Dáil Éireann díospóireacht -
Friday, 12 Feb 1993

Vol. 425 No. 9

National Stud (Amendment) Bill, 1993: Second Stage.

Minister for Agriculture, Food and Forestry (Mr. J. Walsh)

I move: "That the Bill be now read a Second Time."

The Irish National Stud is located on over 800 acres of land at Tully, County Kildare, on the edge of the Curragh. Thoroughbred horses have been bred on the farm since 1900, when it was acquired by Colonel William Hall-Walker. The land and buildings were presented to the State in 1943. The National Stud (Company) Limited was set up under the National Stud Act, 1945, to lease the land from the Minister for Agriculture and to carry on the business of stud farming on the land.

The 1945 Act gave the stud the power to set up and operate schemes for the improvement of thoroughbred breeding. The stud's main method of operation was to improve available blood lines by providing the services of highclass stallions to as wide a range of breeders as possible.

The National Stud purchased its first stallion in 1946 when it acquired Royal Charger. He went on to become one of the leading sires of his era. The tradition has been maintained over the years with many outstanding stallion purchases, such as Lord Gayle, Ahonoora and Crash Course. I think that it is fair to say that the stud has admirably fulfilled its role in thoroughbred breeding over the years. This is underlined by the fact that over 700 brood mares visited the stud in 1992.

In addition to its core stallion and thoroughbred breeding business, the Irish National Stud is involved in a wide range of activities, from farming to tourism and training personnel for the bloodstock sector. While I am very conscious that the central activity of the stud must remain bloodstock breeding and the necessary related farming business, many of its other activities are very important and may not be generally well known. First among these is its tourism role. The stud and the Japanese Gardens at Tully are now well established tourist attractions with over 80,000 paying visitors annually. Last year 87,000 visitors called to the Japanese Gardens and the horse museum. This activity has been turned into a profit maker in recent years and is capable of further significant development. However, the general facilities at the stud are not adequate to cope with an increasing throughput of visitors. Accordingly, a new visitors' centre, costing in the region of £600,000, is under construction and is scheduled to open at Easter this year. This centre will be capable of servicing the increased tourist numbers projected by providing the ambience demanded by discerning visitors. The centre will incorporate a ticket office, restaurant, souvenir shops, toilet and washroom facilities. This centre will provide an appropriate backup to the unique and celebrated Japanese Gardens.

The Irish Horse Museum within the stud grounds was established in 1977. The museum, featuring the skeleton of the great Arkle, traces the evolution of the Irish horse from prehistoric times to the modern era. Included are exhibits of folk life, transport, racing, hunting and showjumping. The existing building is rather cramped and plans for a new building are under consideration.

The visitors' centre, Japanese Gardens and museum are complemented by the development of a walking trail through the general stud grounds where visitors can view horses in the paddocks at all times.

Mindful of its role in the horse sector in general the stud organises a horse-breeding training course for 25 to 30 young persons each spring. This course, which has been in operation for over 20 years, is recognised within the bloodstock industry as the best of its type in the world. Graduates of the course manage some of the biggest stud farms in the world and have trained winners in three continents last year. It has never been known for a graduate of the course to fail to be placed in employment. This is a remarkable achievement in the present environment of high levels of umemployment, particularly in view of the fact that it is operated without any subsidy or assistance from the State.

Horse racing and breeding have for many years formed an important part of Irish life. Racing provides a valuable leisure activity for many people. As an outdoor sport, it can be regarded as a true family activity enjoyed in a healthy, natural environment. There is also a place for the armchair enthusiast, of course, whether it is in front of the TV in the living room or in the betting shop. Despite the generally difficult economic conditions prevailing last year, attendances at race meetings and betting on the tote held up well. Attendances were up by 3 per cent and stood at over one million. This was the sixth year in a row that attendances topped the one million mark. Tote betting also increased by 3 per cent in 1992.

While many people look on the thoroughbred sector purely in terms of leisure activity I must emphasise that for other people it is a very serious activity from which they earn their living. Up to 25,000 people are directly or indirectly employed in the thoroughbred sector. This industry must be considered an important source of employment. This factor is all the more important when one realises that much of the employment is available in rural areas where alternative work can be scarce.

While the breeding of thoroughbreds is a scientific activity, it is in Ireland primarily a farm-based enterprise. I regard this as the basic strength of our thoroughbred breeding sector. Breeding activity is characterised by the relatively large number of breeders with just one or two brood mares. Obviously, the brood mares are normally used to supplement the farm income achieved from more conventional farm activities. Most of these breeders are involved in the business of producing foals or yearlings for the annual sales.

I must emphasise that a certain level of risk is associated with the breeding and production of livestock in general, but the thoroughbred sector entails a much higher level of risk than more conventional livestock production systems. While the cost of production of a foal or yearling can be forecast with reasonable accuracy, the price obtained at the sales is very difficult to predict. This sets the thoroughbred apart from other enterprises on our farms. Accordingly, it is prudent for many farmers to regard thoroughbred breeding as a supplementary enterprise.

While mare ownership is traditionally a supplementary activity on farms, the stallion sector is characterised by a relatively small number of studs with ten or more stallions. Such studs are professionally managed and many of the stallions command high fees. These studs are part of a truly international breeding business and the market for top quality stallions is a highly competitive international one. This is the environment in which the Irish National Stud must operate.

The Irish thoroughbred sector was put on a solid footing with the introduction in the 1969 Finance Act of the concessionary tax regime in respect of stallion nomination fees. This set the scene for the location of larger numbers of top class stallions in Ireland and enabled our breeders to emerge as a dynamic force in the world thoroughbred sector. The emergence of a small number of larger, highly professional stallion studs over the last 20 years has led to a questioning of the continuing necessity for a national stud. I am firmly of the view that there remains the need for a vibrant and competitive national stud to service breeders in the long term. The Killanin report of 1986 was also of this view.

Since its foundation, the Irish National Stud has played a significant role in the development of Irish bloodstock. Historically, the stud has been a viable and profitable operation with a strong capital structure. This profitable situation has been reversed, unfortunately, in the last few years when losses averaging over £500,000 per year were incurred. The main contributory factors have been the downturn in the bloodstock industry worldwide, with a consequent substantial reduction in nomination fees, and the stud's difficulty in maintaining the quality of its stallions due to financial constraints. Faced with this situation, the stud made strenuous efforts to curtail the costs associated with its operations. While these efforts have been moderately successful, the reductions achieved have not been sufficient to compensate for the very substantial decline in income from nomination fees. The stud needs to acquire new stallions on an ongoing basis. Currently, the stud has seven stallions and it urgently needs to acquire new ones and to increase the numbers standing if it is to retain its client base and improve revenues. However, the company is unable to provide the capital required to do so from its own resources.

The purchase of untried stallions is a high risk business. However, in a large operation like the National Stud the risks can be spread over a number of stallions. The capital cost of a top class stallion can be from £1 million upwards and most stallions are syndicated to spread the ownership risk. The National Stud has also used this mechanism to reduce exposure to acceptable levels of risk.

The board of the stud submitted a five-year development plan to me last year. The main proposal was an injection of fresh capital, principally to purchase a number of top quality stallions. Furthermore, the board has sought an increase in borrowing powers from the current £0.5 million to enable the stud to move quickly and effectively to acquire suitable stallions when they become available. I have asked the new board to re-examine the plan with a view to restructuring the stud's activities in the most cost effective way, particularly in respect of the core stud activity.

This Bill, which will amend The National Stud Acts, 1945 and 1976, proposes to increase the National Stud's borrowing powers from £0.5 million to £5 million. It also proposes to increase the share capital of the National Stud from £5 million to £10 million. To date the State has purchased all but £24,626 of the £5 million in share capital which is authorised under existing legislation. The last purchase was of 800,000 shares of £1 each, which was made by the Minister for Finance in December last year. These financial provisions are enabling ones. The power to borrow is subject to the consent of the Ministers for Agriculture, Food and Forestry and Finance. The increased share capital will be issued when and as considered appropriate by the two Ministers referred to. The Bill also provides for statutory control of staff pay.

The stud, with its current staff complement of 46, will have to face a number of challenges in the future. The proposed route of the Kildare town by-pass will go through a part of the stud and will cause some disruption to its activities. I believe that the stud can play a significant role in the Irish thoroughbred industry in the years ahead — an industry that portrays a positive image of Ireland abroad. The Irish National Stud has provided the farmer-breeder with access to the top blood-lines and enabled our breeders to carve out a special place in a competitive international business. The Bill before the Members today is necessary if the Irish National Stud is to have the financial flexibility necessary to enable it to continue to deliver access to international quality stallions to small breeders at affordable rates.

I commend this Bill to the House.

Mr. Yates

We have no particular difficulty with this Bill, but it affords the House the opportunity to scrutinise the National Stud and its performance. On this side of the House I believe there is an obligation to make a very critical analysis of the National Stud and its performance. A blind man could see that there is a need to increase the borrowing and share capital limits of the stud. It cannot continue to operate in the present hamstrung way. The stud is 46 years old. I regret to say that in recent years since 1988, it has traded with significant losses. My first criticism — and this is not just of the stud but of the Department — is that when I went to the Library to get the up to date financial picture of the stud I was given the last three published accounts, those for the years 1987, 1988 and 1989. The latter runs to the end of the financial year, December 1989, and is three years out of date. I know of no investor, equity fund manager or pension fund manager who would think of giving increased borrowing powers, increased injection of equity, to a company that had not produced or published accounts for three years up to December 1992. As a practice, I have to say that that is wholly undesirable and, quite frankly, unacceptable, and that the taxpayer deserves better.

From the latest published accounts we have, from 1988 and 1989, we see that in 1988 the stud made a net loss of £429,000, increasing to £467,000 in 1989. It seems from what the Minister said, which was quite informative, that in the last few years it has lost about £500,000 per annum. If we assume that to be the case, it seems to be in a fairly serious permanent loss-making situation; and from reading the chairman's comments it appears that this has been financed by increasing the overdraft limit in consecutive years and running down the stallion replacement fund.

This brings me to my more serious criticism of the stud.

As someone who has a very keen interest in the racing industry and in the betting industry, I believe that the quality of stallions at the National Stud is not what it was in the past — stallions of the quality and renowned progeny of Lord Gale, who was a soft ground specialist; horses such as Carroll House, who won a Prix de l'Arc de Triomphe, and Executive Perk. Crash Course, unfortunately, died when he was establishing himself as one of the best National Hunt stallions. Sallust was another very good commercial stallion producing good flat early two year olds. Ahonoora was exceptional, producing many group and classic winners, including Don't Forget Me, a dual classic winner. Through unfortunate deaths and sales — as in the case of Ahonoora, who was syndicated and sold — and through retirements as in the case of Lord Gale, there had to be replacements. If we now look at the stallions in the National Stud, I believe those replacements are just not of the same quality at all and it comes to me as no surprise that the main business, the income from nomination fees, is falling off. If one looks at sires such as Yashgan, Magical Wonder, Hatim, Broken Hearted, Coolmore Row, Digamist, Tremblant and, to a lesser extent, Dancing Dissident, they have their qualities; but they are not up to the quality that I believe is required. They are not top class horses, but middle range horses. They are not the type of horses, for example, that Coolmore Stud has been syndicating. They are not the type of horses that the Arabs have been syndicating, be it Sheik Mohammed or Kalif Abdullah or whoever. This matter must be examined.

I welcome the appointment of the most recent board by the Minister, but I have to say that the decisions made by the previous board in relation to buying and selling stallions left a lot to be desired. The reason this is becoming so significant is that the horse breeding industry is in crisis at the moment. This is manifest in every sales ring from Goffs to Tattersalls, from Newmarket to Kentucky, Paris and Deauville. A Nyjinsky yearling could be syndicated for £10 million five or six years ago; now it costs £1 million or £2 million. There is a major slump in the market and quite frankly, gross overproduction of bad horses in this country. Pick up any racing card and you will see the position, both in flat or National Hunt. This Sunday at Leopardstown The Hennessy Cognac Gold Cup might attract fewer than ten runners, but a maiden hurdle or a maiden bumper would have to have two divisions and probably a ballot, with about 60 declared. The country is full of lousy, third rate horses, because the breeding practices result in more mares that never won a race being kept for breeding. Also, there was a practice where stallions serviced about 45 mares a year; they are now servicing over three times that number. In the sales catalogues and the results in The Racing Post or The Irish Field, most entries have “NS” after them, and in some cases there is no bid. There is a huge depression. As the Minister, rightly said many farmers who have one or two thoroughbred mares are really feeling the pinch.

The best way for the National Stud to safeguard its position in this recession is to specialise in quality. That does not necessarily mean having 12 stallions — both the board and the Minister seemed to indicate that seven were not viable. If you had 12 mediocre stallions the problem would only get worse. It would be better to have three superb stallions. This means, in terms of flat breeding, concentrating almost exclusively on classic and group winners for new stallion replacements. That brings up the question of affordability, because you are talking about large sums of money. I implore the Minister to implore the National Stud to go for a policy of syndication. The only way you can do it is to have half or quarter of a stallion, to have a number of nominating shares. That is the most viable route for the National Stud to take.

The role of the National Stud in terms of horse breeding must be looked at anew and in a modern context. When it was originally established under the 1945 Act, Ireland had a rich tradition of horse-breeding and bloodstock; but we were not then the premier force we are now. We are now, for tax and other reasons, the mecca of the bloodstock world. We have Sheik Mohammed and the Dubai Ministers. The Aga Khan is here, he moved out of the UK for a number of reasons. We have a number of top French operators. We have studs such as those at Coolmore, Ballycastle and Moyglare Stud — all the very top international breeders, who could sell their progeny in America or other countries and who would come to any invitation day. Things have changed. The National Stud is no longer required as a flaghsip for the industry. It is not a flagship, because things have moved on and, for tax and other reasons, we have outstanding studs here.

The National Stud is undercapitalised, it is no longer the flagship, and the question then arises as to what should be done. A new and more imaginative policy is required. Purely in the context of horse-breeding, the National Stud should be open to joint ventures with other top class studs — for example, with Moyglare Stud. I know some board members have links with a number of studs, I am not exclusively picking on Moyglare and there should be a joint venture with an Irish stud because it would have huge mutual benefits in terms of cross entitlements to nomination shares and rights. If you fail to go down this route you will continue to be undercapitalised, to have mediocre stallions, a reducing stallion income and sustained losses. The shareholder is entitled to better.

I am talking exclusively about horse breeding, because I fully accept that the Japanese Gardens, the Horse Museum and the renowned — as the Minister rightly described it — students stud management course are public service functions, I have no problem with that. That could be dealt with in two ways, either the State could in all circumstances, retain a majority shareholding or, alternatively as in the case of heritage parks and so on, those aspects of the stud could be put into a trust. However, those elements could benefit from a more commercial approach.

Last year I visited the National Stud, because I am interested in horses and so on, and the Japanese Gardens. I was disappointed with the Horse Museum; I had seen it some ten years previously and it had not changed. You can only see or be interested in a skeleton of Arkle so many times; when you have seen it there is no particular interest in seeing it again. Some things could be done. For example, there is no promotional material available to buy, mementoes of horses or anything like that. There is no video material of the stallions there winning their best races. That would be of great interest and would attract horse racing enthusiasts, who are perhaps not even aware of the existence of the museum. I have never heard on 2FM or on any radio station, in the same way as you hear advertisements for greyhound racing or horse racing, any promotional material for the National Stud. A commercial attitude would be of great help.

I welcome the appointment of the new board. Messrs. Shubotham and Dermot Weld for whom I have a very high regard in respect of their wisdom in buying and selling, which is a key part in the stud's activities. However, I regret that some of the purchases made — and I accept that this is undoubtedly a high risk business — are stallions that others shied away from.

I would like to make a few more points. I note that the last President ran a number of horses. I think Seskin Bridge was perhaps one of the better known, it won a number of races and is now breeding. The Minister should encourage the President to support our large horse racing industry by ensuring that one or two horses, both on the flat and under National Hunt rules, would be kept in training — perhaps progeny from the stud — and to take a more active role than she has done to date. As far as I am aware, I do not recall seeing much high profile in that sphere of her activities.

In relation to the problems with Kildare County Council about road development, I understand that this is a national primary route and I ask the Minister to use his influence with the Minister for the Environment to ensure that that matter is satisfactorily resolved.

The backdrop to the Bill is provided by the Killanin Commission report in 1986 and the report of the Oireachtas Joint Committee on semi-State Bodies some time later. The most significant thing about this Bill is that it is long overdue. I am glad, therefore, that we are taking all Stages, because the sooner it is enacted the better. It is over six years since the recommendation to raise the borrowing limits and so on. All businesses — retail, manufacturing or agricultural — have changed enormously in the last 20 years. The National Stud has changed very little in 46 years.

Therefore we have to look at new policies and new ways of moving forward.

The Minister has promised a new horse racing authority and the necessary legislation for that. I was somewhat disappointed that it seemed to have as its primary focus getting the agreement of producers for the industry. That is entirely valid in its own right. But, essentially, racing, unlike breeding, is a leisure business competing with every other leisure business to attract crowds. The lifeblood and future of racing is the levy, and the levy comes from punters. If some of the large carpet dealers or large meat barons do not turn up at Leopardstown on Sunday you will know in your levy returns that they did not turn up. In other words, there has been a growing dependence on large betting by a few individuals, which, I believe, masks the figures. In fact, I think the turnover in levy terms peaked in 1988 and has gone down ever since in real terms, although it has not got back to its 1989 level. While attendances are up, that must be a very worrying situation. I believe that the primary role of this new authority — and I am all for bringing the Racing Board and the Turf Club together — must be to get more people racing and more people betting. The way you do that is not running ten maiden EBF seven furlong races at Roscommon and places like that. Mixed cards, handicaps and holiday type fixtures and festival cards attract the punters. I have been to places like Mallow and Roscommon. These are tracks I like, unlike Tramore and Bellewstown, which I do not like and, most especially, that Kilbeggan track, which I think is a waterloo for any punter because of those hills and undulations they have to encounter. The point I am making is that it is not market driven, it is not consumer led, and unless the right people — and I do not mind if they are your nominees, Minister — are put on that board, it will not work because you cannot run racing for producers, you must run it for consumers.

I would also like to say that there is a rumour in the betting business that the betting tax is going to be raised — 12 per cent and 15 per cent have been mentioned. I can tell the Minister, on behalf of those who are in the business and conducting it entirely legitimately and legally in which I would include some associations I have myself, that this is like a piece of elastic and if you stretch it too far it will break. There are plenty of people who will facilitate tax free betting. Therefore you will make the margins such that, while people are prepared to pay 10 per cent, they are not prepared to pay beyond it. In so far as it is now the case that money from off course is financing on course racing in terms of the Government grant, it is absolutely imperative that that revenue be buoyant and that it stays at 10 per cent. No matter what happens on 23 January when the Minister for Finance is struggling with his Labour colleagues to fill the last remaining gap in the deficit, it must be hands off the betting tax, because that is not on. One of the biggest single advantages we have in bloodstock sales is the advantage we have over the UK in the way we treat VAT, the 2.7 per cent rate as opposed to the British rate, which is a multiple of that. That must be retained.

I believe it is a time for a more imaginative approach to the National Stud. There is no point in the people on the board being so busy running other things that they do not give this their primary attention. I would ask them to adopt a policy of having an alliance or joint venture with other studs, of seeking to get a reduced number of top quality flat and National Hunt stallions, stallions of the Sadler's Wells ilk, at the very top of the market. You will have to pay for them and I suggest that that be done through syndication. I would also support an increase in the practice of selling stallions to the southern hemisphere during our offbreeding season for their breeding season to maximise their revenues and to ensure that the glut of overproduction taking place at the bottom end of the market is not a policy pursued by the National Stud. I do not accept the view that the National Stud is there to provide the type of stallion that is affordable for farmer breeders. Unless that policy can stand up in commercial reality, it will not succeed. This is not a social welfare policy for breeders. Breeders are only interested in selling animals that will give a rate of return. The best way to do that is to ensure that you have quality animals and I think that can be done through syndication.

I welcome the Bill. It is long overdue, but I think it is time for a new approach to the National Stud.

Mr. O'Malley

I would like to express my satisfaction that this Bill has been introduced. I am glad to see that it will pass through this House today without any opposition because I think it is badly needed. While I obviously welcome the Bill and its enactment at a very early date, like Deputy Yates, there are some things one is forced to say in regard to the National Stud. The Minister gave us a certain amount of information, but I found Deputy Yates's speech perhaps more informative and more entertaining.

Mr. Yates

The civil servants do not write my speeches.

Mr. O'Malley

When I saw this Bill was being taken today I went to the Library to get the latest annual report and it is an absolute disgrace that it is the 1989 report. The fact that it is three years and two months out of date and that that is accepted as the norm by the Irish National Stud, and possibly by the Department of Agriculture, is symptomatic of many of the things that are wrong with the National Stud. That they should run their affairs in such a haphazard way as that is simply not acceptable.

The 1989 report discloses very substantial losses in that year and in the previous year. I do not know what the figures are since then, but the Minister said that the losses are running in recent years — that is, the years since the report — at approximately a loss of half a million pounds every year. That means that this stud has lost £2.5 million in the last five years. It is very regrettable that that should be so. I know that the breeding industry has been passing through a difficult time. I am sure some other stock farms at least have lost significant sums of money too, but what amazes me is that, as well as running a stud, the Irish National Stud has a lot of land which it farms in a conventional way and that that succeeds in losing a great deal of money too. Not alone have they 800 acres beside Kildare town, but I think they also have the land that is attached to Barretstown Castle some miles away. They have these large quantities of good quality, valuable land entirely free and they lose more than £50,000 a year on farming it.

Mr. Yates

If they set it, they could not go wrong.

Mr. O'Malley

This is quite an achievement. Even if the average farmer in this country were offered 1,000 acres of high quality land in Kildare for nothing, he certainly would not lose over £50,000 a year on it.

I agree fully with the Minister that, having such a large infrastucture and having only seven stallions standing there, does not make sense. One of the several reasons I welcome this Bill is to have the opportunity to increase the number of stallions standing. Like Deputy Yates, I would say that there is no point having stallions that are no good. One advantage at least for the National Stud and one reason this Bill is particularly timely at the moment is that the market for stallions is depressed and even the best ot them are costing less than they did some time ago.

Even though they are still very expensive, world class stallions may be bought now for less than they would have cost five years ago. It is very much in the interest of the stud that it acquires top class stallions and the obvious way in which to acquire several such stallions — they are needed — is by taking shares in stallions, as Deputy Yates has suggested, rather than by buying them outright. Other countries are quite happy to syndicate stallions and the Irish National Stud should be equally prepared to do so. If it cannot afford to buy a world class stallion outright it may well afford to take shares, which would make a major difference to breeding here.

The losses continuously incured at the stud will have to cease. Otherwise the money being voted today in this Bill will be simply money down the drain. The Irish National Stud is not all as well regarded these days as it was in the past. Apart from its financial results it does seem to have declined in the esteem of breeders in recent years. There may be reasons for that which might not be appropriate to personalise here and I do not want to go into that now. The Minister and the board must be aware of these reasons, and they should take whatever steps are open to them to try to reverse that decline. With the form of syndication which has become common there are opportunities open to the National Stud which were not open to it in earlier decades and these opportunities should be fully availed of now.

The Minister refered to a five year plan which the board of the stud submitted to him last year. That plan should be published so that people would have an opportunity of working out where the stud is going. Certainly on its published reports, which are more than three years out of date, one had no official information on what are its plans. Perhaps the Minister will consider putting that development plan in the Library of the House so that Deputies may study it.

The Minister made various references to racing, which is the other side of this coin, as did Deputy Yates. I would urge the Minister to take note of what Deputy Yates has said because it is common sense. We have a remarkable racing industry but it is more notable for its quantity than its quality. The number of race meetings held is huge. The reason for that is the number of horses we have is huge. However, a great number of horses are not of good quality — the huge entries for maiden hurdles are indicative of that. The same horses may run in maiden hurdles three or four seasons after they ran in their first one and that practice is likely to continue.

Mr. Yates

I hope they are not carrying the Deputy's money.

Mr. O'Malley

The future of racing here would be assured if the cards were more attractive and particularly if national hunt racing got greater support proportionately than it does at the moment. Racing is a consumer driven industry, whether or not those running it realise that. The public in general prefer national hunt racing to the type of flat racing that takes place every summer, which is not particularly attractive and in which the quality of horses taking part is very poor.

The Minister has spoken — this is appropriate here — about the thoroughbred industry. I would take the opportunity to remind him that while we may have an over-population of thoroughbred horses, some of whom are of very poor quality. There are and should be great opportunities for farmers and breeders in non-thoroughbred breeding. The dangers of over-population in this area are not as great and very good prices may be obtained for non-thoroughbred horses that are suitable for equestrian events of various kinds. At a time when farmers are increasingly restrained by milk quotas and difficulties with intervention for beef the Minister should seek to encourage people to take part in this industry. Even though it is a somewhat risky and difficult business, it is one that is very much associated with this country and in which this country has been and can continue to be eminently successful.

I am glad this Bill has been introduced; it is not before time. Ideally it might have been introduced several years ago, particularly as it was recommended by Lord Killanin. However, there is at least one advantage in its coming now in that the moneys that will be made available through the passing of the Bill can be utilised at a time when prices are lower than has been the norm. I would urge the National Stud to acquire some outstanding stallions and acquire shares in as many as possible. The National Stud is attractive as a location in which to stand stallions for shareholders. It should be borne in mind that much of the success in the breeding industry here, with the advent of very large and successful privately owned studs, is tax driven and tax related. I greatly fear that many of those studs would close if changes were made in the tax system. If that were to happen breeders would have to rely very much on the National Stud and I doubt very much, with the way the National Stud is operated at the moment, if their needs would be met. For that reason it is very timely that we build up the National Stud and ensure it is a place of which we can be proud, with outstanding horses.

In conclusion, it is inexcusable that such large sums of money should continue to be lost by the stud year after year. If the stud was privately owned that could not happen. I regret that it happens at public expense. I hope the investments that will be made as a result of this Bill will turn things around. I support the Bill and I wish the National Stud well.

Acting Chairman (Mr. Leonard)

I call Deputy Rabbitte who has 30 minutes.

Mr. J. Walsh

A photo finish.

Mr. Rabbitte

I hope there are no female gender references in this speech which would make it somewhat awkward.

County Kildare has been synonymous with the bloodstock industry for years and the jobs and prosperity of many Kildare people are dependent on the success of the industry. The location of the National Stud in the county reinforces the close relationship between this county and horse breeding. During its 46 years of operation the National Stud has established a fine reputation at home and abroad and has become an international flagbearer for our bloodstock industry.

I welcome the fact that legislation to update the financial basis of the National Stud is finally being put in place. As long ago as July 1986, the Commission of Inquiry into the thoroughbred horse breeding industry under the chairmanship of Lord Killanin reported to the then Minister for Agriculture, Deputy Deasy, and made a strong case for increasing the scope for borrowing by the National Stud. It is a pity that it has taken so long for this recommendation to be acted upon. The Killanin report recommended that the borrowing authorisation should be £5 million, as the Bill proposes. This was the figure also recommended by the Oireachtas Joint Committee on Commercial State-sponsored Bodies in 1990. However, costs and inflation have risen since then and I wonder if the authors of the Bill should not have taken note that the recommendation in the Killanin report was for a periodic review of that figure.

Many of the points made in the Killanin report are pertinent today. It pointed out that unless fresh acquisitions were made the stud would slowly decline as its stallions aged. It argued the case for a viable future for the National Stud in order to protect against any possible disasters in the bloodstock business, whether financial or disease-related. The acquisition of more and better stallions is a costly business but the depressed market favours investment at present.

The Minister recognises the vital role played by the National Stud in the education and training of young people in stud management. It is remarkable in these tough days to be able to guarantee a job to any graduate of any training course. Yet this is the case for the 15 Irish people who qualify each year from the training course. One-third of all students who attend the course come from overseas and the general demand far outstrips the number of places. Investment in the National Stud should mean that its training capability will expand with the number of stallions bought in.

When it comes to creating new jobs, it has been shown that the one area where Ireland can excel is selling quality education to overseas students. We have no better opportunity to do this than inhorse breeding management. Our National Stud has a good name world-wide. Indeed, many stud managers operating around the globe learned their skills in Kildare.

The relationship between visitors and the stud has been built-up over the years so that yet again demand is outstripping accommodation. Since the National Stud is strategically placed close to a national primary route, the build-up of tourism has been considerable. As many as 74 tour companies and groups have dealings with the stud and 108,000 people visited the centre last year. Expansion of visitors' facilities is overdue. To give one example of the urgency of the matter, the Museum of the Irish Horse housed at the National Stud is capable of holding only 30 people at any time. This creates major logistical problems. The growing interest in the National Stud as a tourist destination, together with its ancillary attraction, the Japanese Gardens, augurs well for the future. However, if the spin-offs in terms of jobs and prosperity are to come about we must ensure investment in high quality facilities.

Certain services are provided to breeders nationally — a countrywide foster mare service, a plasma bank and a limited amount of assistance for research and development. The role of the National Stud in developing the thoroughbred industry is critical. It is an industry whose job creating potential is generally underestimated by the general public.

Traditionally, however, it is an industry with archaic practices when it comes to industrial relations. It is not common for workers in the industry to be unionised. The tied cottage is still a feature for many people employed on stud farms and stable lads can often work for low wages. Modernising that aspect of the through-bred industry should go hand in hand with the improvements that this Bill will bring about. An attempt was made by my union to organise this category or worker but it did not have a great deal of success. Because of its nature, it is an exceptionally difficult industry to organise. It is an area that requires attention, and to the best of my knowledge no minimum pay legislation applies.

The benefits of having a National Stud at the heart of a long-established thoroughbred industry have been long proven. It is important that as a semi-state company it plays its part in ensuring that these benefits can be enjoyed right through the industry by everyone who contributes to making it an integral part of Irish agriculture and of the Irish export business.

I welcome the endorsement of the future role of the National Stud as a semi-State body. In its 1990 report the Oireachtas Joint Committee on commercial State-sponsored bodies came out clearly against privatisation and spelt out the arguments against such a move. Those arguments are detailed at page 40 of that report.

The report recognised that the company's borrowing powers of £500,000 were totally inadequate, especially in the context of an industry where even a moderately priced stallion costs over £1 million. The decision to raise this borrowing level to the more realistic figure of £5 million is obviously an improvement. The report sensibly argued that the statutory limits on the company's borrowing powers be lifted altogether and be replaced by a requirement that the company get ministerial approval for its borrowings. The Bill provides for both a ceiling on borrowings and a ministerial authorisation. This would seem to be a "belt and braces" approach.

It is not always a good idea to stipulate a precise sum of money in legislation of this kind as in a few years time that figure could be quite meaningless due to changes in cost structures and other changes that may occur in the bloodstock industry. If we are to encourage State enterprise we should not be setting unnecessary strictures to it.

Finally, the "direction" referred to must include the creation of more sustainable jobs. Investment in a national resource of this type must have spin-offs in employment if its benefits are to be felt by those most in need. I hope that in its future plans the National Stud will play its part in helping to reduce the overall numbers of those out of work as well as generating new life into the horse breeding industry, thereby increasing tourism and the number of overseas students.

Mr. Yates

On a point of order, I have no doubt Deputy Power is about to make a very significant speech and it is appropriate, therefore, that there would be a quorum to listen to him.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Mr. Power

First, I thank my colleagues for coming into the House to listen to me, and I hope they will not leave. As we are debating the racing industry I might be tempted to give them the name of a winner. There is a big race in Leopardstown next Sunday and if they put their money on Jodami they will not be going too far wrong.

I welcome the opportunity to speak on this Bill. It is very fitting that 50 years after the lands and buildings were presented to the State this has been brought before the House. The Bill is fairly straightforward in that it proposes to increase the National Stud's borrowing powers from £500,000 to £5 million and increase its share capital from £5 to £10 million. As someone who comes from Kildare it is easy for me to recognise the important role the National Stud has played in developing our racing industry, increasing tourism and creating employment. The National Stud has been a tremendous success since its foundation and it has been very well managed.

The racing industry has been taken for granted by successive Governments. When one looks at the various sectors involved, the racing industry employs in the region of 25,000 people. It is only in the last few years that the industry has fallen on bad times. When this was recognised by Government it was decided to put the money back into the racing industry. This industry, particularly in regards to off course betting, has given a good return to the Exchequer over the years and I am glad that the Government was prepared to put money back into the industry during its hour of need. Unfortunately, the problems in the industry have not been solved and it is in urgent need of attention.

I thank the Minister for the interest he has shown in the racing industry. I know that like Deputy O'Malley and a few other Deputies in the House, he is a very keen racegoer. He may not be making any money out of it but he certainly has the interests of the industry at heart. The decision taken by the Minister earlier in the year to set up one authority to run the racing industry has to be welcomed. The racing industry is very important to the consumer. Many people involved in this industry have taken the consumer for granted and if more people do not attend race meetings the racing industry will remain in decline. The racing industry in Britain is in a poor state at present and it is important that we make every attempt to benefit from that. We have seen over the last couple of weeks the difficulties the fall in the value of sterling has caused for us, and we have an opportunity to benefit from the difficulties in the British racing industry.

I should like to give the House some statistics which indicate the extent of the difficulties being experienced by the British racing industry at present. During the last 12 months the number of owners in Britain has fallen by 8.2 per cent and the number of horses in training has fallen by 9.5 per cent. In January 1992 there were 11,469 horses in training in Britain but last month that figure had fallen to 10,374. Since 1990 the number of horses in training in Britain has fallen by 13 per cent. These figures tell their own story about an industry that has been taken for granted both in Britain and Ireland, an industry which Governments have not given the attention it deserves. We should recognise that the racing industry is a big employer, and try to help it as much as we can. Some months ago Tattersalls announced its intention to bring one of its premier sales to Ireland. this would be a major embarrassment for the British racing industry. We should facilitate this company in every way possible in this regard. It would be a marvellous help to the Irish racing industry if a premier sale was held here.

Apart from the breeding aspect, there has been a tradition for a long number of years whereby the National Stud has supplied the horse, or placed the horse in training, which ran in the colours of the President. That in itself is a very significant practice and has shown the world that we have a great interest in racing. In the not too distant past a mare called Seskinbridge, which was trained by the late Peter Creery, ran in the President's colours. If my memory serves me right, it won the Thyestes Chase and finished second in the Irish Grand National. I think the only horse in training at present is a two year old which, hopefully will run in the President's colours in a few month's time. I appeal to those in authority to ensure that over the next couple of years more horses run in the colours of our President. I agree with Deputy O'Malley that the National Hunt appeals more to Irish people; there is much more excitement at the National Hunt that at flat racing. If more horses run in the President's colours, the world at large will realise the seriousness with which we take the industry. This suggestion should be given serious consideration.

I welcome the proposal to increase the National Stud's borrowing powers. At present the stud has a number of good stallions, for example, Dancing Dissident, Magical Wonder, Digamist, Magical Strike and Broken Hearted. It has also had some excellent sires, the most notable of which are Ahonoora, a Classic Winner, and Don't Forget Me. These horses, which were owned by a number of Irish men, created great excitement when they won at Newmarket.

Mr. J. Walsh

Cork men.

Mr. Power

They came from the same county as the Minister.

Mr. O'Malley

The Minister is directing the Deputy; he said Cork men.

Mr. Power

There is a difference. The victories of Don't Forget Me and a number of other Irish horses, including Carroll House, which was sired by Lord Gale and which went on to win the Prix de L'Arc de Triomphe, a race regarded by many as the most important in the world, has shown the success achieved by the National Stud. Despite enormous competition throughout the world the stud was able to produce these winners.

I would like to avail of this opportunity to thank all those people involved in the National Stud and the Japanese Gardens.

They are a marvellous tourist attraction in County Kildare, although most people would not consider Kildare as being a tourist county. The National Stud and the Japanese Gardens were visited by approximately 100,000 people last year and this represents a boost for tourism in Kildare.

I met with members of the local authority, the county council and people from the National Stud who expressed concern in relation to the Kildare by-pass which will cut through part of the National Stud and in effect divide it in two. Unfortunately, this development cannot be avoided and I hope that when it is built and up and running it will cause as few problems to people as possible. It would be dissappointing if the National Stud was affected to any great extent as a result of the new road..

Reference was made by Deputy Rabbitte about the training in the National Stud. This is an important area and one about which I wish to comment. Approximately 25 young people are taken on and trained at the stud every year. The course lasts approximately five months and they are given training in every aspect of the racing industry. Our record here has been unequalled in any other industry in that 100 per cent of these graduates succeeded in getting employment following their training at the National Stud. They work and manage studs throughout the world. Graduates from the National Stud manage the Coolmore Stud; the English National Stud and the Windfield Farm in Canada, the home of Northern Dancer, are managed also by graduates from the National Stud. This is indicative of the enormous contribution made by the Irish National Stud, not just to racing in Ireland but throughout the world. I wish to thank those people for their tremendous effort in bringing that about. Those people who are presently working in the National Stud will be very influential in the industry in the future. Therefore, it is important, while we have the opportunity, to give them every assistance in their work to make life a little easier for them.

The breeding industry has gone through a difficult period, although some might argue that in the not too distant past the fees were beyond the reach of the ordinary person. The industry has often been referred to as the sport of kings and the prices obtained for yearlings and foals in the past made it almost impossible for ordinary people to become involved in it. Whether it is due to common sense, the recession, or a mixture of both, prices are at a more realistic level now and I would recommend that those who have a few pounds should get involved in the racing industry. Enormous pleasure and satisfaction can be gained by people involved in the racing industry. This has been evidenced over the past few years by the growth in syndicates here where people can buy a share in the ownership of a horse for a small sum of money. All horses cannot win and, as one speaker pointed out earlier, some of them may only have run a maiden race three or four years ago. That point may be slightly exaggerated but may not be too far out. I met a man recently who suggested that the meat industry had caused such problems of late that we should consider setting up a horse meat factory, the implication being that some of the horses running today might be more suitable for a meat processing factory than a racecourse. Perhaps that is something which could be considered, I am not sure what sort of demand exists for horse meat but we certainly have an abundance of it here at present.

I wish to refer briefly to the Killanin report produced a number of years ago and which has not been acted on to the extent that I would have wished. As we approach budget day it is no harm to remind the Minister for Finance and his colleague, Minister Joe Walsh, that a recommendation in the Killanin report was that we should operate a betting tax system here preferably lower, but certainly not higher, than that pertaining in Britain. While the English system is a little more complicated than ours it works out at approximately 10 per cent, similar to that here. Over the past few years we have seen the movement of large book-making firms from Britain to Ireland. If we were to increase the betting tax here, no matter how small the increase, it would be counter-productive and if the Minister intends to make any change in the tax, he should take a gamble and reduce it. A phrase used a couple of years ago, self-financing tax deductions, could perhaps be one charge. A large export market exists in Europe, and if we had a betting tax here which was lower than that in Britain it could be of enormous benefit to our Exchequer.

I thank the Minister for bringing forward this Bill which will be of enormous benefit to the National Stud. I would like again to thank the people in the National Stud for the professional manner in which they have conducted their business and the honour that they have brought to County Kildare and, indeed, to the country at large.

Mr. Durkan

I welcome the Bill and what it proposes. As has already been alluded to by previous speakers, at a time when the need for job creation is at its greatest we should recognise the work done by the National Stud in regard to job creation in the racing industry generally. Very often we forget the important role played by the National Stud in building the foundation for that kind of job creation. Those who visit our racecourses will be aware of the ancillary industry associated with the racing industry. For some unknown reason the view is often taken that this is an exclusive industry providing for an exclusive set of people. In fact the large number of jobs associated with the industry generally has never been appreciated by the public. If an industrialist arrived here, particularly at the present time, with a proposal to create anything like the number of jobs to that the horse breeding and racing industries provide, he would receive large amounts of money in grants and inducements.

This is an indigenous industry providing jobs from entirely native sources and we must give a modicum of recognition to that industry. I wish to express our appreciation for the constructive input of the industry over the years. I hope this Minister and this Government will continue to appreciate that work and will assist in every way possible to ensure the industry is given the latitude that it needs to expand. It is easier for an industry that is up and running to further improve in the area of job creation than to introduce that which is new or untried. Again, I emphasise the native sourcing in this industry and compliment the Minister for introducing the Bill.

Minister for Agriculture, Food and Forestry (Mr. J. Walsh)

I wish to reply to a number of the points made before I go on to next Stage. I appreciate very much the House's acceptance to conclude this Bill today.

First, the contributions were excellent, well researched and constructive and I thank the Deputies for that. All the Deputies referred to the scandal of annual reports and accounts not being available and I concur totally with that. I sought those reports at the first opportunity available to me. It is not good enough for any State body to say to a Minister that they are in serious financial trouble when no report has been produced by them for three years. I now have the reports for 1990 and 1991. They will have to be examined by the Government and will be circulated and laid before both Houses of the Oireachtas and put in the Lilbrary at an early date.

I agree also with the suggestions regarding the quality of the stallions. We must produce very high class stallions. When I called to the stud last year and observed what was taking place there, including viewing the skeleton of Arkle, I came to the conclusion that they were better at breeding plants and rare species of flora than breeding horses. The only money making activity there was the Japanese Gardens. The core activity was in a shambles. I concur totally with Deputy O'Malley when he said that however bad the recession is in the horse industry, to fail to make money out of 800 acres of prime land seems to be an uncanny exercise and just not good enough. As Deputy Yates said, even if the land was rented it would show a credit at the end of the balance sheet. The issue is being addressed.

Reference wes made to the five year plan. In inviting a number of new people to join the board as a first priority I asked them to examine this five year plan, amend it, bring it up to date and to strengthen the finances. For that reason a person with a financial background was invited to take over as chairman of the National Stud because I do not accept that State bodies must be making losses. In this case the reality is that the British National Stud, which is fairly similar to our National Stud — they have less land but approximately the same number of stallions — is managed by a graduate of the Irish National Stud and is making a net profit on a commercial basis. If it can be done in the UK, which has an even more depressed thoroughbred industry than ours, I do not see why we cannot do the same here.

The Irish National Stud is being given an opportunity to get its financial house in order and to increase the profile of the stud to what it had been in the past. I realise that competition is greater now with a number of world class studs in operation but many people who have an interest in the thoroughbred and non-thoroughbred industry hardly know the location of the National Stud and know very little about its operation. As I said, if it were not for the Japanese Gardens few people would visit it or know much about it. In future I would like some of the owners of our top class brood mares to consider availing of the facilities at the National Stud. That has not been the case up to now. Owners of horses such as the Flame of Tara, would not even consider using the National Stud and I would like to see a change in this regard.

Deputy O'Malley asked that the five year plan be made available. I have no difficulty with that; however, it is being amended at present and as soon as it is available I will circulate it. Deputy O'Malley referred also to the non-thoroughbred horse industry; we have an over-supply in that industry also. I established an interim horse board under the chairmanship of Noel Cawley of Bord Bainne, who has a tremendous amount of administrative experience, to draw up a programme for the rational development and the improvement of quality in the non-throughbred industry. In many cases the commercial aspect is greater in the non-thoroughbred sector than in the thoroughbred industry.

Deputy Rabbitte referred to employment. There are 12,500 people in direct employment in the horse racing industry. In the ancilliary support industries such as betting shops, many fine people operate these institutions around the country and offer employment with good conditions. There is a margin involved, I understand. I am in favour of decent pay and conditions for everbody connected with the horse racing industry.

Reference was made by a number of speakers to the wider racing industry. I hope before the year is out to bring in legislation which will provide for an overall authority and put that issue on a sound footing as well.

A number of speakers referred to the good days when good horses ran in the President's colours. I have already asked the Irish National Stud to resume that practice. It affords a high profile opportunity for our presidential colours to be worn by good horses. A start has been made in this regard in that a two year old has been put in training with Michael Grassick and hopefully we will have a listed or group winner running in the national colours in the not too distant future.

I thank Deputies for their extremely constructive contributions in relation to this Bill and for facilitating the passage of the various amendments to it this afternoon.

Queston put and agreed to.