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JOINT COMMITTEE ON AGRICULTURE, FISHERIES AND FOOD díospóireacht -
Wednesday, 26 Jan 2011

Role and Functions: Discussion with Horse Racing Ireland

On behalf of the committee, I welcome Mr. Brian Kavanagh, chief executive, Ms Margaret Davin, chief financial officer, and Mr. Michael O'Rourke, director of marketing, Horse Racing Ireland and thank them for attending the committee. Before I call on Mr. Kavanagh to make his opening statement, I remind everyone of the position with regard to privilege. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

By virtue of section 17(2)(l ) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If witnesses are directed by the committee to cease giving evidence in relation to a particular matter and continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable.

Let me apologise to Mr. Kavanagh for the delay caused by members going to vote in the Chamber. We were returning to the committee when a third vote was called. I expect more members will arrive shortly. This is not the best week to appear before the committee. I suggest we have a shorter meeting with members having the opportunity to ask brief questions. The new committee will invite representatives from Horse Racing Ireland to appear before it later in the year. I invite Mr. Kavanagh to make his opening statement.

Mr. Brian Kavanagh

I thank the Chairman. We understand the circumstances to which the Chairman referred. To use a racing expression, we did not know whether the race might be abandoned. We are pleased, however, that the meeting can be accommodated. Would the Chairman like me to go though our submission before taking questions from members?

Mr. Brian Kavanagh

I am grateful for the opportunity to make a presentation to members and for the interest the committee has always shown in our sector. I am chief executive officer and Accounting Officer of Horse Racing Ireland. I am accompanied by Ms Margaret Davin, chief financial officer, and Mr. Michael O'Rourke, director of marketing.

The Horse and Greyhound Racing Act was signed into law in July 2001 which led to the formal establishment of Horse Racing Ireland. It replaced the Irish Horseracing Authority, incorporated many functions of the Irish Turf Club and created a board of 14 members representing the key sectors of the industry. The legislation received general cross-party support in the Oireachtas. Horse Racing Ireland's mission is to "develop and promote Ireland as a world centre of excellence for horseracing and breeding".

The industry is one of the few sectors in which Ireland can genuinely have a claim to world leadership. This is not merely rhetoric but has been consistently proven time and again in the marketplace and on the racetracks of the world. We "do horses well" in Ireland, with people coming from all over the world to see how we operate. The strength of the breeding industry is reflected in the fact that an Irish horse has been the leading sire in Europe for each of the last 19 years. It is exactly the type of industry and agricultural activity that we need to protect and develop in our current circumstances. It is labour intensive, with a very broad regional spread of employment. It is a green activity - probably the most environmentally friendly agricultural activity we have. It is low intensity in terms of land use.

The industry is export driven, with 50% of our horses exported to more than 40 countries worldwide. The industry provides a significant level of international inward investment to Ireland, with most of the major players in the international bloodstock and horse industry having a presence here. Most of this investment is in remote rural areas where alternatives are limited. In 2008 Mr. Alan Dukes undertook a study on behalf of the Irish Thoroughbred Breeders Association which showed that the industry provides 16,500 full-time jobs. I have distributed maps and charts which show the spread of those jobs around the country. The Dukes report found that the industry contributes in excess of €1 billion to the economy every year, with racing generating more than 80,000 tourist visits to Ireland annually.

Of course it is not just about the breeding industry. The 26 racecourses throughout the State contribute significantly to the sporting and social life of the communities they serve. They are at the heart of local economies and communities, as members will know from their own areas. Festival meetings at tracks such as Fairyhouse, Galway, Punchestown, Killarney and Listowel are major contributors to the tourism sector, contributing cumulatively more than €100 million in local economic activity. Point-to-point racing, which is the starting place for most great national hunt horses, is rooted in local rural communities, particularly in the Cork-Waterford region.

An issue I am keen to underline today is the relationship between racing and horse breeding. The racecourse is the proving ground of the thoroughbred. Successful horses may become successful stallions and these attract brood mares, many from outside Ireland, which in turn stimulates economic activity for a wide range of businesses, including feed suppliers, vets, farriers, transport providers and so on. At this time of the year, with the breeding season about to start, brood mares are coming from all parts of the world to board in stud farms in counties such as Meath, Kildare, Tipperary, Kilkenny and Cork, with a significant positive impact on local economies.

I saw a picture in a newspaper yesterday of the first ever foal by Sea the Stars, which is probably the best racehorse the world has seen. This foal was born on a farm in Trim in County Meath, but the mare is owned by an Australian businessman who keeps his brood mares in Trim. Sea the Stars is owned by a Hong Kong businesswoman who stands the horse in Kilcullen, County Kildare. This is a perfect illustration of the global impact of the industry, with investors from Australia and Hong Kong putting their assets in Trim and Kilcullen and generating significant economic impacts for local economies. There are 9,000 foals born every year with a similar story.

Breeding is environmentally sound and sustainable. The Dukes report showed that the racecourse and the farm are more closely linked than many would imagine. Most breeders are not major international operators, with the majority having fewer than five horses. The small breeder is the backbone of the racing and breeding industry.

Employment in the industry is spread throughout the country. The Dukes report pointed to some significant practical examples. The study showed that 428 full-time staff are employed within a five-mile radius of Bagenalstown in County Carlow, in trainers' yards, stud farms, at the racecourse, at the Red Mills feed company, as well as vets and equine suppliers. The same study showed 259 full-time jobs in the vicinity of Enniscorthy in County Wexford, 325 full-time jobs within a five-mile radius of Navan, County Meath, and 162 jobs in the vicinity of Fermoy in County Cork. These data show the real impact in terms of actual jobs. That is not to mention counties such as Kildare and south Tipperary where we see a major concentration of employment in the horse business. It is estimated that 3,000 people are employed in the industry in Kildare, where Horse Racing Ireland is based.

Such a vital business requires certainty of funding. When the horse and greyhound racing fund was established in 2001, it was to be fully financed from the revenue from excise duty on off-course betting. It is important to stress that the racing industry is not seeking handouts from Government from scarce Exchequer funding. The model, as originally envisaged, is viable, by which betting tax was to be ring-fenced for the development of this key indigenous industry. However, something has gone wrong with that model in the years since the horse and greyhound fund was established as a consequence of the reduction in the take to the State from betting tax.

When the fund was set up the rate of duty was set at 5%, but this has been progressively reduced to 2% and then 1% until, in 2006, the liability was transferred from the punter to the bookmaker. Also during that period, an increasing amount of business has moved to tax-free offshore platforms. We are now left with a situation where the Exchequer must make up the shortfall between the take in betting tax and the allocation to the horse and greyhound industries. This was never the intention at the time the legislation was introduced. It is not our wish to be in a situation where funding is debated annually and is dependent on the economic circumstances of the time. There must be a ring-fencing of the take from betting tax for the development of the two sectors. Where arbitrary annual grants are applied they will inevitably and naturally be subject to political pressures. That is not a sustainable position from which to develop a key industry. I may return to this point if time allows.

I would like to give committee members an oversight of the business structure of Horse Racing Ireland, as I understand the issue was raised at a previous meeting. We have a board of 14 members which acts as the national authority for horse racing in Ireland. Its statutory functions are set out in the Irish Horse Racing Industry Act 1994 and the Horse and Greyhound Racing Act 2001. These include, inter alia : the allocation of race fixtures, programmes and prize money; negotiation of media rights; control of the operations of on-course authorised bookmakers; stakeholding and distribution of prize funds; guaranteeing the cost of integrity services carried out by the Irish Turf Club; grants to authorised racecourses for capital development and capital projects; industry training and education; and the overall administration of Irish racing.

In addition, we operate three commercial wholly owned subsidiary companies: HRI Racecourses Limited, which acts as a holding company and operates the four racecourses at Leopardstown, Navan, Tipperary and Fairyhouse, owns the land at the Cork Racecourse in Mallow and has a shareholding in the operating company, Irish Thoroughbred Marketing which is an international marketing agency to promote investment in the bloodstock industry in Ireland and to encourage people overseas to buy Irish horses and develop inward investment and Tote Ireland which operates the on-course and off-course tote betting service. Our headquarters is located at Ballymany in the Curragh outside Newbridge and our total staff across all divisions is 150. There is an approximately 50:50 split between Horse Racing Ireland and our commercial subsidiaries.

Since 2008, our costs have been reduced by 28% and owing to decreased funding our staff numbers have declined by more than 20% or 30 people. Horse Racing Ireland is not protected from the recession nor is the wider industry. It is estimated that approximately 2,000 jobs have been lost in the industry since 2008. Unlike Dell, where 2,000 jobs were lost in one go jobs in this industry are being lost in dribs and drabs in towns and villages around the country, which tends not to be noticed. There has been a huge erosion in the industry over time and we are concerned the situation will worsen unless our funding improves.

Funding is the most important issue facing the industry. The 2001 Act intended that the industry would be fully financed from betting duty. While that model worked well in the beginning, within two years it was necessary for the Exchequer to top a shortfall on the revenues from betting. One would imagine this could be explained by a fall-off in betting activity which caused a reduction in the take from betting, but the opposite is the case. In 2001, total betting in Ireland, through betting shops or on track, was approximately €1.3 billion and the tax return to the Exchequer was €68 million. This was ringfenced and was sufficient to cover all the needs of Horse Racing Ireland and Bord na gCon. By 2009, while betting had increased four-fold to €4.5 billion, remarkably the take to the Exchequer had fallen to €31 million, which is the core of our problem. A quadrupling of betting turnover has been matched by a halving of the return to the Exchequer.

It is unacceptable that the Exchequer should have to top up the horse and greyhound racing fund. It is extraordinary that this should happen against the background of significant growth in betting turnover. This has come about because the levy on betting has been progressively reduced and is now down to 1%, the lowest rate of betting tax in the world. The rate is low enough to allow big operators to absorb it as part of their costs but smaller operators are struggling to pay a turnover tax irrespective of their level of profitability. Furthermore, online betting operations avoid paying the 1% levy, which is the core of the problem for funding of the industry.

The Government announced in May of last year that it intended to introduce legislation to reform the betting industry and to address the increasing amount of betting which is being routed outside the State to avoid payment of betting duty. There appeared to be all-party support for introduction of that legislation. A comprehensive policy document published by the Labour Party advocated a new licensing regime for online betting and Fine Gael issued positive statements supporting the Government's initiatives to address the issue. The matter came before a joint hearing of the Oireachtas Joint Committees on Arts, Sport, Tourism, Community, Rural and Gaeltacht Affairs and Agriculture, Fisheries and Food on 31 March at which all the major betting operators said they had no objection to paying an extra tax on online betting if the tax was applied in a fair manner. In a submission to Government in October on the subject of betting legislation we pointed out that betting is unique as one of the few forms of discretionary consumption which is exempt from VAT. By way of example, for every €1,000 spent on betting the Exchequer receives €10 in duty and no VAT. If that betting is done over the phone or on the Internet the Exchequer receives no money. Online betting is effectively all offshore. Even telephone call centres based in Ireland route their calls offshore and accrue no duty. If a punter spends €100 on betting he pays no tax. However, for every €1,000 spent on beer the Exchequer receives €240 in duty and VAT. In respect of petrol the Exchequer receives €583 in excise duty and VAT for every €1,000 spent. Whatever way one looks at it, betting is a tax free activity in the hands of the punter, which is unusual when compared to other forms of consumption.

The recently published Finance Bill 2011 contains relevant measures to address the taxation of offshore betting and betting exchanges. We expect further detail in a new betting (amendment) Bill which will amend the 80 year old Betting Act of 1931. These developments are welcome and could provide a framework under which this troublesome issue can be resolved. It is imperative that we get this right if the industry is to survive. This is a potential win-win situation: it can save the Exchequer a minimum of €30 million, the amount in top up it has been putting into the industry annually and will remove the need for funding of horse and greyhound racing by the central Exchequer. It can protect jobs in the betting industry by creating a level playing field and can protect jobs in the horse and greyhound industries by creating a security of funding which is not dependent on a Government grant. This would still leave Ireland with the lowest rate of betting tax in the world.

This is an urgent matter, one that goes to the survival of the racing and breeding industry. It is a show piece industry. Were it not here, it would be exactly the type of industry the country would try to create. If someone came to us today with a proposal to create 450 jobs in Bagnelstown, County Carlow, we would walk down there to assist them. It is important to stress the significant world standing of Ireland in this industry. We are not operating in isolation. While we are the third largest producer of horses and thoroughbreds in the world and the largest in Europe we are under significant threat. Two well organised and successful countries, Britain and France, compete for our business on the world stage, in particular France which is actively seeking to attract the leading bloodstock investors to invest there as opposed to investing in Ireland and has been successful in some cases, which is a source of great concern to us.

In the UK, the betting industry pays a tax rate of 3% on turnover, which is three times higher than the Irish rate. In France, the legislation provides for taxation of 15% of turnover, which is 15 times higher than in Ireland. I accept that France has a different system because it operates a tote monopoly but it returns 8% of this betting to the French equine industry. With this level of financing, the French bloodstock sector has been targeting Irish business by providing incentives for people to move their horses to France. By way of example, a horse called "King's Best" which sired "Workforce", the winner of this year's Epsom Derby and Prix de l'Arc de Triomphe, formerly at Kildangan Stud in Monasterevin is now at stud in France. There is a danger of this type of practice accelerating.

The racing industry does not want the taxpayer in Ireland to directly subvent the industry through the Exchequer. It believes there is a clear model, based on international practice and existing legislation, which established Horse Racing Ireland, to provide for secure funding through a proper tax system on the betting industry in Ireland. I am happy to take questions from members.

My colleague, Deputy Doyle, is attending another meeting. I welcome Mr. Kavanagh and his team to this morning's meeting. I thank Mr. Kavanagh for his fascinating presentation which, while it contained no new news, set out the stark facts and figures on an industry producing great economic activity, value and jobs and which is now under pressure because of the betting tax regime. It is a wake-up call.

I am interested in Mr. Kavanagh's remarks on the measures in the Finance Bill 2011. Perhaps my colleagues in the other House are more up to date than I on that issue. Before coming to the meeting, I had a brief discussion with my colleague, Deputy Barrett, who is well known in equine circles. He intends to raise his concerns about changes the Finance Bill will make to the current practice whereby Ministers have the power to increase the betting levy by way of ministerial order. A proposed amendment to the Finance Bill would remove the Minister's entitlement to change the rate of taxation by order. That may be part of a wider reform in this area but if the delegates understand the nuances of the amendment, perhaps they can share their views with the committee.

Generally when groups appear before this committee they do not propose VAT or other tax increases. Today's presentation was refreshing and realistic in that regard. We have on previous occasions discussed the long-term funding of racing during a time of great economic distress. I fully agree that we cannot call on the taxpayer to come to the industry's aid but the formula works well internationally and was working in Ireland. We must try to adjust the betting levy accordingly.

We last met the representatives of Horse Racing Ireland in March 2010, which is a million years ago in political and economic terms. Some of the bigger betting operators who manage offshore betting operations were not entirely happy with our presentation on this subject. Is there a practical way of introducing flexibility to the betting levy so that we can ensure online and offshore operators will pay? Otherwise, firms might take advantage of technology to avoid the levy.

I admire the work being done by Horse Racing Ireland. We should reflect on what has been said because it is probably the only industry in which Ireland is a world leader. It would be a shame if we lost that competitive advantage. Horse racing is an industry, a sport, a pastime and a way of life. It stirs the emotions and from Cheltenham in March until Leopardstown in December, people dream dreams because of racing, even if they generally have to pay the bills afterwards.

We are facing into an election and a new Administration. I will not be so arrogant as to predict who will be in power but there certainly will be change. My party recognises that Horse Racing Ireland needs certainty and funding. The 120 people who work in its head office are trying to steer an industry which sustains tens of thousands of jobs. This country would be so much better if we had more organisations like it. I wish the delegates well and ask them whether they are confident that a change in the levy will ensure online and offshore operators pay their share. That is a stream of revenue we cannot ignore.

I welcome the Mr. Kavanagh and his colleagues to the committee. The Labour Party issued a document through Deputy Upton called Raising the Stakes which raises similar aspirations and concerns to those set out by the delegates. Why do we have a situation in which celebrities plug online betting exchanges when the evidence is clear they are not contributing to the Exchequer or the prize money for the very races on which people place their bets?

The challenge for the next Government will be to go after the online community. It is disingenuous of the big betting companies, which have an online presence alongside offshore accounting procedures, to expect the Irish taxpayer will continue to fund prizes and allow them to live off the fat of the land. I come from Mallow, where Mrs. Bambury has operated a bookmaking operation through thick and thin. I wonder how this matter affects her given that she does not have an online presence. She is funding the prize money through the levy while the big operators are not required to pay. We need to address that disparity.

The delegates' submission reveals a willingness to engage. If politicians can work with Horse Racing Ireland, we would be able to reach an arrangement that allows for the continued funding of the industry. It has to be funded by punters and companies as well as taxpayers. The companies will have to stop hiding under wonderful statements about the jobs they are creating. I acknowledge they are creating jobs but they cannot use that as a battering ram to get away from funding prize money. We need to find solutions and in that regard I welcome the submission as a step forward.

I welcome the delegates. I appreciate what horse racing means for local economies, not least in Tralee, Listowel and Killarney in my constituency. The local social and economic benefits of point-to-point meetings were mentioned in the presentation. We cannot undervalue the fact that the industry is 50% export driven and employs 16,500 people during a period of mass unemployment. It is essential that we create as much employment as possible if the economy is to recover. Up to 80,000 tourists visit the country every year for racing, which is also welcome. I am most impressed that 92% of breeders here are smallholders with five or fewer stallions. This shows the localised nature of the industry.

I have serious concerns about online betting. I recognise that it damages the industry and its funding but from a wider point of view its easy availability is also harmful in that it can cause people to develop gambling habits. I would fully support any measure that regulated this type of system. For many people, drinking a pint and having a flutter on the horses is an enjoyable part of who they are. Effectively, when there is onshore betting one is sitting at home in front of a computer able to bet on the Internet. It is creating terrible hardship for families all over this country. At least, it must be regulated stringently and there should be funding coming back into the industry as a result. I thank Horse Racing Ireland for its presentation. It is informative and helpful for all of us who must make decisions in this regard.

The prize fund in Ireland is substantially higher than it is in the UK. Are we getting value for money? The question being asked now by everybody is why the price is so high in Ireland in these difficult times.

There are 26 race courses in Ireland with a total of 335 meetings. Can Horse Racing Ireland continue to justify that in recessionary times? Numbers are falling substantially. I note Horse Racing Ireland gave the figures for 2008. I want to know the figures in 2010. I go racing. I do not go often, but I go a few times a month. The bookies are falling by the wayside in a big way and so are the numbers attending. For example, I was at Leopardstown at Christmas, and it was different. I accept the weather was a factor. I had a good gamble there as well, to tell the truth, but that did not go to the prize fund.

It is a highly capitalised industry. For several years, we went down the road of building infrastructure and corporate developments all over the place and most of these corporate developments are now idle. As somebody stated, they nearly could be turned into nursing homes as there are so many of them around. How will Horse Racing Ireland justify that in the days and years ahead? Mallow is one of the courses with which I am familiar. The €6 million development at Mallow will not work. It will be like the housing in Leitrim and Roscommon. As far as I can see, it is a ghost development. Tipperary is another course that is in some difficulty. Leopardstown and Navan are prime.

That is quite an issue that will be around for Horse Racing Ireland in the future. I was a little surprised that Mr. Kavanagh did not give us the figures for the year 2009 or 2010. They must be available. Some 335 meetings in a country with a population of 4.5 million is high compared with the UK. There is a significant population in the UK around Kempton and Sandown and up into Yorkshire and York, and they are in difficulty as well. I read the British sporting newspapers. National hunt in the north of England is falling off. There are courses closing down and changing rapidly.

How many times has Horse Racing Ireland changed head office? This question was raised here some weeks ago by a Kildare Member. Horse Racing Ireland is now in Ballymany. Has it office development vacant or idle? How many times has it changed and what was the reason for all the changes in head office from one place to the next? Horse Racing Ireland is coming in to make a case to the Government - we are on the way out and I too am on the way out - and is looking for extra funding. It wants to hold on it, but if it is spending money at that level on changing head office from one place to the next, there must be waste involved. I understand Horse Racing Ireland has moved three times. Could Mr. Kavanagh explain all of that to me?

I welcome Mr. Kavanagh and his colleagues here today. It is a timely presentation. In the House, there is cross-party agreement that some changes must be made on the tax collection and the present regime. As he stated, a couple of years ago Horse Racing Ireland was getting €76 million and now it is getting €57.2 million. It is obvious that Horse Racing Ireland needs funding for prize money and to keep the business going.

This business of horse racing and horse breeding is part of our DNA in Ireland. It is part of what we are. There is not a county in Ireland that has not got a race course and most have many. In my constituency, the one in Gowran is a fantastic race course. People get such enjoyment out of it from a recreational point of view, as well as the industry and the off-shoots from that.

No punter would be too worried about whether he or she had to pay 2%, even if it went from 1% to 2%, of what he or she bets. If one bets €100 and one has to pay €2 tax, or likewise if one bet a tenner, nobody will be too worried. It is a small amount of money. Nobody will be too worried about it and it will not have any effect on the industry as such. Horse Racing Ireland needs the funding and changes have to be made.

Online betting is in fashion and people are doing it on a continual basis, and offshore. I understand there are only two or three large operators involved, some of whom are based in the Isle of Man. They are milking the system in Ireland through offshore betting and making no input back into the industry from which they are gaining, making a living or making a profit. It is well time that changes were made.

I was told that this system is in place in England, France and elsewhere, but they have a problem in collecting the tax on offshore and online betting. Will this be a problem in Ireland if the next Government - whoever is in it - brings it in? Will this be a problem where these companies are based in places such as the Isle of Man and will the Revenue have a problem in trying to get that tax in? How would the Revenue enforce the tax on them?

We, in my party, heard representations from some of the large operators and they told us they had no problem with paying the tax. They stated they were willing. They volunteered to pay the tax so long as it was a reasonable rate such as 1% or 2%. They would like to see some system put in place where they could play their part in keeping the industry going. It is for their own benefit because they are making a living from it.

This is timely. It needs to be reviewed. The sooner we get this legislation in place the better.

I welcome the delegation. Sometimes I meet Mr. Kavanagh at a racecourse but it is nice to see him here. I have gone to races since I was 14, never missed a day in Fairyhouse and realise the potential of the horse industry to Ireland. There is no point in hiding it and I will not hide what I have to say. Driving up by Navan racecourse one will not see anybody there. All our syndicates are gone. I have been involved in a syndicate for the past 15 years and we are winding it up tonight because none of us can afford to stay in it. It is a group of people who have gone racing for the past 18 years and always had some interest in a horse.

There are two aspects on which we need Horse Racing Ireland's advice, one of which is people betting and the money not coming back into the industry. I am a new member of this committee. When I read last year what we took in revenue in the early part of the last decade and see now that Horse Racing Ireland is losing, I know that something is not right and it must be remedied immediately.

I note what Deputy Edward O'Keeffe stated about our fine race tracks. It is a little like the building industry. It is easy to complain about it afterwards, but it is great to have these facilities in every county that can be subsidised to keep them going. It would be a disaster to close them down.

I refer to the stallions in the country of which Mr. Kavanagh spoke. I have visited Coolmore and elsewhere. In the past six months, I heard about the French issue and maybe Mr. Kavanagh might elaborate on that. I note from speaking to some of the breeders that the French issue is a massive one. How will Horse Racing Ireland work with us to ensure that we do not lose our world identity as the best. No three months goes by but a programme will go out on RTE, BBC or another channel stating there is no place like Ireland for horse breeding.

From a syndicate's point of view, one way of gobbling up money is to have a horse. The money taken from winnings for entry fees and so on was a constant drain, even if one's horse won, so much so that the syndicates are gone. Mr. Kavanagh must look at that. Every horse trainer is under serious pressure. They own most of the horses in their yards. We should work together to get the tax right, ensure we keep the French out and get young people back at racing tracks instead of looking at a computer. I know this is happening because I was at a house canvassing recently - I am back at it after two years - where they spend the whole night on the computer gambling online. There are houses being lost on it. Somebody did not do their job right in the past two or three years in the case of online betting. That is all I have to say.

I wish Horse Racing Ireland well. At this committee we all agree that horse racing and agriculture are mixed and agriculture is the one thing that will get us out of this recession. We should promote our own industry.

Notwithstanding the drop in the number of horses, people still find it difficult to get racing opportunities. Has there been any progress in developing another all-weather track? That is an obvious solution that would solve certain problems in the industry.

What about the entry fee to go racing? It is presented as modest but acts to deter young people. We cannot compare Ireland with France because of the nature of the French funding system but in the middle of August entry to Deauville was €2. It is expensive for a family to go racing and the profile of race goers is getting too mature for the long-term good of the industry.

Mr. Brian Kavanagh

There are many questions; it is like starting the Grand National. The Finance Bill contains welcome measures to address online betting. The detail is missing; that will come in a betting amendment Bill, although I do not know if it will see the light of day under this Government. It will contain the practical measures to tackle this. The changes in the Finance Bill will not come into effect until the betting amendment Bill is passed and a commencement order is signed. We welcomed the provisions in the statute to address the issue. Obviously the devil is in the detail and we must consider how it can practically be addressed. It has been done in Australia and France and is happening in all other countries so I am confident a way to capture offshore betting can be found. The deletion of the section relating to the ability of the Minister to vary the rate ties the hands of any incoming Minister for Finance and I am not clear on the rationale for it .

There is no one job that is more important than another. While we talk of protecting jobs and the smart economy, there is significant employment potential in the betting and racing industries. We need a solution that protects everyone's jobs, not one that protects one set of jobs at the expense of another. The only way to address that is to level the playing pitch. All bookmakers have been at pains to say they are prepared to pay tax in a fair system and the Department of Finance and Revenue Commissioners are now progressing legislation. A fair system can be introduced which can be a win-win situation. Small bookmakers operating betting shops and those working on tracks cannot compete with online business when the playing pitch is not level. We must level that pitch and that will protect jobs. The Bill will not discriminate against anyone who wants to operate a call centre or online operation out of Ireland and it will protect jobs in the racing and breeding sectors.

Prize money has decreased by 23% in the past two years. Our prize money is significantly less than our competitor country, France, although it is above the prize money in Britain, although that is not a valid comparison because Britain runs more than 350 meetings on the all-weather track, low quality racing that takes place simply to give the betting shops a product. The money that HRI puts into prize money stimulates investment of €270 million. Deputy McEntee mentioned how expensive it is to keep horses in training and that is the investment that is stimulated by prize money because that then goes to trainers who then pay staff wages. Half the prize fund is put forward by owners and sponsors themselves and prize money in Ireland is significantly below the level in France. There must be a decent level of prize money to encourage people to put horses in training and to invest.

We have many racecourses but each of them is important to the local economy. HRI has always operated a 50:50 grant system. We would only have given grants to racecourses for capital improvements on the basis that they would have come up with half the funds themselves. Any developments around the country were 50% funded by the private sector. Cork Racecourse was mentioned and Cork is a key area for us, it is the home of many good horses and is the nursery for point to point racing. The Irish Horse Racing Authority felt Cork needed an improved and better racecourse and it was developed in the mid 1990s. The stand referred to was the final phase of that development and was funded 50% by Cork Racecourse, which did not have to borrow the money, and the investment will be there to stand the test of time. The facilities are not used as often as we might like but they are there forever now and Cork Racecourse is also a showpiece.

There has been one change at headquarters, although it might appear we have had more than that. When Horse Racing Ireland was established in 2001, the intention was that the old Horse Racing Authority that was located in Leopardstown and remote from the industry, would relocate to its own headquarters in Kildare at the heart of the industry. We spent time looking for an appropriate location in Kildare and while we found it we rented premises in Kill, half way between Leopardstown and Kildare, to facilitate staff moves.

We must stop for the vote in the Dáil, it is the Finance Bill and we cannot take a chance. Perhaps Mr. Kavanagh would reply to the Deputies through the clerk of the committee.

Mr. Kavanagh has nearly finished replying to me, has he?

Mr. Brian Kavanagh

I am finished, yes.

I thank Mr. Kavanagh for the presentation and for discussing the matter. I am sure the new committee will invite HRI to a full meeting because this is a vital issue.

The joint committee adjourned at 1.30 p.m sine die.
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