I move: "That the Bill be now read a Second Time."
I am delighted to be back here once more with legislation on the horse and greyhound racing industries. As is well known, these are subjects which are very close to my heart but, some might suggest, not so good for my health – financial or physical – when I get a run of bad luck. That said, I enjoy the sports as do many more in this House. The excitement of both horse and greyhound racing and the punting that goes with it is hard to match. However, it is not for that reason that we are now giving this area our attention.
I have said before and I reiterate it here, the Government considers racing to be strategically important because of the employment it creates and sustains at all levels and the significant contribution it makes to rural development, farm and other incomes, the business and services sectors, tourism, the economy as a whole and the international reputation of the State. There are approximately 30,000 people gainfully employed, either directly or indirectly, in these industries and racing makes a significant contribution to the buoyant £1 billion off-course betting market. There is scarcely a town or village in the country that does not benefit in some way from these activities.
Despite its size, Ireland is recognised as one of the leading countries in the world for the production of quality thoroughbred horses and greyhounds. Ireland is an attractive location for many foreigners to breed, own and race horses. Our soil and climate are ideal for the purpose and not only do Irish people have a great love of the horse and greyhound but there is also a breadth and depth of innate skills and experience in the breeding, handling, rearing and training of these often extremely valuable animals. This combination could scarcely be matched elsewhere.
The production side of the business is showing healthy growth. On horses, for instance, the last five years has seen a 23% increase in the number of thoroughbreds being registered annually with a similar increase in the number of runners. The gross value of our thoroughbred sales has more than doubled in that time. I want to give great credit for this to the efforts of IHA company – Irish Thoroughbred Marketing. In the past year alone, ITM has conducted an unprecedented number of promotional visits to 25 established or potential markets for Irish thoroughbreds. It has set up an excellent website on the Internet and distributes information on Irish horses to more than 2,500 contacts in 64 countries. As a result, more than 1,000 foreign buyers availed of its inward buyer programme by purchasing at public sales here last year. All its targets have been far surpassed. There has been a huge increase in percentage terms in customers for our horses coming from Australia, Hong Kong, India, Italy, Norway, Sweden, Switzerland and Tunisia and potential growth to be experienced in the trade to Turkey. Of the emerging markets, Spain and Greece are showing great promise and other countries which offer serious potential include China, Korea, Saudi Arabia and South America.
ITM is also strongly promoting racehorse ownership in Ireland. More than 700 new owners were introduced to Irish racing in 2000 as a result. One syndicate at least was made up of both Houses of the Oireachtas and their purchase, Arctic Copper, did them proud during the year. One of the many things the new guaranteed funding for the industry being proposed in the Bill will facilitate is the continued and planned resourcing of ITM and its valuable activities.
Ireland has always been regarded as the home of the best racing greyhounds. However, when the racing sector was in decline here for lack of investment in and promotion of the sport, there was a serious knock-on effect on the breeding front. Since the home industry has been rejuvenated over the past five years or so, prices for our quality greyhounds have risen and our markets have opened up again. We export Irish greyhounds to the UK, the US, Australia and many European countries. Nevertheless, there remains a very big job of work to be done in developing existing markets and exploring new ones.
I know Bord na gCon has a vision for the globalisation of greyhound racing and associated betting, with Ireland leading the process. It has started with participation in an international carnival in Australia where greyhound racing is very strong and there is a huge betting market. It is now turning its attentions to the US and will participate in planned new international races there next January. We have the quality in stock in greyhounds as much as in horses. We have the skills and the expertise. What we need is much more investment and planning coupled with aggressive marketing. The results will be improved returns for Irish breeders, owners, trainers and rolled out benefits for all those involved in or providing services to the industry.
We have not been short in Ireland of world class thoroughbred horses and greyhounds and famous breeders, owners, trainers and jockeys whom we can rightly describe as legends in their own time. In 2000 alone, Irish-bred horses won 30 Group 1 races around the world. The highlights include the record-breaking performance of Sinndar who won the Irish Derby, the Epsom Derby and the Prix de l'Arc de Triomphe, Istabraq's outstanding run at Cheltenham, Papillon's win in the Aintree Grand National and the Irish-trained Giants Causeway who ran in eight Group 1 races and won five. Just as, and some would say, even more important are the human heroes behind those horses – Aidan O'Brien, John Oxx, the family combinations of Ted and Ruby Walsh and another father and son combination, Tommy and Paul Carbery. I must mention also the legendary Vincent O'Brien who has been our most famous ambassador as a renowned trainer under both codes – national hunt and flat courses. Johnny Murtagh had a tremendous year altogether riding as he did 12 Group 1 winners and Mick Kinane came a close second with 11 such wins.
Irish-bred and trained greyhounds have been winning consistently at home and abroad. Bord na gCon finds it difficult every year to choose their Hall of Fame Award winner, such is the large number of successful and extremely committed greyhound breeders, owners and trainers in the industry. This year I believe it goes to Pat Dalton, a Tipperary man, who would be as well known in the US as he is in Ireland for the extremely high quality of his greyhound breeding and racing on the international scene and is generally regarded as Ireland's leading ambassador world wide for the greyhound industry.
Before I leave the area of breeding and rearing horses and greyhounds and the people involved, I will say a few short words to record my thanks and appreciation of their co-operation and commitment having regard to the recent foot and mouth disease scare. The agriculture industry and the Irish economy has just come through one of the toughest and most difficult periods for many decades. Like all big challenges, if we rise to the occasion we can defeat the problem and grow and learn significantly from the experience. Foot and mouth disease galvanised the country into extraordinary action on a single issue with one goal in sight. I am not saying the foot and mouth disease crisis is over and we cannot become complacent in our attitude to it. However, thanks to a great effort by all, we have been successful so far. I take this opportunity to congratulate and compliment the horse and greyhound people for their voluntary, enthusiastic and pro-active support for the necessary control measures and I acknowledge the difficulties created for them. The sacrifices they made for the overall good of farming and the economy were extraordinary and are much appreciated not only by me but by the Taoiseach and the Government.
If we had any doubts at all about the merits of the level of investment being proposed in the legislation for the horse and greyhound industries and whether it would represent value for money, we need only look at the performance of these industries over the past five years to see their capacity for growth and development. Attendances at horse racing have grown from approximately one million to more than 1.35 million people. On-course betting has jumped from £96 million to more than £160 million. Prize-money has shot up from £14 million to £25 million. In that context the contribution from sponsors and owners has also been increasing. I outlined earlier the consequential and significant growth achieved in the breeding and sales of thoroughbreds over the same period.
Greyhound racing has seen proportionately an even faster rate of growth. Attendances there have grown from just over half a million to 900,000 people with the one million target expected to be broken this year. On-track betting has jumped from £23 million to more than £53 million. Prize money has more than doubled, rising from £1.9 million to £4 million. The contribution from sponsors for greyhound events here is also rising. Therefore, this is an opportune time to introduce legislation to put these industries on a stronger and more secure footing into the future. Despite the progress and growth, both sectors operate in a highly competitive and rapidly changing environment. The time has come to introduce some fundamental changes.
The Horse and Greyhound Racing Bill, 2001, represents substantial changes in both structures and funding, which have been in the starting stalls for some time but are now finally at the off. On horseracing, it builds on the significant developments which took place in 1994, with the establishment of the IHA, and in 1999 when the first rearrangement of the financing of the industry was undertaken. Both of those initiatives which I brought forward were major improvements in their own right. But for those changes at the time, and the forward movement that followed on those developments, we might never have been able to achieve this final and critical phase of the restructuring of the horseracing industry. Given the rapid and impressive growth achieved in the greyhound industry over the same period, we are also including Bord na gCon in the revised funding arrangements and this is well deserved.
As is evidenced by the performance figures I have given for the horse and greyhound industries, the increased State investment in these sectors over the past few years has paid handsome dividends. The measures that were taken then and since, and the hard work and commitment of the people in the IHA and Bord na gCon, the Turf Club, the many representative organisations involved and the various participants in racing at all levels in the industries, all contributed to a good result. The new regime we are now putting in place will go on to yield even greater returns. I am delighted in these circumstances that the industries are united in this effort and I feel strongly that the cohesion created will underpin the industries for the long run and, together with the necessary guaranteed funding we are now providing, will allow both sectors to develop and grow to their real potential.
I now come to the details of the Bill. The Irish Horseracing Industry Act, 1994, was an extensive stand alone piece of legislation which essentially replaced the Racing Board, that had been in existence since 1945, with the IHA. As many of the provisions of that Act could and should rightfully apply to the new body being established under this Bill, we decided to amend the 1994 Act to provide for the new situation and, as a consequence, we also had to amend parts of the Greyhound Industry Act, 1958, the Horse and Greyhound Racing (Betting Charges and Levies) Act, 1999, and the Betting Act, 1931. We have provided an explanatory memorandum for the Bill, which summarises all the major changes and then goes on to explain each section of the Bill and the consequential issues arising in some detail. I look forward to teasing out these issues out on Committee Stage.
I will now deal with the major points of policy involved. The Bill is essentially setting up a new body called Horse Racing Ireland, or HRI, to replace the IHA and take over certain functions from the Turf Club and the National Hunt Steeplechase Committee. It was felt that there was an element of duplication of effort and resources between the IHA and the Turf Club. There were two completely separate and independent head office buildings and facilities, finance and accounting units, IT database management and data processing services, as well as personnel and management functions. There was a large body of opinion in the industry which held the same view as mine and that of the Minister for Finance that better efficiency of operation and cohesion generally could be achieved if at least all the main administrative and financial streams of the racing business could be brought together into one new body. This is what we are seeking to achieve with the establishment of HRI. From now on, all elements of the industry will deal with one body in relation to their participation in racing and their financing arrangements.
This comes about as a result of the transfer of the registry office functions from the Turf Club to HRI under section 8 of the Bill. HRI will retain all the functions currently carried out by the IHA. These include the authorisation of racecourses, the setting of fixtures, the control of on-course bookmakers and the general development and promotion of the industry and the Irish thoroughbred horse. The registry office functions which HRI will take over from the Turf Club will include the issuing of racing passports, handling race entries, making race declarations and holding and managing the race entry as well as prize money funds.
The Turf Club will continue to be responsible for the critically important function of making and enforcing the rules of racing in every respect. This will protect the integrity of racing which the Turf Club has done for over 200 years and in respect of which it has a reputation second to none. These functions are set out in paragraph 6 of the Schedule to the Bill. The costs of integrity services will be met by HRI as they were by the IHA under the 1994 Act. Paragraph 8 of the Schedule inserts provision for an arbitration system to resolve any disputes on the budget for such services.
Further functions which are being added to HRI's responsibility include providing support for the improvement of the health status of the Irish horse and the specialised education and training requirements of the sector. These are issues which have been raised here in the House several times and are very important to the future of the industry and, therefore, I felt that HRI, in its new and central role in that industry, should have a responsibility in these areas.
Other than State and industry funding, the sale of the pictures and associated information on Irish race meetings is the one other key source of potentially high levels of revenue for the sector. The media rights were vested in the racecourses in the 1994 Act. However, it was felt that, because of the huge impact that the terms of any sale of racing pictures could have on the industry as a whole, it would be better if the negotiations on the sale of media rights in future were to be handled, serviced and funded by the State body which will now be directly representative of all the major interests in the industry. This was agreed by the Association of Irish Racecourses. Section 10 prescribes that the negotiations will be undertaken by a committee of HRI. The representative of the racecourses on the board of HRI will chair the committee and the Turf Club will have a member on the committee.
However, racecourses will receive the full income from the sale of media rights for the next five years. After that, HRI will be obliged to negotiate with the racecourses how the income from this source, which by then will hopefully be much increased, might be distributed among the wider industry interests who are contributing to Irish racing. In that context, HRI will be required to guarantee to the racecourses revenue from this source for each of the following five years which will at least equal the average annual income they got for the first five years.
The Turf Club agreed that the property rights it had up to now in the information on runners and riders compiled by the registry office, can be immediately vested in HRI by this legislation, subject to a guarantee that the income over the next ten years will accrue to the Turf Club.
Section 12 holds most of the financial implications of this legislation. Given the exceptional returns achieved over the past five years for the investment to date in the IHA and Bord na gCon and the huge potential for further improvements in this area, the Government feels that the case has already been well made for a permanent and guaranteed provision of State funding at a significantly increased level for these industries. The domestic horse and greyhound breeding and racing sectors are providing the raw material for the off-course betting market and deserve to receive some of the fruits of their labour in this regard.
That is why we are proposing in the Bill that HRI and Bord na gCon will, between them, receive this year from the Exchequer, funds equivalent to the revenue generated from excise duty on off-course betting last year, which amounts to a total of about £46 million. This will be divided between the two bodies on a four to one basis, with HRI getting 80%, or roughly £37 million, and Bord na gCon getting approximately £9 million. In future years, these bodies will receive the equivalent of the revenue generated from the excise duty in the preceding year or the £46 million they get this year, increased by the consumer price index, whichever is the greater. We need to keep the latter as a guarantee for obvious reasons connected to potentially fast moving changes in the off-course betting market. The rate of excise duty on betting may, at any time in the future, have to be adjusted downward from the current 5% to maintain our competitiveness. The UK is putting in place substantial changes in this area and nobody can be sure yet what the full effect of mounting credit and Internet betting will be on our off-course market and how the bookmaking business here will respond.
What we are doing in this legislation is putting a new operating structure into Irish racing, which will be capable of being more effective and efficient in managing what is a very big and important business for us. We want to give this sector the level and security of funding it requires to fully exploit the potential for the benefit of all concerned. It can do this only if it can plan into the future and this will be possible only if it is guaranteed the level of funding promised.
The mechanism of the fund to be managed by my Department, as set out in section 12 of the Bill is, in the view of the Government, the best way to achieve this. However, I also feel that if this House agrees with this procedure, it should also be involved in reviewing it from time to time. The total aggregate limit placed on funds to be made available to the horse and greyhound industries through this guarantee system is £200 million, which may be increased only by regulations that must be approved by both Houses of the Oireachtas. This means that the Dáil and the Seanad will have an opportunity to debate this funding again in three to four years' time. I know that Deputy Dukes is also committed to the principle that such regulations and instruments are not just deposited in the Library but that this House is given the opportunity of having a full debate on them if it so wishes.
In the meantime, all of the necessary financial and audit controls required will be implemented. The Department's appropriation account will clearly show, in a special note to the account, the payments into and out of the fund. The Secretary General of my Department will be accountable to the Public Accounts Committee in the normal way. Under sections 13 and 14, the annual accounts of HRI and Bord na gCon will be required to be audited by the Comptroller and Auditor General and the chief executives of those bodies will be accountable to the Public Accounts Committee in respect of those accounts. Under section 15 those chief executives may also be required by other Oireachtas Committees to give evidence concerning the general administration of the bodies.
Members will recall the last time we discussed the funding of the horse and greyhound racing industries in this House was on the passing of the Horse and Greyhound Racing (Betting Charges and Levies) Act in 1999. At the time, the Minister for Finance had decided, in order to ensure the off-course betting market here in Ireland maintained its competitiveness internationally, to reduce the excise duty on off-course betting from 10% to 5%. This had the knock-on effect that we had to abolish the 5% on-course betting levies which were an important source of income for the IHA and Bord na gCon. As a result and in order to replace that revenue for the bodies concerned we introduced among other things a new 0.3% betting turnover charge on on-course bookmakers as well as a flat rate charge of between £500 and £2,000 on each off-course betting shop. The revenue went straight to those bodies.
It is considered that these charges are no longer required in the context of the new funding arrangements for HRI and Bord na gCon being proposed in this Bill. I therefore intend to remove these charges as soon as possible. Section 19 removes the turnover charge from 1 July next. However, I may have to look again at that date depending on progress on the enactment of this Bill and will consider introducing a Committee Stage amendment if required. Section 20 removes the flat rate charges from 31 August. As such charges for this year would not be payable under the 1999 Act until 1 September, there will therefore be no money due in respect of these charges in 2001 with the possible exception of any amounts that remained unpaid from last year.
Up to now the totalisator legislation – the 1929 Totalisator Act, regulations made thereunder and licences issued to the IHA and Bord na gCon – restricted these bodies to operating their tote betting services at racecourses and greyhound tracks or by credit accounts. The IHA has examined the possibility of moving onto the High Street with their tote betting and believe that there is a lot of heretofore untapped business for the tote which could be exploited by providing tote betting services through the off-course bookmakers shops. I think this would be a good development and I understand that the off-course bookmakers are also happy with the idea. Therefore I have incorporated authorisation for this move in section 17 of the Bill.
Another extension to tote betting which both the IHA and Bord na gCon are anxious to develop is what is called "co-mingling" with some of their tote counterparts abroad. This would allow Irish punters, through the tote services here, to bet into some of the very large tote pools operated on the big international events abroad and punters in those jurisdictions could bet into our pools, basically making for bigger pools and more excitement and with it, it is hoped, significantly higher turnover and benefits for Irish racing. I have provided for these developments in sections 17 and 18.
I have also taken the opportunity to remove a general restriction which the Betting Act, 1931, puts on punters here preventing them betting with bookies outside Ireland. In effect, this was difficult if not impossible to police or enforce. In fact, no prosecutions have ever been taken under this law. Furthermore, my colleague, the Minister, Deputy McCreevy, and I both agree that it would not be appropriate for us to prohibit Irish people from betting abroad while taking measures here to ensure the international competitiveness of our own off-course betting operation to enable Irish bookmakers to encourage the punters outside the State to bet into our market. This business will survive or otherwise, based on the variety and quality of its products and competitive costing. Section 18(2) repeals the relevant 1931 provisions.
Paragraph 16 of the Schedule to the Bill effectively amends the Schedule to the 1994 Act and defines the new rules on the composition of and appointments to the board of HRI. The board is being reduced from 15 to 12 which will make it more compact and manageable. The only member of the new board to be effectively decided by the Government will be the chairman. All the others will be nominated directly by the relevant representative industry organisations concerned. These organisations will be required to use an open and fair electoral process to democratically select their nominees. Because of the significant transfer of functions taking place from the Turf Club and National Hunt Steeplechase Committee to HRI, their representation goes up to five members on the board. The other interests to be represented on the board will be the racecourses, owners, trainers, breeders, bookmakers, employees and the sector in Northern Ireland, each of which will get one seat on the board. We are putting in a system of board members retiring by rotation. From the outset, three members will retire each year to allow for a regular infusion of fresh blood while constantly maintaining a strong element of continuity for planning purposes.
As it was not possible to accommodate all the interests in this sector on the board itself, I have decided to require the new body to set up and maintain a racegoers consultative forum. This will include representatives of racegoers, their clubs, racecourse supporters and any other interest group which makes a case for itself and is affected by the decisions of HRI or who use the facilities or services provided by HRI. The forum can be used to beneficially explore issues which are important to those interests and puts a formal mechanism in place for bringing their views and recommendations to the attention of HRI. Under section 11(5) of the Bill, HRI will be required to have regard to any opinions expressed by the forum.
I now want to turn to the staffing of HRI and in particular the arrangements for the transfer of staff and the protection for such employees of the IHA and the Turf Club which I have built into this legislation. Section 27 of the Bill provides for the immediate transfer, upon the establishment of HRI, of all the staff of the IHA to the new body. For logistical reasons it may not be possible to transfer all the functions of the registry office and the associated staff from the Turf Club to HRI on the same day. These changes may have to be effected on a separate commencement day.
However, the staff of the Turf Club who are currently engaged on work in this area will be guaranteed the right to transfer to HRI with the transfer of functions. Both categories of staff, those coming from the IHA and the Turf Club are, under the provisions of section 27, being given the same guarantee that, while in the employment of HRI, they will not be brought to less beneficial terms and conditions of employment than those to which they were entitled before the transfer. Paragraph 3 of the Schedule to this Bill affords these staff the same rights in relation to their superannuation entitlements.
Other provisions of the Bill provide for new terms of reference for HRI's fixtures committee to seek to protect important fixtures for racecourses and to give the final decision on such fixtures to the board of HRI. HRI will be allowed to give graded grants of up to 100% for development work at racecourses relating to the implementation of important health and safety measures. There will be improved controls on on-course bookmakers while on-course betting offices will be given authority for extended opening hours to put them on a par with off-course shops.
In conclusion I would like to express my appreciation to the Opposition and to the spokes man on agriculture for facilitating the Second Stage of this Bill today and for their support for this important development. All of these are progressive developments and will lead to even more exciting times ahead for Irish horse and greyhound racing and punters. We must all pull together to achieve the best results from this and I am now confident that such will be the case. I commend the Bill to the House.
