Deputy O'Keeffee gave notice of his intention to raise on the Adjournment the subject matter of the operation of the Swansea-Cork Ferry Company. The matter is in order and the Deputy may now proceed.
Adjournment Debate. - Swansea — Cork Ferry Company.
It is appropriate to ask where is the Minister for Tourism and Transport. It is perhaps ironic to be faced by a Cork Minister of State. If the Cork Minister of State is here to give positive news to the House it is appropriate that he should be here but——
Do not be disrespectful.
Good news.
As always.
—— if he is not in such a position I would regard it as a peculiar decision by Fianna Fáil to dispatch the Minister of State to deliver the death knell of the Swansea-Cork ferry. I want to focus on the future of the ferry in the light of the imminent danger of the company ceasing operations in the absence of a commitment from the Government to invest a sum which has been estimated by the company to be £1.6 million. I understand a meeting will take place tomorrow between the Minister and the chairman and chief executive of the ferry company. It is absolutely essential that a plan be agreed tomorrow to ensure the continued operation of the ferry. The disastrous consequences for tourism in the south-west region if the ferry ceased to operate should be borne in mind.
The Swansea-Cork ferry is the lifeline of the south-west in tourism terms. I am glad to see some of the Cork Government backbenchers here as well as representation from Kerry.
Of course we are here.
They will understand the absolute need to ensure the continuation of that lifeline.
We were waiting three years for it.
In response to that interjection it is appropriate to recall that out of the west Cork package I allocated capital to get the operation under way. I do not want to see the operation collapse now. I am sure that the fears I voice and the hope I express for the continued operation of the service are shared by the Minister of State and his backbenchers. The importance of that lifeline was fully appreciated by my Government. When I allocated the sum of £250,000 from the west Cork package to provide the seed capital, the ferry operation got under way because of the additional resources provided by the then Government, the input of Kerry County Council, Cork County Council, Cork Corporation and the county council on the other side of the water. I stress that the information available indicates there is a real danger that this ferry may cease operations. I am further advised that this decision can hardly be avoided unless there is a satisfactory outcome to the meeting tomorrow.
The Swansea-Cork ferry service in its short life has already made an enormous contribution to the south west. The excellent Fanning-McCarthy Report highlights the fact that the contribution in 1987 — its first year of operation — amounted to upwards of £20 million in its total spending contribution to the economy of the area. That includes tourist spending and operation expenditure. I do not have the figures for 1988 — the year is not over — but from the evidence in my own area and the reports I received, it is quite clear that the figure will be substantially exceeded by perhaps something in the order of £25 million.
Two things are needed for the ferry to survive and to enable it to realise its full potential in the development of tourism in the south west. Its capital base must be restored and developed and — equally important — its efforts must not be deliberately undermined and sabotaged by cartel or other arrangements. I will deal with the latter point first. It is no coincidence that in January 1987 the B & I and Sealink advertised their high season fare as 39 per cent higher than their corresponding low season fare. However, two months later, following the entry of the Swansea-Cork ferry on the market, their fares were some 12 per cent to 34 per cent lower than their corresponding low season fares. This indicates that the cartel arrangement was to strangle the Cork-Swansea ferry service at birth and enable B & I and Sealink to retain the monopoly of the Irish Sea. I wish to give some time to Deputy Quill.
Is that agreed? Agreed.
I mentioned the importance of competition in regard to fares and the effort made to strangle the company at birth. B & I, who were part of that cartel, are State owned and were in receipt of an enormous State subsidy, thus enabling them to join in the effort of stopping the new company from having any chance of survival. That, thankfully, was not achieved but, as a consequence of that approach, a large part of the capital base was eroded in trying to match the subsidised fares. The subsidies to B & I have totalled £150 million since their nationalisation including £44 million over the past two years. Put in that context, the effort to provide a proper capital base for Swansea-Cork Ferries can be seen objectively. We are talking of total funding of something over £1.5 million. It is important to have fair competition and there should not be predatory pricing or abuse of a dominant marketing position. The Minister must insist on a certain approach. Of course the subsidy of £1.5 million is buttons in the context of the enormous investment and subsidy to B & I but it is essential to secure the future of the Cork-Swansea ferry service. The kind of money I am talking about has already been earned by the Exchequer. I referred to a figure of £20 million for the first year of operation which would probably be around £25 million in the second year. However, approximately £45 million has come back to the Exchequer by way of tax.
It is essential that a commitment is given to provide that capital injection. Without such a commitment there is a serious danger that the company will announce that their operations will cease for 1989. A few points need to be made. I am talking about the ferry principally in the context of tourism. I often wonder whether our commitment — I am not speaking politically — to tourism is really solidly based. The commitment of the Government will be put to the test in regard to this issue. We know the figures quoted in the Price-Waterhouse report and the prospects for tourism over the next few years. A figure of £217 billion was mentioned in regard to international tourism revenues by 1995. We also know that this country has not achieved its full potential for many years. In many instances we have lost a market share although world tourism was buoyant. In other areas our market share remained static and we also know that in some years more money was spent on travel abroad than was generated in international tourism. That is a disgrace.
The Taoiseach at the tourism forum last January said that tourism figures were unacceptable. He outlined the commitment of the Government to doubling tourism income and he talked about it as the top national priority. I want to put that to the test now because tourism in the south-west without the Cork-Swansea ferry will not prosper and develop to its full potential. We know the importance of tourism in the south-west from the number of hotels and guesthouses there. Perhaps the figure for guesthouses is more important than hotels because the numbers in hotels can be distorted by figure in relation to business. One third of the guesthouses are in the south-west, an indication of the importance of tourism to that area.
The establishment of this ferry brought hope to the south-west based on the restoration by the last Government of the Swansea-Cork link. Those hopes will be dashed unless there is a positive response from the Government to the request of the ferry company. The words of the Taoiseach and his Ministers will sound very hollow if the premier tourist region is left without this lifeline. I ask the Minister of State to give a commitment that there will be the necessary capital input to allow the company to continue. I am also asking him to take whatever steps are necessary to ensure fair and free competition on the sea routes. An investment made now will repay itself handsomely in regional and national terms in the future. Unless that investment is made, the whole south-west region will suffer disastrously in the years ahead.
I wish to thank Deputy O'Keeffe for allowing me some time. He put the case very well and there is no need for me to remind the Minister that we have in Cork city, in Kerry and in the south-west region generally a gold mine in terms of potential for the tourist industry. It is a gold mine also in terms of potential for generating jobs but the Government need to provide access to that region. There are three different access routes, the airport——
We have done very well with that.
——the road from another ferry point and the Swansea ferry. As the Minister has said, we have done well with the airport——
I have done well.
We also have difficulties with the airport. Due to air inversions planes cannot land on certain days. There is anything but a satisfactory road structure from the ferry point at Rosslare to the city of Cork, which is the gateway to the west. That is widely acknowledged. The most satisfactory access vehicle to Cork city and to the whole region is the Cork-Swansea ferry.
Hear, hear.
It is a service that has proven its worth and its viability. It is, by any standards, the key to growth in the tourist industry in that region. It is our major asset, an asset that is crying out for investment. We are asking the Minister to make sure that the investment is made. We are asking for a very minor contribution of State funds in line with that given to other shipping lines in recent years. What is being sought is a minor investment that will yield a massive return over the years in terms of buoyancy in that region. We are saying to the Minister that that investment must be made now. If it is not made now tour operators and people in the tourist industry in the region will not be able to plan and promote their region for the next tourist season. Unless a guarantee is given that this service will be properly funded and provided, there will be no hope of proper planning and development and the extension of tourist facilities in that region.
That region has everything to offer. The brand names are there already, names such as Blarney, Kinsale and Killarney. All that is needed is access to the region. It is the duty and the obligation of the Government to provide the funds to ensure that that access is available. A great local effort has been made to provide the cargo ship but the obligation is on the Minister's shoulders to ensure that capital funding is provided now. If that is done, there will be a considerable return to the Exchequer, not alone in the next tourist season but in the years to come. In conclusion, I add my voice in support of the very fine argument put forward by Deputy O'Keeffe this evening.
Ta súil agam go mbeidh an t-am agam chun ceisteanna atá curtha a fhreagairt. At the outset, I wish to make a few basic but very important points about my own and the Government's involvement with Swansea-Cork Ferries. Firstly, the company in 1987, got a start-up grant of £500,000. This was intended, and it was specifically stated at the time, to be a once-off grant to assist the company in the start-up of the ferry link between the Cork-Kerry region and the UK.
Half of that came from the west Cork package.
I could have interrupted the Deputy at the begining of his contribution when he was being personal. The Deputy should listen for a minute.
Half of that money came from the west Cork package.
Deputy O'Keeffe was allowed to make his speech without interruption. I must insist on the same courtesy for the Minister.
I could use that kind of smart jibe too but that will get us nowhere.
Secondly, in recognition of the benefits for tourism in the south-west which this service brings, I successfully encouraged the allocation of a further £300,000 earlier this year to Swansea-Cork Ferries out of a special fund for tourism agreed by the Government in the context of this year's budget. Thirdly, I have again encouraged my colleague, Deputy John Wilson, Minister for Tourism and Transport, to take up the helpful position which he has outlined to the Dáil in recent weeks, namely that the Government would be prepared to consider a further grant of £500,000 to assist Swansea-Cork Ferries in marketing and promoting a service for the 1989 summer season. This, however, is subject to a reasonable condition that the company would submit to the Minister proposals for a viable operation in 1989.
The value of the Cork-Swansea Ferry to the south-west is well known by me and to everybody else. I fully accept what the Deputy opposite had to say about its value to tourism in Cork and in the south-west region in general. The success of the company is indicated by their above-target performance in terms of numbers carried and bookings throughout the year. I, as a local Deputy, fully realise the regional impact that this service has made. Indeed, we have given practical expression to our appreciation of the service, as I outlined in my opening remarks. This is, of course, fully consistent with the Government's policy objective of maximising tourism revenue and jobs. However, Government action alone will not be enough to achieve our tourism objectives. We need an ongoing partnership of Government and tourism interests. I would acknowledge the cooperation we are receiving from the tourism interests to the initiatives and promptings given by the Government.
Swansea-Cork Ferries cannot expect to rely on the Government to meet shortfall in their working capital. It is, therefore, now a matter for them to respond to the possibility held out by my colleagues of a further £500,000 grant by putting together proposals for a service in 1989. Such proposals would have to include, for example, the sources of the necessary working capital in addition to what the Government may be prepared to provide. That is what I meant when I said at the outset that I will continue to assist the company in exploring every possibility — I emphasise "every possibility"— including the possibility of raising finance from the private or other sectors.
It is time I referred to statements made by Deputy Jim O'Keeffe in the House this evening about the B & I. I should pre-empt my remarks by saying that, when in Opposition, I was as critical as was anybody else of the B & I. I am on record as having made the longest contribution in a debate on the reports available to us at the time on the matter of the B & I pulling out of Cork. I do not change too easily. I was strong in my determination then and I am as committed now as I was then.
With regard to the allegations being made about the level of subsidy for the B & I and its use to support uneconomic pricing I might say that the B & I do not receive Exchequer subsidies to support any fares policy or for any other reason. The B & I have received equity support from the Government, in respect of which I might remind Deputy O'Keeffe of a few facts. In 1985 the B & I received £5 million in equity, in 1986, £20 million but, and here is the difference, in 1987, £11 million. In 1988 the B & I will need approximately £7 million in equity, bringing the total for those two years not to £44 million — as I have heard quoted and read — but to a maximum of £18 million in order to implement a radical plan of action aimed at restoring the company to viability, a plan the company have successfully pursued this year. In any event I do not accept that B & I pricing policies have caused financial problems for Swansea-Cork Ferries. The low fares which all ferry operators have marketed in recent years constitute an inevitable and necessary response to the low air fare competition the ferry companies are experiencing. These low air and sea fares — which the Minister and I have encouraged — have greatly assisted our efforts to stimulate the tourism industry. I might put on the record that the 500,000th passenger this year passed through Cork Airport today.
With regard to the suggestion that the Government are closing the company by offering a maximum of £500,000 when the company say they need much more, let me say that the Government most certainly are not forcing the company to close. On the contrary, we are concerned that as many commercial access transport links as possible be supplied by air or sea in the interests of our national tourism efforts. However, it is a matter for Swansea-Cork Ferries to satisfy themselves that sufficient finance will be available to support whatever services the company wish to provide.
I might remind the House that that company received a start-up grant of £500,000 from the Exchequr in 1987 and, earlier this year, received £300,000 from the special tourism promotion fund. Indeed they have been told that a further £500,000 may be made available to them this year. In that equation we must also include the contributions of Cork and Kerry local authorities amounting to £300,000 to initiate the service.
The Rosslare impact was mentioned in the House here last week. This debate affords me an opportunity to reflect briefly on that aspect. Comments were made about an alleged adverse impact of Government assistance for Swansea-Cork Ferries on other ferry operators, particularly those using the port of Rosslare. I do not accept that a viable Cork-Swansea service necessarily has adverse implications for other port or ferry operators. It is a matter for all ferry operators to respond vigorously to challenges in the market place and increase the total number of tourists utilising their ferries.
Finally I might add that, as a Cork Minister and Minister of State at the Department of Tourism and Transport I will continue, as I have done with my Government colleagues, to assist Swansea-Cork Ferries to explore every possibility of ensuring the continuity of the service. The Minister himself and I will be meeting with Swansea-Cork Ferries tomorrow when I assure the House that our attitude on that occasion will be as helpful and as constructive as it has been in the past.
The Dáil adjourned at 11.20 p.m. until 10.30 a.m. on Wednesday, 30 November 1988.