism and transport sectors are exceptionally important both in terms of their existing contribution to our economy and also their potential for wealth and employment creation — a potential which has not been adequately tapped in recent years.
In my view, there is an undue obsession with the demand aspects of macro economics in this country. While it is important to ensure that the level of aggregate demand is maintained at a sustainable level, we must also ensure that its composition is conducive to increasing economic growth. This is the primary task the Government have set themselves. We are going for economic growth. We have the policies to achieve it. We will succeed by creating an economic and business climate conducive to confidence and enterprise within a framework of consistent, fiscal, monetary and exchange rate policies.
Imaginative micro economic policies are also a pre-requisite for sustained economic growth. We will concentrate on developing those sectors whose output can be sold in international markets. In keeping with this philosophy tourism has been chosen as a major target area for the generation of wealth and jobs. Tourism will, by the end of this century, be the largest single industry in the world. It will not be IBM or General Motors, but tourism. With a good quality and competitive product marketed professionally and sold aggressively we can substantially increase our share of this rapidly growing market, with all the ensuing benefits for wealth and employment creation.
On coming to office, we found a tourism sector sapped of confidence and lacking the leadership and commitment it was entitled to expect from Government. Our first priority was to restore confidence and give a clear sense of direction to the sector. We wasted no time in setting about these tasks. The swift merger of tourism with the crucial area of transport was a clear signal of the Government's commitment to harmonise these sectors to the betterment of both.
On 3 May, less than two months after we assumed office, I announced a comprehensive programme of initiatives to boost tourism in 1987. The main elements of this programme were set out in our document, Ireland in '87. I have that document and I could go through the details but as time is limited I will not delay the House at this stage. I may be able to deal with this matter when replying. This was phase 1 of the Government strategy for their tourism programme in 1987. Phase 2 is to follow this up with contributions from the industry supporting the Government initiatives. I am pleased to be able to inform the House that my Department had a series of very constructive meetings with all the main operators in the industry. The outcome of these was the series of measures which I announced to the House on 14 May. On that date I expressed my gratitude to the operators for their contributions. Again I want to emphasise that the constituent organisations and the groupings involved in the tourism industry were more than co-operative in this effort to launch a new initiative in the tourism industry. I should like to reiterate my thanks to them today.
I mentioned in my opening remarks that I would take full cognisance of the views of Deputies in formulating policy. As an earnest of my commitment in this regard I ask the House to note that the petrol voucher scheme which I announced on 3 May has been extended to all of Britain. It has been originally intended for administrative reasons to confine it to the London area which is our largest market. However, in response to suggestions and representations by Deputies I was pleased to be able to broaden eligibility for the scheme. I know this will please Deputies in those constituencies, like my own, which draw tourists from many parts of Britain outside the London area.
While our 1987 programme is designed to significantly increase tourist traffic in 1987 it will undoubtedly have a positive knock on effect well beyond that. It is intended that it should have that knock-on effect. My Department are currently working on a comprehensive medium term plan for the development of the industry to ensure that the drive for growth in tourism started in 1987 will be maintained into the nineties.
We have just received a first draft of the consultancy study of State expenditure on tourism, commissioned by the previous Government. We expect to receive the final version shortly. The consultant's findings will be a major input into our plan.
At this stage, I should like to give the House details of the Exchequer's allocation to tourism this year. Including the token Supplementary Estimate the allocation for Tourism in 1987 is £25.065 million excluding the provision for the Shannon Free Airport Development Company. Of this total, £24.154 million is being allocated to Bord Fáilte. The token Supplementary Estimate of £1,000 includes the transfer, from within the transport element of the Tourism and Transport Vote, of the sum of £1.251 million to Bord Fáilte and £1 million of this will be used by the Board to undertake, in conjunction with the carriers, a promotional campaign to capitalise on the Government's recently announced programme of measures.
Bord Fáilte will spend approximately 25 per cent of the additional £1 million on promoting the new air fares and other incentives in the North American market. A breakdown of the £1 million expenditure by market is as follows: North American, £250,000; Britain, £320,000; Continental Europe, £355,000; Home, £75,000.
I should like to call the attention of the House to the £355,000 for continental Europe, an area we must target and attract more tourists from in the future. I ask the House to note the £75,000 for the domestic market. That is important because it is the equivalent of exporting.
The balance of £251,000 will be used to cover the cost of promoting a petrol voucher scheme for British visitors taking motoring holidays in Ireland and redemption of the vouchers. This transfer has been made possible by an increase in non-Exchequer receipts generated under the transport element of the Vote; £200,000 of the expenditure will be used to redeem the petrol vouchers. Under the scheme 20,000 vouchers valued at £10 each are being made available for British motoring tourists to Ireland who booked a holiday to Ireland after the scheme was announced. To be eligible for the £10 voucher a visitor in advance of travelling, must produce evidence, exempli gratia ferry ticket, to show that he booked a holiday to Ireland. Media response in Britain has been excellent, strongly reinforcing the image of Ireland as an ideal location for motoring holidays. Latest indicators show that already, only three weeks after the launch, the rate of increase in British car arrivals for this month has more than doubled the rate of increase for the first five months of the year. The balance of expenditure, id est £51,000, will go on advertising — postage costs associated with the scheme.
The board's overall subvention to the regional tourism organisations in 1987 will total £2.016 million in 1987 compared with £2.336 million in 1986. The reduction in the board's subvention to the RTOs is unavoidable given the cut in the board's own budget. We expect the private sector to contribute a substantial amount to even the score in that area.
In so far as Bord Fáilte's tourism capital development programme is concerned £2.176 million is being provided compared to £3.340 million in 1986. The reduced capital allocation is due entirely to the termination of the hotel and guesthouse reconstruction and development grant scheme. When this scheme was being introduced in 1986 it was announced that it would operate for one year only. The Estimate also includes provision of £1,120,000 for tourism and traffic development by SFADCo which plays an important role in tourism development and promotion particularly in the mid-east and west of our country. I have already given the House my assessment of prospects for the 1987 season so there is no need to cover that ground again.
I will now turn to the other sector for which I have direct responsibility, namely, transport. I have a dual responsibility here. First, I am responsible for regulating the transport sector in a way which will contribute to an improvement in national competitiveness and sustainable employment creation and, secondly, I represent on behalf of the Irish people the shareholder interests in the major companies operating in this sector. Governments in the past have been accused of confusing these two roles. Let there be no confusion about where this Government stand. Our primary responsibility and commitment is to develop an efficient and competitive transport sector to support the Government's goals of creating sustainable employment and economic growth. Having established this framework our second responsibility is to ensure that our State bodies perform well within it.
In keeping with this overall philosophy we introduced a series of innovative measures in access air transport on 3 May last which will not only benefit the tourism industry but also many other sectors in our economy. Details of those measures have already been made available to the public and the House. On the European front I welcome the prospect of greater competition in aviation as a healthy development. International aviation must break away from the traditional mould of regulation and create a more competitive air transport system. I shall continue the work undertaken in recent years to expand the development opportunities for Irish carriers. Ireland has been to the forefront in seeking a more competitive air transport system within the EC. At the Transport Council in March, I emphasised that it was a policy priority of the new Government to generate additional tourist traffic to Ireland and that one of the ways in which this could be achieved is through the adoption of measures to liberalise air transport in the Community.
The Council made substantial progress in agreeing more flexible fares arrangements also, but I stressed that liberalisation in the market access area was of critical importance to Ireland. The potential for growth in all sectors of the Irish economy is directly related to the proximity of Ireland to the heartland of the Community. This can be achieved through the expansion of the network of air links between Ireland and Europe and through the opening up of opportunities for profitable expansion of air services. I stressed to my council colleagues that any package of air transport measures designed to promote additional competition in intra-Community air services would have to make some provision for fifth freedom rights. In the coming months, I will seek liberalisation measures which will promote competition on routes between Europe and Ireland but also provide commercial opportunities for the development of more routes. I should like to tell the House that at 9.30 a.m. tomorrow I shall be at the meeting of the Council of Ministers in Strasbourg and, as far as I can anticipate, we will be dealing with the liberalisation of air transport for the whole day. In particular we will be dealing with the gaining of fifth freedom rights for our carriers which is essential to our programme for development of the economy.
Aer Lingus have now embarked on their 51st year of trading. The international environment within which they operate has changed dramatically over the past few years. Following years of losses in the first half of this decade the company returned to profit in 1986 and are expected to do so again in 1987. However, a disappointing feature of the group's performance has been the fact that their core business — air transportation — has only made a marginal contribution to overall group profits in the last few years. Furthermore, the level of profitability has not been sufficient for it to renew its basic plant — aircraft. It must do so. I am glad to be able to report to the House that the company is currently engaged in a fundamental review of all its costs with a view to increasing profits to a level where it can afford to replace its equipment to a standard compatible with a company of Aer Lingus' stature and renown for a quality product. We had some discussion of this today at Question Time. I can assure the board and the employees of Aer Lingus that its profits will continue to be available to it for reinvestment. Indeed, knowing the ethos of the company, I am sure they would prefer to fund their fleet replacement programme in this way. The concept of subsidy, in whatever guise, has been alien to the Aer Lingus way of thinking over the years. I am proud to say that the current management have carried on this tradition.
Aer Rianta are another body of which we can be proud. Their performance over the past few years justifies this pride. I am also grateful to them for providing the bulk of the extra revenue I needed to finance the 1987 tourism programme as already outlined. While air tourist traffic has increased at a much faster rate than anticipated at the beginning of the year, Aer Rianta must be congratulated on translating this extra volume into extra revenue. I am hopeful that if present trends continue, they will even surpass the revised income target for 1987 which we set them in April last.
The Dublin runway project is the largest single infrastructural investment ever undertaken at the State airports. As well as the runway itself, the project will include the provision of a parallel taxiway system, advanced navigational and visual aids, a new air traffic control tower-technical building and consequential road works. The project will provide several hundred jobs and will be one of the largest construction projects in north County Dublin over the next four years. Preliminary expenditure of about £800,000 was incurred on the project in 1986 and this was financed by an Exchequer grant. Total expenditure on the project in 1987 is expected to amount to £10.7 million of which £2.6 million will be financed by the Exchequer from subhead D3 in the Book of Estimates.
A number of other major investment projects are also planned for the State airports in 1987. These include the re-organisation of the departures floor of the terminal building at Dublin Airport, an extension of the apron and pier building at Shannon Airport and certain works on the extension to the main runway at Cork Airport. It is expected that State expenditure of about £1.5 million will be incurred in these areas in 1987.
Turning now to the allocations for regional and local airport projects which are covered by subhead D8, I am not making any provision for new projects in this area in 1987. The 1987 provision is mainly required to discharge commitments which have already been made to certain projects. I am satisfied that the funds which have been made available by the Exchequer for the development of regional and local airports have been generous, especially in the prevailing budgetary position. Furthermore, the network of regional airports is now reasonably adequate for the country's requirements.
I would also like to avail of this opportunity to congratulate Connaught Regional Airport on the commencement of operations at the airport. The spirit of enterprise, determination and courage which has characterised the development of the airport has been an inspiration to all of us. I am particularly delighted with the airport's recent successful introduction of scheduled air services to Britain and I believe that these services have a major role to play in the economic and financial development of the airport and of the west of Ireland in general. I can also assure the promoters of the project of the Government's continued goodwill and interest in the development of the airport.
An allocation of almost £2.5 million is provided for the Air Navigational Services Office in 1987. The main projects to be carried out during 1987 are the installation of new main VHF communications systems at Dublin and Shannon airports and the provision of a new radar simulator for the Air Traffic Services Training School at Dublin Airport.
The affairs of the B & I have been extensively discussed in this House in recent weeks. I will, therefore, confine my remarks to the latest developments. Deputies will be aware that the Government decided recently to make available to the B & I additional equity from the Exchequer of up to £8 million in the period to end October 1987. Of this amount, £6 million will represent an advance payment of the equity allocation for the company proposed by the previous Government for 1988.
As I told the House today at Question Time I had a meeting with the board of the B & I on Friday, 22 May to inform them of the Government's decision. I conveyed to the board the Government's extreme concern and dissatisfaction that, notwithstanding equity injections totalling £25 million since February 1986, the company were now forecasting losses for 1987 which would be more than double the 1986 loss of £6.8 million. I told them that this situation was totally unacceptable to the Government. I am aware that the B & I have lost traffic by virtue of competition from low air fares but in my view too much has been made of that factor. After all, the air companies cannot compete with the car ferries. Competition is a fact of life and a commercial company such as B & I have to react positively and aggressively to changes in their commercial environment.
Tá cúig noiméad fágtha ag an Aire.
Ní raibh a fhios agam go raibh teorainn ama ann. I recognise also that a major contributory factor to the company's serious financial situation has been the disastrous strikes which occurred in the B & I earlier this year. It is incomprehensible to me that such strikes should have occurred at all given the B & I's financial position. I have told both the board and representatives of the B & I unions, whom I also met recently, and I got a very good response from them, that if the company are to survive it will be necessary for the board, management and staff to face up to the need for drastic and radical change which will eliminate the company's losses. I have directed the B & I board to submit to me as soon as possible a plan of action for implementation in the autumn. Between now and then, the Government will be considering the position with a view to a long term policy decision.
I will conclude my review of the international dimension of the transport sector with a brief reference to our international road haulage industry. Last month, agreement was reached at a meeting of the European Conference of Ministers of Transport on the allocation of additional annual multilateral authorisations permitting haulage throughout participating States — that is a larger remit than the EC states. For the remainder of 1987, Ireland will have 39 such authorisations. The organisation of our domestic transport sector, which I propose to deal with under appropriate headings, is also a major determinant of our competitive position.
The Road Transport Act, 1986, will complete the process of liberalisation of the national road haulage industry over a two year period. Since last September, road freight carriers licences are being granted on an unrestricted basis to existing licensees and to operators in the exempted areas who held current road freight certificates at 30 September 1986. With effect from 30 September 1988, similar licences will be granted to all applicants who satisfy the EC requirements of good repute, sound financial standing and professional competence. Because the liberalisation is being phased in over two years, it will be another 18 months or so before it will be possible to assess the impact.
The Transport (Re-organisation of CIE) Act, 1986, led to the establishment of the three new subsidiaries — Iarnrod Éireann, Bus Éireann and Bus Átha Cliath — which started trading on 2 February last. Note I am using only the Irish version of their names. I was impressed with the smoothness of the changeover in which the co-operation of the staff of CIE was obviously an influential factor.
Experience with CIE in the years 1984-86 has been good. The deficit was £4,000 in 1984, a year when accumulated deficits brought forward were close to £59 million, including a deficit of £20.6 million from 1983. In 1985 the board made a profit of almost £7 million and the unaudited figures for 1986 indicate a profit for last year also. These profits have gone towards offsetting the accumulated deficit of earlier years.
The results for 1985 and 1986 would have been better if the financial commitments in respect of subvention payments made to CIE by our predecessors in office had been implemented in full. Because the last Government did not honour their commitments, CIE had to borrow to meet their financial commitments. The consequential interest charges are reflected in the board's results.
The shortfall related first to interest payments on the capital costs of DART, to which the last Government committed themselves in 1984. That Government decided, however, on a number of occasions to defer payments to CIE instead of making the payments as they fell due. When I came into office I found that payments totalling over £30 million, relating to 1985, 1986 and 1987, had been deferred to 1988. If account is taken of interest on borrowings which CIE have had to undertake to cover the delays in payment the shortfall exceeds £34 million.
The second shortfall relates to the subvention for CIE's general operations. The previous Government decided in late 1985 to defer until January 1987 subvention of £9.2 million which was due for payment in 1986. A similar decision was taken in relation to the 1987 subvention, except that the amount deferred to next year amounted to £11.2 million.
In all, the shortfall in payments to CIE arising from the non-fulfilment of the previous Government's commitments exceeds £40 million. Indeed it totals approximately £45 million if interest on consequential borrowings undertaken by CIE is taken into the reckoning. The shortfall is a major problem and the Government are clearly not in a position to make good the shortfall or any part of it. There is an obligation on me to review the position and I will be doing that in the months ahead.
The Dublin Transport Authority have now been in existence for approximately six months. While the Authority have been charged with the assessment of transport infrastructure proposals and public transport services in the Dublin area, one of their more immediate concerns is traffic management involving a number of technical management projects.
Subhead C4 of the Vote provides £365,000 this year towards the costs of such developments while, under subhead C3, a provision of £300,000 has been allocated to meet the Authority's current expenditure. The Road Transport Act, 1932, as amended, is the primary legislation governing the regulation of road passenger transport services. Over the past ten years or so there has been a considerable increase in the number of private operators providing unlicensed bus services. The legality of some of these operations is doubtful.
As a result of these and other developments over the 50 years or so since the legislation was enacted, the provisions and the operation of the 1932 Act are being reviewed in my Department. That review is at an advanced stage and, before year end, I hope to bring before the House amending legislation which will take account of the needs of the travelling public, CIE and private operators.
Tá súil agam go mbeidh díospóireacht againn anseo a bheas chun sochair do chúrsaí turasóireachta agus cúrsaí iompair. Beidh mé ag éisteacht leis na Teachtaí a bheas ag caint agus tá siúl agam go rachaidh na moltaí a thiocfaidh uathu chun tairbhe iompair agus turasóireachta agus chun tairbhe na tíre freisin.
Molaim an meastachán don Teach.
I welcome the opportunity to discuss this Estimate although I regret we do not have much time. When we speak of tourism and the projections for 1987, we seem to draw comparisons with 1986 which is erroneous and misleading when we take account of the fact that 1986 was, in real terms, probably the worst year for tourism in modern times. We should make comparisons with 1985 or even the years immediately preceding that; indeed comparisons with any year over the past 20 would be more realistic than 1986 which was disastrous mainly because of the reluctance of the Americans to come to Europe as a result of acts of terrorism in Europe and the Middle East. Those acts, whether carried out in the Middle East or Europe, emanated from the Middle East.
I was listening to RTE radio this morning and I heard a typical, snide remark about the United States which does not help our image in that country or the cause of tourism. The remark was to the effect that last year's tourism in this country was affected by the uninvited incursion by American forces into Libya. I should like to point out to RTE that our tourist industry would still be in the doldrums in 1987 if those acts of terrorism had not been nipped in the bud in 1986 by President Reagan and the United States administration. It is not an occasion for snide remarks or for blaming the remedial action taken in our interests and to use it as an excuse to have a go at President Reagan or the United States. By stopping terrorism in the Middle East and Europe, we have reaped the benefit of a huge upsurge in tourism from the United States. Anybody willing to bring back law and order and a civilised relationship in Europe and the Middle East is to be complimented, not denigrated. Our airwaves should be used for something a little more constructive than bashing President Reagan and the United States and insulting its people.
The most important thing, as far as tourism is concerned, has been the deregulation of air fares or, as we say, the improved facility of access to this country. In other words, people can get here at a much cheaper rate than was previously the case. I should not like anybody to get away with the notion that those cheap air fares resulted from the policies of the Government. It is due to the policies brought in by the previous Government and Minister for Transport as tourism is interwoven with transport. We should compliment Deputy Jim Mitchell, the former Minister, for the work he did to unravel the web of conspiracy that ensured there was a high level of air fares operating into and out of this country which deterred people from visiting it. The breaking down of that network goes back several years during Deputy Mitchell's period as Minister for Transport. We are now reaping the benefits because we did not get an opportunity to do so in 1986. Deputy Kavanagh was Minister for Tourism during that period and he also played a part in breaking down those prohibitive rates of air fares.
Nowadays some fares are so low they appear ludicrous. It is no wonder that B & I and other car ferries are in difficulties because if those fares are maintained the number of people using the sea routes will seriously diminish and the airlines will have a field day. We will wait and see; this has often happened before in other lines of business. Sometimes supermarkets lower their prices on certain lines and when they have mopped up the opposition they raise them again. We will watch with interest to seen what happens air fares. I know the initial burst is very welcome but it is difficult to see how it can be maintained. Maybe fares will stabilise at a level close to the exceptionally cheap rates at present.
The Minister referred to consultancy studies. This was also mentioned in The Irish Press yesterday which estimated the cost at £266,000. It is said that the Minister and the Government had sent back the study to the consultants because they were extremely unhappy with the analysis which had been done, that the work was incomplete. I would have thought when the Minister was making reference to the study that he would have referred to the inadequacy of the work done, or else that he might have denied the newspaper article. It is rather important that we get the matter cleared up; it is confusing. I do not see why the Minister should be referring to it in a laudatory manner if the press report is true.
The Minister referred to the petrol voucher scheme for British visitors, which is very welcome. I hope it does genuinely increase the number of British tourists visiting this country. We always have a difficulty here in defining a British tourist. Nobody ever seems to differentiate between an Irish man or woman working in Britain returning here on holidays and the genuine British tourist, the British national coming here as a tourist. The figures there, if we could get them, would be extremely interesting. Would the Minister ask his Department to try to break down the figures for us? One would suspect that the vast majority of what are termed British tourists are Irish people returning home on holidays. I should be delighted to see that figure provided. They are welcome whether they are Irish people returning on holidays or British tourists because they are the best spenders of all tourists. I thought I heard the Minister saying during Question Time that the American tourists are the best. That is not our experience.
I did not say any such thing.
Over the years the British tourist has been the best spender. We all know the truth of that. As regards competition on air transport, the Minister refers to Aer Lingus and the profits being made by that company. Would somebody put me right? Am I stark raving mad, because I think Aer Lingus are losing a packet? There is a vast difference between operational losses and profits — and that is what we have been hearing about in the last year or so — and overall profits and losses. Any business must take into account the cost of replacing its equipment. Whether it be a one-man business or a huge national transport organisation, it must include, in any account provided, provision for replacement of its fleet or its equipment. I do not see any reference to this in figures provided by Aer Lingus. All we hear about are operational profits or operational losses. Any Joe Soap could make a profit if he were given the equipment free of charge. Let us get an honest assessment of the situation. It has been put to me, and we all know it, that the Aer Lingus fleet must be replaced. Who is going to pay for it? Is it going to be Aer Lingus, or the hard-pressed taxpayer? I suspect the latter. If the hard pressed taxpayer is going to have to pay for it, we should know what the bill comes to. It has been put to me that the bill may range somewhere between £300 million and £1,000 million; the higher figure may be somewhat imaginary or inflated. I would like to know what the figure is. I would like to know who is going to foot the bill. Even at £300 million it is a colossal figure.
The Minister, during Question Time here today, was asked repeatedly by a number of Deputies whether there were any plans to privatise sections or all of Aer Lingus, or if there were any additional sources of funding for that company. He gave us a run around and said that the whole matter was under study by an interdepartmental review body. That is fine, but it does not tell us anything. It is a bit of waffle. The public would like to know where the money will come from, because it is a huge amount of money. If that much is involved, then alternative methods would have to be looked at. There is no doubt about that. I was handing out bouquets earlier about the regulation, but I should say that the Commissioner in Brussels, Mr. Sutherland, has done wonderful work for deregulation and liberalisation of air fares. He does not get sufficient credit. Of course, he is Commissioner for Competition within the European Commission.
There is one small point on airports. The regional airports are referred to in the Minister's statement. One thing has been a very welcome development in the past ten years — we have got quite a number of regional airports and they are serving those isolated communities tremendously well. The Minister makes much play of the Connaught Regional Airport of Knock, but there are others as well.
Indeed there are, good ones.
There is one in Galway and one in Waterford, of which we are very proud. We should like a little additional money for a terminal building initially, that is the first priority, and eventually an extension of the runway so that we can bring in and out jets rather than turbo-prop aeroplanes as is at present the case. All the regional airports should be given equal consideration. Some have got considerably more money than others.
These airports are doing a tremendous job in conjunction with a number of independent airlines. Those independent airlines deserve a great deal of credit. I wish them every success in the future. Ryanair, in particular, are blazing a tremendous trail of glory in the way in which they are operating. I hope they can continue to do so and extend their operation.
The Minister referred to grants for guest houses. Some of the grants have been done away with and others retained. It has been pointed out that there is a limitation on grants depending on the size of an hotel. It would seem to discriminate against small family hotels. I believe the maximum number of bedrooms in Dublin City would be 30 and the maximum number in other parts of the country would be 20. If you are to encourage tourism in a realistic manner, surely the family hotel is the one that you must take greatest care of and encourage. Those hotels provide a very personalised service. They have an attraction for foreigners which is unequalled. It is extremely important that we maintain grants for that size of operation.
The Minister referred at some length to the B & I Shipping Company. We are all extremely distressed at the difficulties of that company. It certainly looks as if there could be a very bleak future. The Government have provided temporary funding and, as the Minister pointed out at Question Time, that will sustain them up to the end of October. We do not know what the future holds for the company beyond that. If the plan of action to which the Minister referred involving management and workers takes effect and the company can become self-sufficient, and is fine but our experience here would indicate that it will not be quite as simple as that. If people get over a hump they are inclined to go back to the Government and look for subventions. That is the reality.
As the Minister pointed out the company has been savaged in the current year by a series of strikes. People should think twice before they take part in damaging strikes which may eventually strangle the very company which is providing employment for them. There is a very serious problem concerning that company and I hope commonsense prevails and that wastage and any other element which is providing an undue burden will be eliminated so as to allow the company to continue to function. It would be unwise and it would be bad policy if we were left with one operator, one car ferry on the Irish scene. We do not want a monopoly. We want an element of competition. It will be in everybody's interests if that shipping company is retained. We want the employment content and the service and we do not want to see a monopoly provided from outside this country.
The Minister referred to CIE and the figures he gave are puzzling. The Minister referred to a figure of £4,000 of a loss. I assume that subvention for CIE is something in the region of £90 million to £100 million annually. The Minister's figures are most confusing. They do not give a picture of what is happening. Under the previous Government the overall deficit for CIE has come down considerably. The previous Minister for Transport, Deputy Jim Mitchell, can take a great deal of credit for that as can the management of CIE, particularly their chief executive Mr. Conlon who has done tremendous work in the last number of years. It is not easy to run a national rail service without incurring considerable losses but it is a strategic service which must be kept.
The Minister referred to tomorrow's meeting of the Council of Ministers in Luxembourg. It is important that what seems to be a frivolous objection by the British to Irish independent airlines flying to Britain from Ireland should be lifted. Will the Minister see to it, whether it is done at the Council of Ministers meeting or in bilateral discussions, that Ryanair are allowed to fly directly from Cork to Luton and directly from Dublin to Manchester and that these snags are ironed out? It is awfully petty that an aeroplane flying from Cork to Luton has to touch down in Dublin and take off again without landing or taking on passengers. It is absolutely ludicrous. Perhaps there is more to it than meets the eye. Maybe there is some uisce faoi thalamh, but some funny business is going on. Is the Minister putting all his cards on the table? Is it totally the fault of the British or are we partly to blame?
Perhaps the Deputy will now bring his remarks to a close.
I thank the Chair for allowing me to contribute to this debate and I hope we will get some interesting new ideas from it.
I welcome the opportunity to speak on this important area of tourism and transport. I welcome a lot of what the Minister said in the areas he covered. The Minister touched on a large number of important areas and he identified the fact that tourism has been chosen as a major target area for the generation of wealth and jobs. If the work is done in the months and years ahead tourism will have a great effect on our future. I am glad that at long last a Department of Tourism has been established in its own right. It has been coupled with the important area of transport.
Transport, particularly air transport has become an integral part of the future development of tourism. We are an island nation and access is crucial to us in the long term if we are to develop tourism seriously. We have the potential to develop tourism. The Minister has touched the top of a possible iceberg in a number of areas he mentioned. I am anxious to encourage the Minister to go down some of the roads about which he has expressed an interest. We should not take the pedal off at this stage. We on this side of the House will encourage the Minister to be positive, constructive and radical where necessary in his approach to the development of tourism and transport.
The package the Minister announced some while ago with regard to the impending tourism season is welcome in the short term. Judging by what the Minister had to say in his speech last week, when he identified his surprise at the lack of motivation in Bord Fáilte plans, that some radical action had to be taken, I encourage the Minister to take some action. I hope the action taken and the moneys put into it will have borne fruit when we review the results of that package this year.
The fact that the Minister had to take that action highlights the approach of Bord Fáilte. Bord Fáilte have served the country well but they should be reviewed in the light of development over the years. The time has come for us to look seriously at how Bord Fáilte operate today. Are they doing the best possible job? Are they geared to achieve the best results for us? I hope these questions will be examined minutely in the forthcoming Price Waterhouse report which we are eagerly awaiting. Will the Minister clarify the statements in some of the papers that he has rejected aspects of this report? As I understand it, the Minister had a preliminary look at the report which will be due in the next few weeks. I hope the whole structure of Bord Fáilte is examined.
At the moment there is a sense of urgency in relation to cuts in many areas, but it should not be forgotten that the object of cutting many areas is not just to reduce expenditure but to get a leaner and more efficient structure. There are many areas where the budget is either incorrect, or could be increased or at least reviewed in an overall context. When I look at tourism I consider that the return for the money spent is excellent. That return could be substantially increased in the coming years. The Minister touched on one area when he identified in his speech the importance of the private sector working hand in hand with the public sector. It should not just be the responsibility of the Government to produce on behalf of the commercial and private interests the necessary funding to promote tourism. I hope it will be looked at in the coming months and that some mechanism can be devised to allow for a serious contribution from the private and commercial sectors. On the figures that are available to date we could spend much more money on tourism but the areas in which it should be spent and how it should be spent should be clearly looked at.
The Minister in his speech identified the breakdown of the extra moneys voted by Bord Fáilte and he identified also certain markets. The easy part of this is to identify the markets. Nobody in the country or in this House is in any doubt that we are not gaining the tourist trade from Europe that we should be. It is not enough to identify that market: we have to identify the requirements of the tourists from those countries and those requirements vary tremendously from country to country in Europe. We have to identify the requirements and needs of for example, the German tourists, the Danish tourists, the French tourists, the Spanish tourists and what they perceive and enjoy on their holiday. Leisure time is becoming extremely important in the context of holidays. I do not believe it is right any longer to talk in terms of holidays in what they have been to date. That concept has quite seriously expanded and it is in these areas that the opportunities for expansion of the Irish tourist season offer us our greatest scope for development.
I referred the other night to the development of the product market. There is no reason why we could not have a ten-month tourist season. This, of course, depends on the type of developments one gets from the various markets. There are fishing seasons which occur at various times of the year which are not necessarily at the same time as the peak sunny months. There are shooting seasons open at different times of the year. Golf can be played for about ten months of the year because it does not have to be played in blazing sunshine. A temperate climate is most enjoyable for a golfing holiday.
I was surprised to learn that one of the fastest growing activities enjoyed by tourists are visits to gardens throughout Europe and the world. We have much potential in this area. I do not have figures in this regard but I believe the market is very substantial. Perhaps the Minister could look at this. We have natural resource assets. We are an island nation with the sea all around us. We have opportunities for sailing, surfing and swimming. The requirements of these markets must be identified and related back to the requirements of the tourists from Europe.
The Minister identified the over cost in this country of many of the requirements on which tourists spend their money. We have got to get it right if we are to sustain the repeat tourist business. This is very important. Apart from the family-type tourists who come on a regular basis, many of our tourists come on a once-off basis. We have to develop the repeat business on an annual and seasonal basis and to do that we have to get the cost of the package right. That is the bottom line. I have no doubt we can provide the requirements but cap-in-hand with that must be the cost effectiveness. Unfortunately our costs are too high and this has to be looked at.
I want to refer to transport and, in particular, air transport. Obviously there have been very encouraging developments in the area of air transport and deregulation. However, for one side of the House or the other to claim that it is their own ingenuity that has brought this forward would be erroneous. If anybody outside the House was asked who was responsible for at least motivating the rapid forward movement in the area of deregulation, the name of Deputy Desmond O'Malley would be very much to the fore. An enormous amount of further development has yet to occur and the Minister is taking the right approach in this area. There is huge scope for further development. The Minister's meeting tomorrow is very important and vital and I have no doubt he will put the case for Ireland in a very cogent manner because of the importance to us of air transport as an island nation. The cost of air transport and the deregulation of air transport is vital to increase and enhance our tourist potential.
Air costs at present from many parts of Europe are vitally important. Australia has a huge indigenous Irish population which we tend to forget. The breakdown of the Irish connection in Australia is far higher than is the case in the USA. If we can bring tourists from as far away as the USA there is enormous potential for us to bring tourists from Australia. However, we have been losing out consistently because there is no direct flight from Australia into Ireland at present. There is a very substantial number of Australian tourists going to Europe but because of the cost of access fares from Europe to Ireland up to now we have not been gaining those tourists. I would be delighted if an Irish airline could operate that type of route. It is extremely important.
We had a discussion earlier today on fifth freedom rights and I am glad the Minister mentioned it again tonight. The Minister gave me a very detailed reply to my question today but I was disappointed to learn that we do not have in operation at present any fifth freedom rights for any of our airlines. It is crucial and essential for the development of our airlines on the world stage that fifth freedom rights become an integral part of any deal that is completed within the European context. Obviously I appreciate there will have to be some give and take both ways but that is part of the world we live in and the commercial way in which we operate. In this regard I urge the Minister to press, as I know he will, to ensure that we receive the opportunity to have fifth freedom rights.
The Minister in his speech mentioned the funding for airports. The development of regional airports during the past number of years has been extremely important. It has brought an injection of capital into the areas in which they are located and it has positive social implications for the spread of people living in those areas. Tourists are able to get into areas where they might not normally go. The smaller operators, the smaller hotels and the smaller guesthouses are an integral part of the continuing development of local economies in these areas. In this regard the Minister would be advised to look again at the importance of regional airports. If he looks at it in an overall context he will find they are an integral part of the development policy which I, and the Progressive Democrats, would envisage. I hope to see the development of airports such as Waterford, which was referred to by Deputy Deasy and which has done a tremendous job with very little Government funding. They are to be highly commended on that achievement. Ryanair was the operator which primarily made it a viable airport. The runway needs to be extended so that we can move into the operation of small jets which will be another major step forward. We need to provide a terminal there, too. All of this will be an integral part of these areas.
The position of the B & I has been referred to. It gives me no joy to see the problems which surround that company today. I encourage the Minister when he is looking at the position to realise and to accept that what we want to see is a viable operation run by the B & I as an Irish company. It is vitally important that that company should continue to operate as an Irish company. A problem we have identified up to now is that it has been unsuccessful in the public sector. There are many good examples of what can be done to make this a viable company. It is important that the workers, the management, the unions and everybody involved accept that at the end of the day we must have a viable company and that whatever steps are taken are in the interests of the company so that at the end of the day there will be a proud and viable company in operation. I sincerely ask the Minister to consider the possibility of the privatisation of this company. It is the route that offers the best possibilities in this regard. Finally in the area of—
I should like the Deputy to draw his remarks to a conclusion about now.
I am sorry that this is such a short debate for such a large area. I had much to say on Dublin Bus on CIE and so on. I hope I will have another opportunity to put those points to the Minister but unfortunately I have run out of time. The other area I wished to refer to was the area of ports. I am not quite sure whether that falls within the area of responsibility of the Minister.
That would be out of order.
I should like to advise Deputy Kavanagh that I am obliged to call the Minister at 12.20 a.m. so that Deputy Kavanagh has only a little over five minutes.
This is the second week I have had to take a restriction. On this occasion I have five minutes, last week I was given no time at all. As the previous Minister with responsibility for tourism I thought I would have had more time because five minutes will not be adequate for me to respond to two recent statements on tourism made by the Minister. I would have liked to deal with certain aspects of transport but it is only fair to myself and to other people involved in the Government to which I belonged that we should make comment on some of the statements in the Minister's brief when he introduced the Tourist Traffic Bill last week and again today.
We would all agree with one statement that is about all I can agree with in the Minister's brief and that is that tourism will possibly be the biggest industry in the world by the end of this century and that we should be gearing ourselves towards that possibility. In both statements the Minister singles out the previous Government, and obviously the previous Minister, in not giving the leadership in this area during our time in office. I should like to say to the Minister that on a public relations exercise he would get full marks but on the facts as they present themselves in the tourism area they require some looking into to see that what he is producing is a very neat trick on the public. I can say for certain, now that we have the figures, that this year there will be a real cut to Bord Fáilte of 11½ per cent on their budget of last year. We got the figures only today. This will be the lowest budget for Bord Fáilte for the past ten years. That is an indication of what the real input of this Government is into promoting tourism for this country throughout the world. In 1968 the budget for Bord Fáilte was £26.8 million, last year the figure was increased to £27.4 million but this year, as provided for in the Supplementary Estimate, the amount is £24 million which is much lower than the figure for two years ago.
Under the promotional aspect of Bord Fáilte the money available to promote this country in all the various regions with which Bord Fáilte deal, whether it be North America, Britain, the Continent, the Far East, Australia or New Zealand, is cut back considerably. Therefore, Bord Fáilte will not have the money to promote this country in those areas. There has been a trimming down in various areas throughout the world in Bord Fáilte's operations following the installation of the free phone systems where rather than having offices in every large city across the States tourists can ring up and get information. This system has been introduced also to Britain and has had a much more beneficial effect than off the street type of office people just walk into. That type of facility is not used by large companies or modern businesses in places like America or Britain to promote their products. The budget has been cut back drastically. Even though we are bringing in a Supplementary Estimate it does not measure up to the reduction in that budget.
In trying to bring forward a policy for tourism the previous Government, under Deputy John Bruton published a White Paper on Tourism. That was the first time that was done for tourism. It is wrong of the Minister to say that tourism was lacking direction under the last Administration and that it is only now getting its due recognition. This was not so. We know what Deputy Jim Mitchell did during his period in the Department of Communications so far as the reduction in access fares into Ireland was concerned. During my short time in the Department of Tourism I made every effort to promote tourism in what was a very difficult year. It was not difficult through any fault of mine, I am not a Libyan, I am not from the Middle East and I am not a terrorist. Americans will not travel out of their country if there is any hint or possibility that their holiday plans can be in any way upset by terrorist activities in Europe. That problem overlapped into this country. Because of aggressive selling of tourism in America the drop in tourism from the States was far less last year in Ireland than in many of the big tourist countries like Italy, Greece and even Great Britain.
I must now call on the Minister for Tourism and Transport to reply.
It is unfortunate that we cannot deal with this very important area, but I wish to ask about the Price Waterhouse report. This is an important report which I commissioned to charter the future for tourism in Ireland. The Minister has said in his brief that the consultants' findings would have a major input into our plan. I am glad to read that, but because of what was said in yesterday's papers there should be some explanation to the House and to the public.
I thank Deputies Deasy, Cullen and Kavanagh for their contribution to the debate. I expected a varied contribution and I was not disappointed. I regret that a former Minister for Tourism did not have more time to expand on his views on tourism. I wish to point out to him that my budget was the budget that I received from the previous Government, it was his budget, maybe not technically, because the Labour members of the Government resigned, but it was his budget and I added £1.25 million to that.
It was not my budget.
Technically the Deputy had left the Government. I received a budget which was based on a nine months Estimate, which was cut. Deputy J. Bruton was Minister from 1 January to the middle of February, then there was a change of Minister. The budget for the latter part of the year was cut and I succeeded in adding £1.25 million to it.
On a point of order, what the Minister is saying is not a fact.
It is less than fair of Deputy Kavanagh to interrupt me when I have only a few minutes.
The Deputy's time was very limited and so is the Minister's.
I wish the Minister to correct the wrong impression that he is giving this House. He is wrong; it is his budget.
The Minister to continue without interruption.
I wish to thank Deputy Deasy for his remarks. He said it was bad to make a comparison with 1986 because 1986 was a bad year for tourism. That is generally agreed, but he will note that, in my contribution on both the Tourist Traffic Bill and tonight, any time I made a comparison I made it like to like. Any comparisons I made was before Chernobyl and before the Libyan intervention last year. I agree with Deputy Kavanagh that the Americans would not come, in fact their President told them to stay at home and unlike the fractious Irish, the Americans tend to do what their political leaders tell them. In fact I have been comparing like to like. I know that Deputy Mitchell succeeded in reducing fares from the middle of 1986 onwards, when the first lower fares came into operation, not several years ago as Deputy Deasy said. But I appreciate what has been done.
He was working on it.
The Deputy said that the reduced air fares would play havoc with the car ferries. The car ferries carry cars; as of now the planes into Ireland do not carry cars and there is a whole area that the car ferries can concentrate on without fear of competition. I expect great things this year from that area and the petrol voucher scheme was designed to increase the numbers coming by the car ferries.
Foot passengers also travelled on the ferries.
There is no doubt that it had an impact on foot passengers but I think as a marketing strategy the car ferries should concentrate on the car end of the business and of course get as many foot passengers as possible.
The Minister's figures show that the car ferries have lost to the air carriers this year.
Everybody knows that, but the effect has been exaggerated and there is a market there for the ferries to target. I will not indulge in across-the-House chat when I have so much to say and so little time to say it. With regard to Deputy Deasy's comments on Aer Lingus' profits, the profits given are not operational profits. The profit given to 31 March 1987 is £16,730,000, which is a substantial profit. However, that is the consolidated profit. In my speech I said that I regretted so little of that degree of profit was made in the actual air travel business.
I agree with Deputy Deasy when he says that the Commissioner, Mr. Peter Sutherland — as befits a past pupil of mine — is very helpful in this area of trying to develop fifth freedom rights and improve competition in the area of air transport and I hope to meet him today and to work alongside him towards the development of fifth freedom rights for this country, so that the airlines that are operating in Ireland will benefit. Deputy Deasy spoke about new hotel regulations rather than the conditions applying to grants for hotels when he mentioned the number of bedrooms which will be required in the future. There is a certain amount of confusion when studying the CIE accounts since my predecessor introduced a move that I agreed with, above the line subsidy when we are talking about profits and losses. I reiterate that I decry what happened with regard to pushing back moneys that were due to CIE so that there is a colossal building up of debts to CIE which accrue on 1 January 1988 and which are causing me serious headaches at present. I suggest that Deputies examine that position.
Would the Minister tell us who will bear the cost of replacing the Aer Lingus fleet?
As I said in the House today, the cost of the Aer Lingus fleet is the subject of interdepartmental discussion at present. I also referred to it in the course of my speech, if the Deputy examines the section which refers to Aer Lingus. I wish to deal with the points raised by Deputy Martin Cullen. No doubt Deputy Deasy would like me to deal with the contribution from his fellow constituent, Deputy Cullen, without interruption.
I am glad that Deputy Cullen agreed with some of the positive and even radical steps which I have taken in the tourism line and I agree with him that cuts should be for a leaner and a more efficient operation. Indeed I would not go along with cuts in any area of our national life if I were not convinced that that was the objective of those cuts. We must do it only if productivity and a more viable business development are the result. He also welcomed my invitation to private interests, in the tourist industry to supplement and subsidise what is being done by the public sector. He also indicated, and I hope in 1988 I may be able to help in this regard, that money invested in tourism should increase because it brings in the results, it brings in the profits and of course strengthens our economy. I agree with the Deputy when he suggested that we should find out what the German and French needs are in the way of tourism, holidays and gear our product to their needs. We are doing this. I am interested in his suggestion that we exploit the very fine historic gardens we have. It is one of the many areas we have under consideration with regard to strengthening the tourist industry in various parts of the country.
There is a good deal of talk about prices being too high. I must say that the people who are fully involved in tourism as a business have responded very well to requests from me and my Department with regard to the reduction of various tariffs. I think this House and the country in general should be grateful to them. They deserve to be congratulated by this House and the country in general for what they have done.
It is important for the domestic tourist.
I emphasised that in my speech. The Deputy will have noted that part of the increased expenditure which I have managed to get for advertising — £70,000, if I remember the figure correctly — is being devoted to development of domestic tourism.
The Deputy also saw great potential in the regional airports for general development as well as tourist development, and I agree with him on that. He asked me about fifth freedom rights. I assure him that our whole policy objective is concentrated strongly in that area as far as development in the EC is concerned. B & I, an Irish company that is commercially viable and under the Irish flag, is my objective in that regard.
An Leas-Ceann Comhairle
It is 12.30 a.m. If the House wishes we can give a short——
Tá brón orm——
Is the House agreed?
Tá aiféal orm nach bhfuil níos mó ama agam chun deileáil leis an méid a dúirt an Teachta Kavanagh ansin. He said there was a real cut of 11.5 per cent and that this was the lowest for the past ten years. He must bear some responsibility when, as we were told, the figures were being put together last autumn or when he abdicated his responsibility and walked away from the Government who were putting this budget together for the Tourism Estimates for this year. I know he made every effort last year to buttress up the faltering industry. It was not all that successful but it was not for want of trying. He put in long, hard journeys and travelled long distances including a visit to my constituency straight off the plane from the US at one time.
(Interruptions.)
However, we know that the commitment was lacking to a great extent, whoever was to blame, whether it was an individual Minister or the collective responsibility of the Government. We hope that commitment is now in place and that we will have the full commitment of the House, spokesmen and general membership of the House on both sides, to develop this industry which will be world wide, and will be the greatest industry in the world at the end of the century. We want to be in there with proportionately as big a share as we can possibly get out of it. The greatest industry will not be General Motors or Mitsubishi; it will be tourism and we want to impact on that scene.
Question put and declared carried.