Léim ar aghaidh chuig an bpríomhábhar

Select Committee on Enterprise and Economic Strategy díospóireacht -
Wednesday, 1 Jun 1994

Page 2

I welcome the Minister for Tourism and Trade, Deputy McCreevy, and his officials. The purpose of the meeting is to give consideration to the Department of Tourism and Trade Estimate, Vote. 35.

I have a timetable which the committee can accept or reject. I suggest 15 minutes each for opening statements from the Minister, Deputy Deenihan on behalf of Fine Gael, the Progressive Democrats' spokesperson and the Technical Group's spokesperson. We could then take the various subheads in groups under subheads A, B and C and so on. Is that agreed? Agreed.

Vote 35 - Tourism and Trade (Revised Estimate).

I am very happy to appear before the committee once again to discuss the Estimates for my Department. Many good things have happened during the past year in both the tourism and trade areas and I wll talk in more detail about these later. Allow me first to remind the committee of the central focus of Government policy, which is economic growth that can cut into the unemployment figures.

My Department has one clear focus, to increase substantially our overseas earnings. It is by the implementation of tourism and trade policies, which are firmly focused on the needs of the marketplace, that this can be achieved. Foreign earnings boost economic activity and this leads directly to increased employment. We have seen evidence of this in recent months. However, there is still a very long and difficult road to travel. I am confident that, with determination, leadership and good management, the progress that has been achieved to date can be steadily built upon in the years ahead.

Few sectors can match tourism with its potential for growth. Most tourism services are labour intensive and have a low import content; revenue growth translates directly to job generation. Tourism also acts as a powerful instrument of regional balance. Tourism accounts for 90,000 jobs in the economy. This is estimated to be equivalent now to more than half the jobs in agriculture, forestry and fishing, as against one third in the mid 1980s. In 1992, foreign earnings from tourism exceeded £1.2 billion. This is equivalent to approximately 6.6 per cent of the total value of Ireland's exports of goods and services in that year.

Despite the recessionary climate in Britain and the United States and the fact that travel within Europe was almost stagnant in 1993, total foreign earnings from tourism reached £1.367 billion, an increase of 11 per cent over the previous year. The number of overseas visitors to Ireland was 3.33 million, an increase of 6.54 per cent on the 1992 figures; 1993 has been a record year for Irish tourism.

Targets for growth in the 1994 season set earlier this year are likely to be reached, if not exceeded. Growth targets set by Bord Fáilte were 7 per cent for Britain and 4 per cent for mainland Europe. Despite the recessionary climate, consumer spending in Britain is set to increase in 1994. With Ireland's competitiveness continuing to improve and with the growth in access transport, prospects for tourism from Britain are favourable.

Most European economies are not expected to recover until mid-year. Despite the expectation that competition in Ireland's target segment will intensify, our strong charter base and greatly increased wholesaler distribution network indicates a target growth in 1994 of 4 per cent. In relation to the US market, the committee will already be aware of the special US marketing initiative which I set in place earlier this year. This, combined with Bord Fáilte's normal marketing efforts in the United States, leads us to expect an overall growth rate of the order of 24 per cent in the vacation segment of the market.

In terms of structure and organisation, the past year has been one of change. We have a Tourism Council giving the tourism industry, for the first time, direct input into policy formation. Tourism organisations at regional and county levels have been restructured for greater co-ordination and efficiency. More recently a pro-business and a very pro-tourism budget has been passed.

We are now about to embark upon a new and very ambitious tourism development programme, the blueprint for which will be the Operational Programme for Tourism 1994-1999. It projects total expenditure of over £650 million over the next six years in tourist facilities, training and marketing.

It will build on the existing partnership arrangement with the public and private sectors working jointly towards the achievement of Government targets. These targets are an increase of 50 per cent in real terms, equivalent to an extra £1 billion in foreign tourism revenue and the creation of up to half the new employment growth in the economy over the next five years. Investment under the programme will be targeted at: further product development to meet specific market deficiencies; a large expansion in marketing activities; major improvements in the conference, angling and cultural tourism product; and an expansion in the range and scale of training.

My Department's Estimates include an allocation this year of £21.695 million to Bord Fáilte towards their overseas marketing and promotion. As the committee will know, a special supplementary Estimate in the amount of £8 million was approved for my Department earlier this year in respect of additional marketing measures in the US, Australian, Japanese, British and continental European markets together with a number of special promotional activities. Among the most exciting innovations in 1994 is the marketing initiative currently in place in the United States. This is a particularly interesting development and one I see as a valuable experiment in marketing Ireland as a tourist destination.

Late last year a number of representatives of the tourism sector came to me with a proposal for a new approach to tackling the need for additional resources to be spent on marketing Irish tourism overseas. The formula had never been tried before and involved joint funding by the commercial sector and the Government. This funding would in turn lever support from the EU Structural Funds. The concept appealed to me. The commercial sector would, for the first time, play a decision making role in shaping the marketing of Ireland overseas. In crude monetary terms the formula proposed meant that for every £1 which the industry invested matched by £1 from the Exchequer and with EU support, £6 would be spent in the market-place.

I was prepared to take the gamble and give a run to what was up to then a non-traditional untried approach. A £3 million or $4.2 million campaign was launched in the US, additional to the Bord Fáilte campaign. I can say that to date I have no regrets. The rationale was to redress the loss of market share which Ireland had been experiencing from the US and to maximise the benefits from the signalled US economic recovery which would give a new buoyancy to demand for overseas travel. The anticipated increase in carrier capacity on the transatlantic routes was also a compelling reason. The campaign is overseen by a management committee representing public and private sector interests.

The early results of the media campaign are most positive and indicate that we are on target to see an increase of 19 per cent or 45,000 in the number of US vacation visitors in 1994. Compared to the 5 per cent growth target forecast by Bord Fáilte for this segment of the market, the concentration of resources on creating an extended and more intensive consumer advertising campaign through the US marketing initiative is proving effective as a means for generating increased vacation traffic. As the committee will be aware, the vacation traveller is a high spender. Despite its success to date, the US marketing initiative is being assiduously measured to gauge the extent of the impact and to assess the effectiveness and cost efficiency of the programme and to see what new lessons we can learn.

While the US marketing initiative is the flagship of the special fund, many other markets are benefiting from a special marketing push this year. A small sum-£100,000 in each case- has been made available to Bord Fáilte to boost our promotion efforts in Japan and in Australia. The sums represent a recognition that we must strive to build up our marketing outside of the traditional European and North American markets to the fast growing markets of the Far East and Australia. I would hope that the additional funds available this year will be the first step in a gradual effort to increase Ireland's share of the Japanese and Australian markets. In this regard, we will encourage all attempts to increase the scope of "fly-free" concepts from long haul destinations which allow visitors from these destinations to fly free to Ireland from their initial European landing point provided they book the tickets before they set off. We expect to see an increase of 5,000 in Japanese visitors and an increase of 7,000 in Australian visitors this year.

I am particularly pleased to have been able to make additional funds available to Bord Fáilte to intensify our promotion in Britain and continental Europe. This country has experienced a highly satisfactory growth in both tourist numbers and revenue from Britain and continental Europe since 1987-38 per cent growth in numbers and 50 per cent in revenue from Britain and 124 per cent growth in numbers and 209 per cent in revenue from mainland Europe. Yet I believe, there is still a great untapped potential in these markets. I have earmarked £2.25 million to these markets, of which £1.25 million is for Britain. My aim is to complement and extend the promotion of Bord Fáilte, to draw on good ideas from the industry and to devise approaches that will be innovative and will be tailored to the requirements of the particular markets.

Of the £8 million provided by way of supplementary Estimate for tourism development and promotion, £1.25 million is set aside for projects which will associate Ireland's leading sporting and artistic personalities and events with tourism marketing. The initiatives announced to date include: Jordan Grand Prix, £400,000; World Equestrian Games, £250,000; and Women's Golf Open, £125,000.

One of the major factors which impairs the profitability of Irish tourism is that operators do not get a year round return on their product. In 1992 the peak summer months of July and August accounted for 37 per cent of all holidaymaker arrivals while only 32 per cent arrived in the months of April, May and June and 18 per cent in September and October. The seasonality marketing drive is designed to get 55,000 additional visitors to Ireland during the shoulder months of the tourism season-April, May, June and after August.

The campaign is a joint effort with the tourism industry. It is overseen by a committee chaired by my Department. Total expenditure is set at £1.5 million, £800,000 State contribution and £700,000 industry contribution. The programme was drawn up following consultation with a number of access carriers. A number of product areas have been targeted which include golf, equestrian and horse racing, sales meetings and conferences and city weekend breaks.

The past year has been one of change and development in the tourism sector. Since assuming this office I have taken soundings within the sector and I have introduced a number of changes within my Department, within the regional tourism organisation and through the establishment of the Tourism Council which provides a forum for discussion between the Department, the tourism agencies and the industry. I plan a significant review with CERT of manpower policy and training needs for the tourism sector and simultaneously I have been looking at the role of Bord Fáilte in terms of its future potential and the sector's future requirements.

There has been much public comment in respect of the ongoing review of Bord Fáilte being carried out by Arthur D. Little Ltd. which is expected to be completed in early July. This is an important review. Bord Fáilte was established in 1939, five and a half decades ago. During that time the organisation has done excellent work. However, the world has changed dramatically, in political terms, in means of transport, in patterns of travel and holiday making, in new forms of communications and marketing techniques. The present review of Bord Fáilte will provide me with the best objective external advice I can get on the future positioning of Bord Fáilte to meet the challenges that lie ahead as we seek to develop and expand our tourism performance in the face of growing opposition from competing destinations.

I will now turn to the trade area. My aim is simply to get the absolute maximum return on the State's investment in exports promotion and marketing, with the best possible contribution to the Government's overall strategy for creating jobs. Recent job figures suggest that our policies are slowly bearing fruit and that indigenous export growth is playing a vital part in this progress.

In 1993 — despite difficult international trading conditions — total Irish exports grew to an estimated IR£18.1 billion, an increase of 8.75 per cent over the 1992 figure. Indigenous exports were up by 8 per cent to IR£3.9 billion. This brings the increase in indigenous exports over the last five years to 30 per cent, which compares very favourably with the 23 per cent increase for total exports over the same period. In view of the depressed state of our main markets and the difficulties caused by unfavourable interest and currency rates in the early part of the year, I believe the export performance of Irish companies in 1993 represents a remarkable achievement.

Looking ahead, the outlook for Irish companies is more favourable than for several years, with low interest and inflation rates at home allied to the expected recovery of our main overseas markets. Recent business surveys suggest a real sense of confidence is taking root, based not on some vague feeling of well-being but on firm orders secured abroad and on the home market.

For 1994, the target is to increase indigenous exports by 10 per cent, to £4.3 billion. With the expected continuing recovery in the UK, the US and other principal markets, I am hopeful that this target will be exceeded. The other key factors which make me so confident about the future are first, the successful conclusion of the GATT Uruguay Round and secondly, the continuing determination of all members to make the Single European Market a success.

Turning first to GATT, I signed the agreement at the Marrakesh ministerial conference in mid-April. This is the most comprehensive trade agreement in history. The establishment of the World Trade Organisation, which will succeed GATT, will mean a new coherence in world economic policy and will help create a fairer and more equitable trading system. The world trading regime and the settlment of trade disputes must be conducted on the basis of rules agreed by all, not on solutions imposed unilaterally by larger countries. The Uruguay Round outcome represents a major step in this direction.

After seven years of negotiations the worldwide satisfaction which greeted the end of these talks reflected the importance of the event for the future development of the world economy. At a time of slow growth and the re-emergence of strong protectionist measures, the world trading environment deperately needed a boost to restore its confidence. The Uruguay Round agreement will provide that boost and it has been recognised across the world as exactly the right medicine at the right time.

The resulting increased certainty and stability in world trading conditions will generate confidence, a vital ingredient in the recipe for success in industry and commerce. The establishment of new and improved rules in a wide variety of trade-related actvities — such as anti-dumping, subsidisation, and unfair trading practices and the commitment of Governments to work together in the WTO to implement these new rules effectively — mark a great step forward, will help to create the environment in which global trade can develop and opportunities for increased trade will appear.

A small open trading nation, such as Ireland, is highly dependent on the existence of a stable trading environment to develop and expand its exports. As a small economy, our long term welfare can only be secured if we can compete openly in European and world markets. As the world's biggest trader, the European Union stands to gain most from the Uruguay Round. The boost to European trade has been estimated at over $80 billion a year by the end of the century. If this growth is exploited by Ireland it can lead to significant expansion of our exports and increases in foreign earnings.

Our past experience of progressively freer trade has brought challenges as well as opportunities. Success in a free trade environment depends on competitiveness and innovation. However, the degree of exploitation of the trade and growth opportunities which the Round will create will ultimately depend on the response of the business sector.

Given all the hype about GATT, we are in danger of forgetting the ongoing importance of the Single European Market. Making that market work effectively for all is a matter of considerable importance to Ireland, especially because other member states of the EU take nearly three quarters of our total exports. With this in mind, the European Commission, after consulting member states and other interested parties, has prepared a strategic programme which will further enhance the development and effective management of the Single Market.

The aim is to ensure the Single Market develops in a non-bureaucratic, fair and open manner which will benefit Irish companies and individuals. A Single Market unit has been set up in my Department to ensure the concerns of Irish business and industry are fully met and any impediments to the smooth operation of the internal market eliminated. The unit is available as a contact point on Single Market issues and helps to resolve any difficulties, informally where possible.

The 1994 grant-in-aid to An Bord Tráchtála is £34.781 million, representing an increase of some 71 per cent on the 1988 provision. The 1993 allocation of £37,828 million was made in the aftermath of the currency crisis and included special provisions to help companies in the context of difficult trading conditions internationally. This year's allocation again represents a major Government commitment to support the marketing efforts of Irish firms.

An Bord Tráchtála's export promotion programmes will continue to receive considerable Structural Fund assistance over the next six years. The new market development sub-programme for the years 1994 to 1999 will seek to build on the success achieved by the 1989 to 1993 programme. According to the Commissions' independent external evaluators, the previous programme was a useful and well used initiative in the development of Irish small and medium enterprises.

The new sub-programme will have a sharper focus and will benefit from the reorganisation of some of An Bord Tráchtála's activities. However, the overriding objective remains unchanged — to promote and develop trade from the indigenous manufacturing and traded services sectors. This will be achieved through specific measures which will seek to address and correct the structural disadvantges experienced by indigenous exporters vis-�-vis their competitors in the rest of the EU.

The target over the six year period will be to increase indigenous exports by an average of 9 per cent per annum and to increase Ireland's share of other EU markets by 25 per cent. Again, I am hopeful we can surpass this target, given the resolve of our exporters and the recovery in trading conditions world wide.

I said last year my intention was to give a new focus to the promotion and development of our tourism and trade sectors. I am happy that significant steps have been taken in a short 12 months to achieve those objectives. Much more has to be done if we are to achieve our full potential in these areas. I am determined no stone will remain unturned in this effort. As I said at the outset our focus is on the achievement of real and significant improvements in foreign earnings. By doing so we can secure the economic growth which will benefit all our people, the young in particular.

I will listen with interest to the comments of Members and will be pleased to respond to any questions.

There is a certain irony in the Government's cutting the grant-in-aid to the main trade promotion agency, An Bord Tráchtála, in 1994, the year in which the Uruguay Round of the GATT was signed. The 1994 provision is £34.866 million, a drop of £3 million from the 1993 provision of £37.828 million. This in effect means less funds for exporters to develop their overseas markets.

It will also result in a decrease in funds available for group promotional activities by An Bord Tráchtála. While the board increased the limits of the marketing activities grants scheme from £5,000 to £10,000 at the end of 1993, the reduced fund means the new limit is meaningless. Exporters complain they will have to curtail their international marketing programmes in 1994 as a result of the lack of funds available from An Bord Tráchtála.

The most recent estimates for international trade, incredibly, only go as far as September 1993, which is unacceptable. These show an increase of exports to the UK of less than 2 per cent but an 18 per cent increase to Germany, a 46 per cent increase to Japan, a 25 per cent increase to the US and a 50 per cent increase to Saudi Arabia. These markets are expensive to service and exporters should be given every encouragement and financial incentive to develop them further.

The Minister should consider making more funds available now for export market development, given the need to develop those markets which will be opened because of the completion of GATT. The agreement represents opportunity for our exporters but unless we support them in their efforts the potential will not be converted into reality. Markets today might not be maintained tomorrow if we do not aggressively pursue them.

Exporters found themselves in difficulties at the end of 1992 and early 1993 because of the sudden drop in the value of sterling. The Government responded by creating the market development fund. Over 800 companies benefited from this and many were saved from bankruptcy. The problems arose from the Government's policy of keeping the Irish pound at a high level within the ERM, despite the market's perception that this position was not sustainable. Exports have again experienced difficulties as a result of the increase, from 95p to 99p, in the value of the pound against Sterling in the last few months. The view common to exporters of manufactured goods, agricultural and dairy products is that the Irish pound is now at an unrealistically high level against Sterling. The Government and the Central Bank must take action to correct this situation. An exporter contacted me today about a £1 million transaction which he had to negotiate recently and which cost him £40,000. This is a serious situation which the Minister should carefully monitor.

It is also remarkable that the provision for export credit insurance has been cut from the expected outturn of £11.431 million in 1993 to £5.92 million for 1994, a decrease of 48 per cent. Does this confirm exporters' concerns that the provision of political risk cover falls short of what is available to competitors in other countries, including the United Kingdom, Germany and France, and that we have a scheme which is not readily accessible and responsive to today's needs in terms of resources and programmes? The French Government, for example, is reforming the French export credit agency, COFACE, with the introduction of new policies and greater flexibility.

The media — and this report appeared in The Financial Times of 5 May 1994 — reported that the UK exports credit guarantee department will raise the level of cover to £3.2 billion for 1996-97, almost double the cover available of 1991-92. Because of a perceived lack of capacity in the private reinsurance market, the British Government is now providing substantial reinsurance cover to private sector companies, such as NCM and trade indemnity. As a result of the support provided by the British Government, exporters there now have the benefits of more flexibility for cover on difficult risks, a general reduction in premium costs and a willingness by the British Government to match international competition. By contrast, our exports must wait up to three weeks for a decision on cover in distant markets, which often turns out to be negative. International business cannot work with these delays and the result is recourse to the UK market or a loss of business opportunities. International governments, such as the USA, Taiwan and South Korea, deploy vast resources to compete on the finance front in the medium term.

Few policies have been written since the Government took back the administration of political risk cover from the private sector. Perhaps we should look at a reinsurance role for Government, where the private sector would actively promote and administer a political risk scheme, with reinsurance provided by the State. The British Government actively promotes the concept of export credit insurance cover to its exporters to encourage them to compete for business and to use it as a competitive advantage. Far from promoting the scheme, in our economy, which is more dependent on export markets than that of the United Kingdom and most European countries, it is kept inaccessible if not invisible.

The Minister mentioned the export of services and this is an important area. We should not overlook the fact that despite our serious unemployment levles, over 200,000 jobs in industry and at least as many more in services depend on our export performance. A decrease in this area will immediately result in job losses and layoffs, as was seen during the last currency crisis. Export of services can be a major contributor to job maintenance and creation and this now accounts for 30 per cent of all world trade. We should make a major effort to develop them and we should respond quickly to the report of the Taoiseach's task force on jobs in services, which contains a number of positive recommendations.

I also want to pay tribute to the working group on direct marketing, which made its final report to the central review committee a few weeks ago. The implementation of this group's recommendations meant reduced bulk postal rates, an internationally attractive telecommunications package, five important telemarketing projects approved by the IDA, with many more prospects, and the creation of a language register by FAS, with 900 curriculum vitae, in order to encourage inward investment in the sector. This was possible because Government had the wisdom to respond to market opportunities identified in the growing international services market.

Three factors are driving the expansion of international services markets: inforamtion technology, which is revolutionising the communications market, including banking and insurance; privatisation of public services in maintenance, security, health care and other areas - Japan and the USA now have more people employed in private security than in their police forces; globalisation, which will be speeded up in the wake of the GATT agreement and which provides for services and access to them on a wider international basis than ever before.

There are many examples of Irish companies successfully competing in the international services market, such as the ESB in the State sector. Our international consultants, outside the construction sector, are at a disadvantage in comparison with their international competition. They must bear the full impact of the 40 per cent corporation tax. Their competition either pays no corporation tax or pays a lower rate of tax. A reduction in the rate of corporation tax would result in the immediate increase in overseas assignments which these companies could secure and they could use the funds released for market prospecting and as working capital. The Exchequer would not lose money. Recommendations which have been made by the Taoiseach's task force on jobs in services in respect of taxation on exports of services should be examined without delay and implemented this year, if possible.

The report commissioned by the Minister on the impact of the GATT agreement concludes that export gains will occur in markets where we currently face barriers, such as financial services and consultancy markets in the USA, while service exports such as freight and transportation, tourism, technical services and software will benefit from the increased buoyancy in world economic activity, which will follow the conclusion of the round. Most of these services are location based, that is, they must be delivered where the consumers are located. The important point is that they are labour-intensive, rather than capital intensive. Our fiscal system should therefore be organised to promote and develop, rather than to penalise them.

Another major question concerns the amount contributed to the balance of payments by the export of services. It may seem astonishing, but we do not know what our earnings are because there is no mechanism to collect and analyse the relevant information. I am not saying this is an easy task but, for reasons of policy formulation and allocation of resources to the development agencies, it is essential to devise some method of estimating foreign earnings from the provision of internationally traded services. Perhaps the Minister will respond to this point in his reply.

Tourism has improved this season, especially package holidays, despite the reservations I expressed about the German market. Perhaps the Minister will respond to these reservations. However, a number of people who own bed and breakfast accommodation have not experienced the same benefits from the increase in numbers as hotels in Dublin and Killarney. Although numbers have improved, the benefits are not shared throughout the tourism industry.

I want to refer to the roads in tourist areas, although the Minister and the Minister for the Environment, Deputy Smith, are constantly reminded about this. Despite improvements this year, the roads will continue to be a major problem for the tourism industry. I urge the Minister to make roads a priority in these areas. The appalling standard of our secondary roads, which are frequented by tourists, is a cause of grave concern. Tourists who bring their cars here on holiday usually come from societies and backgrounds which may be described as "car conscious" or "car proud". In short, they enjoy and take their cars on holiday and will have gone to the trouble of shipping it to Ireland to experience our open and relatively traffic-free roads where they may once again experience the joy of driving in comfort and without pressure. However, tourists find potholes or stretches of tarmac linked by potholes. The joy of driving is shattered, as is their car. They curtail their touring, their holiday is undermined and their car is damaged, but worst of all, they go home and tell their friends not to come to Ireland, the land of the potholes. This is an image we do not need. I have encountered tourists, including car owners and tour operators who expressed grave reservations about the condition of our roads. The Government must not only fix roads for the people but also for tourists.

The Minister mentioned a tourism organisation, on which I would like to comment. I have spoken about this on many occasions, including Question Time, other Estimates, etc. Media and other reports have indicated that the new Bord Fáilte will focus on marketing Ireland as a tourist destination and that it will be relieved of responsibility for the development of the tourism product or tourism facilities. As the committee will appreciate, a sustainable tourism industry is based on a sound national tourism policy and direction, derived from research into world tourism trends and market needs.

If the national tourism authority, by whatever name, is not responsible and resourced to research and direct tourism development and tourism policy, where will the responsibility lie and where will resources be located to ensure the Irish tourism industry is not left like a headless chicken in a highly sophisticated and competitive tourism world? The Minister may say the regional organisation or county enterprise partnership boards can take on such responsibilities, but none of these has the required national mandate to do so.

The Department of Tourism and Trade may be the intended responsible agency to do the job. If so, could the Minister advise us how the Department intends to acquire the expertise by way of experienced tourism professionals for such a task?

I raise the problem of the consultants appointed by the Minister being restricted by their terms of reference to examining the role and operation of Bord Fáilte. This is examining only part of the national tourism organisation, which at present consists of the Department of Tourism and Trade, the national tourism council, Bord Fáilte, CERT, regional tourism organisations, the new county enterprise partnership boards and the county tourism committees. The consultants' report and recommendation, which concentrates on Bord Fáilte, does not address the many organisational issues facing Irish tourism and cannot properly advise the Minister on how Government should organise itself to fulfil its role in developing tourism.

A worry expressed in the industry is that the Minister has already made up his mind that he wants to make radical changes in Bord Fáilte and to have political control over EU funds for tourism by having them allocated and disbursed through his Department when he removes that function from Bord Fáilte. The question being asked is whether the appointment of consultants is a cover or a mechanism to allow him to take ministerial control of the allocation and disbursement of Structural Funds and others for tourism development? I would like the Minister to answer that. I know he has committed himself to an increased role in monitoring funds when allocated to Bord Fáilte and other agencies, but who will allocate these funds?

The restaurant sector believes it has been left out of what is happening in the tourism industry. It is not a member of the tourism council, for example. I do not know why it has been excluded, but I ask the Minister to include it. The restaurant sector is acknowledged by travel and food writers all over the world as having made dynamic improvements in the quality and variety of its food and the quality of its service. Irish restaurants have now become a positive part of what attracts tourists to Ireland. They have also become a showcase for our quality food products. Their role in promoting tourism and Irish food is deserving of more recognition, as are the 27,000 jobs in restaurants. I urge the Government, therefore, to review the decision to exclude restaurants from the small business expansion scheme, for example. The restaurant sector is an integral part of the tourism industry on which it is highly dependent for its survival and growth. Because of the quality and variety of food and services Irish restaurants offer to the tourist, they are now part and parcel of the product which makes Ireland more attractive. The restaurant sector provides one of the two needs which every tourist must satisfy each day, to sleep and to eat. With the growth in the number of tourists not staying in hotels, the majority are now dependent on non-hotel restaurants to fulfil their needs for good quality and reasonably priced meals.

The investment in establishing, refurbishing or extending a restaurant is substantial because of the investment in buildings, furnishing and in cooking equipment. Yet the restaurateur, unlike other processing plant owners, cannot invest in equipment as an alternative to jobs. Every investment in equipment and facilities is matched by the creation or retention of jobs. If restaurant owners get support to buy more equipment, they must employ people to use it. It is a labour intensive sector. I urge the Minister to take note of this important sector, which has been ignored.

It is important to refer to VAT harmonisation because we should start preparing for 1996 and the Minister and his Department should focus on this area. At present tourism services such as accommodation, restaurants, car hire, etc., enjoy 12.5 per cent VAT rating, which will help to keep our product at a reasonably competitive rate in the international market place. This agreement on VAT on tourism is due to be reviewed by the EU in 1996, when there will be pressure from the Commission and other member states to put tourism services on the standard rate of VAT, thus increasing the VAT on hotels, restaurants, car hire, etc., to 21 per cent.

This pressure will come from the Commission and member states which are not as dependent on tourism as Ireland and do not appreciate the job creation ability of the tourism industry and its ability to create and sustain jobs in parts of the country where it is difficult to establish manufacturing industry. I urge the Minister to convince his Cabinet colleagues on the necessity, from an Irish standpoint, for tourism services to be maintained at the lower level of VAT and to make this case in Brussels and to his fellow tourism ministers in other member states. If he is not successful in keeping tourism services at the lower level, we could suffer devastating consequences in 1996 if we have to increase our tourism prices by almost 9 per cent.

In the context of the VAT review in 1996 and the harmonisation of the VAT rate, I understand the car hire sector is under threat because it is not perceived in the other member states as being a tourism service, but a service primarily for business people and, therefore, can stand the full rate of VAT. This is not the case here where the car hire industry is dependent on holiday makers and is a vital part of our tourism infrastructure, as we have seen in recent years when there was shortage of cars for hire to holidaymakers.

Ireland is an island holiday destination. It is more dependent on being able to offer car hire to holiday tourists than our competitors in Europe where the majority of holidaymakers arrive by road in their own cars. Ireland is the only member state without a land bridge to the EU.

There is a good case to be made on behalf of the Irish tourism industry. The Minister cannot wait until 1996 to make this case. This is a source of major concern within the industry, as the Minister probably knows already. I ask him to start making the case now and to put forward the role that an increase in VAT could have in reducing our competitiveness in an increasing world tourism market.

I ask the Minister to respond to my questions, especially in the trade area which is causing concern. I ask him to respond to my question on the German market. I have a number of questions which I can ask during discussion on the subheads.

We will now proceed with a detailed consideration of the various subheads. It is my intention to take them in groups. I suggest that we take subheads A1 to A8 under Administration. I ask Deputies to confine their questions to subheads A1 to A8 in the interests of efficiency. You will have ample opportunity to discuss every aspect of the Estimate during the discussions. The Minister has another commitment at 2.30 p.m. in the Seanad and I am anxious that he should finish on time.

Should the Minister——

The Minister will be offered an opportunity at the end of the debate. There is a ten minute period when he can answer. We will go through the Estimate.

I thought that the procedure was that——

The procedure that we have agreed to and which has been practised for the past year is that we now go to the various subheads. There are other Members waiting for an opportunity to contribute. You might afford them that.

There are very few of them around.

I appreciate that, Deputy, but those present are entitled to their say as well.

On subhead A7, consultancy services, does that £250,000 include the fee for the consultants set up to examine the function and role of Bord Fáilte? I am sure consultancy services would include public relations. Would the Minister outline to us the consultancy firms that he employed for public relations and the cost of those firms? Could he name the firms that this Department has engaged for public relations purposes?

Are there any further questions under subheads A1 to A8?

I do not understand the increase for postal and telecommunications services. We were assured by the Minister for Transport, Energy and Communications that those cots would come down for overseas and other charges. Is this 23 per cent increase an indication of what is happening nationally? Are further charges being imposed on industry generally? In regard to office premises expenses, does that 746 per cent increase include any aid for the regional offices or county officies? How does that massive increase occur there?

I note with concern that the increase is 26 per cent in subhead A while all other subheads show a decrease. It seems that all the money is now being gobbled up under the headings in subhead A to the detriment of other headings. I would like the Minister to explain that. Why is that the only subhead to show a 26 per cent increase this year in comparison with last year?

The Department of Tourism and Trade was set up in January 1993. The provisional Estimate would have been prepared in 1992. Therefore in the Book of Estimates published for Tourism and Trade in 1993 the administration subheads were more or less subdivisions extrapolated from other Departments. It was not an exact science. There is a big increase there for office premises expenses because we envisaged in 1993 that we would rearrange the accommodation so that the Departments of Tourism and Trade and Enterprise and Employment would be the only Departments in that building. Some money was set aside in the provisional 1993 Estimate to do this work but it was not possible to do it then. In 1994 we included the figure again and it looks at this stage as if we will not have spent it all by the end of this year either because there are problems with getting alternative accommodation for other people. The reason there is a 26 per cent increase is that in 1993 it was not possible to prepare the Estimates on the exact basis on which the they can be prepared now.

Deputy Deenihan raised questions about the figure for consultancies. This Estimate does include a figure for public relations. I have answered questions in the Dáil about that. It includes a figure of £26,000 for Carr Communications, the PR consultants to me and the Department. We made an estimate of £250,000 and at that stage we did not know what consultants we would engage. It is a figure estimated by the Department for the whole range of consultancy services. We estimate that it may cover everything for consultancy in 1994 but it may cost more or less.

Regarding telecommunications, the reason the figure is up is that it includes some alterations to the switchboard. If the Deputy rang my Department in the last year he probably got through to the old Department of Industry and Commerce. We now have a switchboard of our own so the figure includes a sum to make an alteration there. That is the main reason for the increase of 23 per cent.

Thank you, Minister. I will now move to the next group of subheads, B.1 to B.7.

On subhead B.1, could the Minister indicate the precise amount of money that Bord Fáilte spends on over the table advertising and promotion? How much of the £21.695 million, which is a reduction of a little over £200,000 on last year, is made up of wages and running costs for premises an so forth, and how much of it is made up of over the table spending on promotion and marketing?

How many Bord Fáilte representatives are now in America, and how many are in the Pacific rim countries which are identified as a major growth area for the future? How much money is actually spent at this stage in the employment of personnel in the north American market by Bord Fáilte and how much is spent on over the table promotion? I have asked two specific questions, the overall figure for over the table promotion and also the figure in America. That is under subhead B.1.

In regard to subhead B2, I was in Mayo in connection with the by-election. We have the same problem in Kerry in that the signposts are very poor, especially in some of our major tourist destinations. If it creates problems for people like ourselves who are regular travellers and who understand the roads, what kind of problems does it create for many of our unsuspecting tourists, especially those in cars? Tourists, both Irish and foreign, as well as commuters are inconvenienced because of the total inadequacy of our signposting system and this can also result in traffic accidents. Bord Fáilte has a certain allocation for signposting and we would want to considerably speed up that investment. In the next operational programme for tourism I hope there will be a special allocation to increase and improve the quality of signposting. We could also perhaps include a foreign language on the signposts. That would be important and is starting to occur in France, for example. The Minister should look at the issue of signposting with a view to making an immediate improvement in that regard.

With regard to the spending of £8 million by the Department under subhead B3, how is the Minister evaluating the benefit derived from the sponsorship of the Jordan team? I have been watching Eurosport and the cars move so fast that it is hard to see them. I cannot see any great benefit from it, although I may be wrong. I would like the Minister to indicate how he sees it benefiting Irish tourism. Is there any way to evaluate the numbers that will come to Ireland as a result of this considerable expenditure of £400,000? Bord Fáilte would say that if it had the £400,000 it could use it profitably. On the one occasion the Jordan driver was on the winning rostrum I did not see the Ireland logo displayed. If it was, it did not stand out.

The Minister mentioned that he would spend money on common rating Dublin Airport with London for a number of airlines. This is operating successfully with Australia, for example, and numbers from Australia are up because of the common rating between London and Dublin. What progress is being made with other airlines in this regard?

The Minister referred to the improvement in the American market and he was presumably associating that with the increased expenditure. I noticed in a recent newspaper report that Mr. Jimmy Murphy, whom I am sure the Minister is familiar with——

I do not know him at all.

He said the improvement was due more to the efforts in the last two years of Bord Fáilte than the investment this year of some of the £3 million. It was Bord Fáilte's good work that ensured increased numbers this year. Perhaps with the Minister's initiative we can expect even further increases next year. What is his view on that?

I am sorry to interrupt Deputy Deenihan. We will have to suspend the sitting of the committee for a division in the Dáil because there is no provision made for pairing. We will reconvene immediately after the division.

Sitting suspended at 12.15 p.m. and resumed at 12.30 p.m.

We will now resume on subheads B.1 and B.7.

Before the committee adjourned, I was referring to the American market and the effectiveness of the £3 million US marketing initiative campaign. Could the Minister refer to the statements made by Jimmy Murphy regarding who was responsible for the increase in the numbers of American tourists coming to Ireland?

I want to move on to subhead B5 dealing with Shannon Free Airport Development Company Limited — Administration and General Expenses Tourism and Traffic Development (Grant in Aid). This subhead shows a decrease of £11,000 at a time when the status of Shannon Airport has changed and when Shannon, and especially Shannon Development, faces a major challenge in maintaining the level of traffic passing through the airport. It is difficult to understand why this reduction took place this year when the Minister should be providing more funding to SFADCo to enable it to compete.

No doubt the Minister is aware that the allocation he gave Shannon Development is only a small percentage - 20 per cent - of the total it spends on the promotion and marketing of the area. It makes considerable funds from its promotional activities at Bunratty Castle and other places. Given that the figure is small, it is difficult to justify a decrease of £11,000 at a time when Shannon as a destination is under competition from direct flights to and from Dublin. This measure will especially take effect in the off season when it will be difficult to fill seats to and from Shannon.

At present SFADCo is aggressively marketing Shannon Airport to considerable effect, given that the charter traffic will be increased this year. However, SFADCo will face increased competition from places such as Farranfore Airport, County Kerry, Cork Airport and Dublin Airport. Given the importance of this issue, the Minister should consider the present situation.

Some of the funds made available to the task force headed by Gillian Bowler to consider the future direction of Shannon Airport and from other sources are being used to promote Shannon. However, these funds will not always be available and the task of those promoting Shannon will become more difficult because of competition. If budgets are to be decreased it will be very difficult for SFADCo and the region to face up to the increased competition.

Regarding the loan subsidy for small business expansion schemes, there has already been a debate on this and I welcome the subsidy. It has been successful and has attracted considerable interest by the tourism sector. At present there are more applications lodged than can be met by the funding of £25 million for tourism projects. Can the ceiling of £25 million be raised? Could the Minister also indicate the number of applications which have been approved at this stage, the amount of money thus far allocated from the £25 million fund, the kind of application that has been successful and the number of applications that were refused? This last point is important because I am aware of a number of people who cannot understand why they were refused.

Under subhead B.6 there is a decrease of £1.571 million in respect of funding for CERT. What is the reason? If the tourism industry is to meet the challenge of competition from other destinations a high quality staff is required, working at the coal face, who are well trained, not only in the skills of hospitality and services but also in languages. Such staff fulfil an important role and will do so even more in the future. It is therefore important that training is adequately funded to support this multi-million pound industry.

Deputy Deenihan raised the issue of signposting and this is a matter which also concerns me. Bord Fáilte Éireann and the regional tourism organisations are responsible for the brown coloured tourism signposting around the country, where there have been considerable improvements in the past number of years. Directional signposting is a matter for the Department of the Environment and the local authorities and this could be much improved in parts of the country.

My officials have been in contact with Dublin Corporation and the responsible local authorities in Dublin on a number of occasions on this issue. I know Dublin and its south side reasonably well, being a regular visitor to the city for the past 25 years since my student days, and I still have difficulty getting from the port of Dún Laoghaire to the Naas Road. Signposting appears to be better in certain parts of the country than others. My Department has taken up this matter with the Department of the Environment and asked if matters could be improved by including a small amount of funding for signposting in its next transport operational programme.

Regarding roads used by tourists, I will arrange that each of the regional tourism organisations will identify the priority roads in their areas and the roads which are of tourism significance. I will then consult with the Minister for the Environment to ensure that these prioritised roads will be given particular attention in the next round of Structural Funds allocations. I will also ask the regional tourism organisations to liaise directly with the local authorities to ensure that the roads of tourism significance are improved.

It is not only in County Kerry that people are concerned with roads. Public representatives in County Kildare hear of nothing else at meetings, despite the fact that the county has the best major roads, many of them using by-passes, running through it. However, away from the major roads, people are very concerned with the state of the county roads.

My colleague, the Minister for the Environment is doing his best on the issue with the funds available to him. It is an issue which I am conscious of as Minister for Tourism and Trade. In parts of the country roads are so bad that they effectively limit us from spending money promoting the country because if people cannot traverse the roads in reasonable safety and security they will not return.

Regarding the money spent by Bord Fáilte Éireann on salaries, administration and promotions, I answered questions in the Dáil some time ago on this. In 1994, £10.673 million of the grant-in-aid to Bord Fáilte Éireann will be directed to pay and superannuation. Of this sum, £9.455 million represents direct pay and superannuation payments by the board and £1.218 million represents the board's contribution to the pay and superannuation of the regional tourism organisations.

Is the remainder allocated to marketing and promotions?

The remainder is allocated to all the other activities of Bord Fáilte Éireann, which are broken down into various markets and so on.

Does the Minister have details regarding the American market?

I have not got the figures on that, but Bord Fáil Éireann draws its budgets every year and I assume it operates on the basis that the pay for those working in the different markets is included in the breakdown of its budgetary figures.

Regarding the figure of £8 million referred to under subhead B.3, Deputy Deenihan mentioned the effectiveness of sponsorship of the Jordan Grand Prix team. This is a new kind of initiative. Grand Prix sport attracts the biggest television spectator audience worldwide. Over the season approximately 29 billion people will see this sport. Approximately 150 million people watch each Grand Prix on television. They attract thousands of people to the circuit locations.

Ireland is not well known internationally and I decided to take a chance with projects of this kind which will give the country some promotion. The Jordan Grand Prix team has luckily done very well this year. It is an Irish team and we wish to be associated with it. My civil servants have found photographs of Mr. Barichello when he came third recently. The logo may have been a bit low down for the television camera, but Ireland was labelled across his front and on the side of the car. The Jordan Grand Prix team is associated with Ireland and it is as well to give the team some assistance.

On the question of common rating, the products sub-committee of the Tourism Council, have considered this matter, will report to a meeting of the council tomorrow. I would not wish to anticipate this report, but it is a matter which I have under active consideration.

I do not know Mr. James Murphy, the tour operator in America about which the Deputy spoke. The idea of the US marketing initiative came from the industry itself. Since I became Minister for Tourism and Trade, I said I wanted people to come up with their own ideas and put up their own money. A group of people in the tourism industry came to me about this time last year and proposed this idea. They were willing to put up a certain amount of money and asked if the Exchequer would also contribute. I looked at the proposal and considered it viable. This marketing initiative has worked exceptionally well. In the last month I have heard favourable comments from people who matter in the trade. Before this initiative Bord Fáilte anticipated growth of only 5 per cent from the US market. It now looks like this growth will be at least 16 per cent in the case of people coming on vacation from the US. This is a direct result of the initiative. Anyone connected with the trade would say there are two reasons for the increase this year. There has been a recovery in the American economy and the marketing initiative has had a considerable impact. The figures prove this.

We are evaluating this initiative. The administration of the fund was done by an outside group and a management committee. It has worked very effectively and everyone is delighted with it. I imagine that people in the industry will want to come up with another idea like this for next year. I do not know whether we will concentrate on the American market. The initiative could have fallen flat on its face but I am prepared to take chances. People in the industry put their money where their mouths were and I also provide funding on behalf of the State. This is probably the way things will happen in the years to come.

There is a small decrease of £11,000 in the funding of SFADCo. The 1993 funding included provision for Programme for Economic and Social Progressarrears. Therefore there has effectively been no decrease. We are only responsible for the tourism promotion activities of SFADCo. During the debate on the supplementary Estimate, I answered questions on the loan subsidy. I can now provide more up to date figures on this. As of 13 May 1994 there were 1,182 applications and inquiries in relation to the total fund totalling £215 million. The tourism sector accounted for 323 applications totalling £70.9 million. By that date 61 companies had received loan approval for sums totalling £10.4 million. Deputy Deenihan made the point he made at the last meeting that the total applied for is greater than the indicative amount provided for both tourism and industry. This is the situation at present. The question of cheap loans for businesses is being looked at by the Government and has been commented on by the Taoiseach and other Ministers in recent weeks. There is considerable interest in cheap loan finance. The loan subsidy scheme will work very well. Other EU funds may come on stream to extend this scheme.

The reason for the decrease in funding for CERT is technical. The CERT programmes now qualify for a higher rate of EU grant-in-aid appropriations. There is effectively no decrease but a considerable increase in funding for CERT.

Deputy Noel Ahern may now speak. We are dealing with subheads B.1 to B.7 so the Deputy should confine his questions to these.

This group of subheads deals with grants to Bord Fáilte and tourism organisations. Dublin Tourism plans to move out of its office in O'Connell Street. Can the Minister stop this? This tourist office does a great deal of business. If one wishes to spend a few nights in a fancy hotel such as the Conrad or the Westbury, one deos not go to the tourist office. Such hotels are booked in a different manner. The tourist office deals mainly with the budget type of tourist business. O'Connell Stree is well located for this because this market is on both the north and south sides of the Liffey. Bord Fáilte and Dublin Tourism want to move into a central office, which may be a fine location. I object to the image being given that there is no tourism in any parts of the city other than Grafton Street, Ballbridge and Temple Bar.

The main street of our capital city is O'Connell Street. The office there is a visible landmark. It is easy to identify and to direct people to it. Other committees and other Ministers, in particular the Minister for Justice, have talked about the problems of O'Connell Street. Tourism organisations should consider how it will be portrayed if a State agency is seen to be abandoning this street. This office is suitable for all parts of the city. If it is moved half a mile southside, I can see the tourism business on the north side, which badly needs a lift, being totally neglected. I am unhappy with the current rumours. Is the Minister's Department directly funding Bord Fáilte to purchase a new premises? I would like the city centre location retained because it serves all of the city well. I will not be happy with a token office or a token man or woman at a counter, which is being suggested for the northside. Could the Minister tell us if this rumour is true and, if so, can he do something about it?

It seems there is an increase in package holidays from the United States but the operators at ground level in the small hotel and bed and breakfast sectors are not benefiting from the new marketing drive in America and the apparent increase in numbers. Is there any way that the market drive in future years can ensure there will be benefit across the board? Is the Minister aiding individual operators through the scheme to market their own packages in America or is it an across the board scheme?

I will take on board the points made by Deputy Noel Ahern. The Minister for Tourism and Trade does not have direct responsibility for Dublin Tourism or any of the regional tourism organisations except in the sense that they receive funding from Bord Fáilte, which receives a grant-in-aid from the Department. The funding of regional tourism organisations has changed rapidly. About 70 per cent of it comes from the industry itself and 30 per cent is provided by Bord Fáilte. By an indirect route I have a tenuous responsibility for these organisations but they are independent companies limited by guarantee. I see a great deal of validity in the Deputy's arguments that another signal is being given that O'Connell Street and the city centre is not the place to be. I will take the matter up with Bord Fáilte. I was not aware of the rumours about Dublin Tourism. However, I checked with some of my officials and they have also heard this. We would not be directly involved in it but I will outline to Bord Fáilte the concerns expressed by Deputy Noel Ahern and will get a fuller picture. There is a great deal of validity in the points which he made and I will consult with Bord Fáilte to get an explanation.

Regarding Deputy Deenihan's question about the US initiative, perhaps my Department could show him an advertisement which was shown on American television. The advertisement ends with a telephone number to ring in the United States and states the price for which one can travel to Ireland. It does not name hotels but is a general promotion.

As Minister for Tourism and Trade, I feel that my job is to try to attract people to the country. It is not possible for any Minister or Department to direct to all sectors of the market. We must let the market dictate. It is up to the individual operators to attract their share of the market. The policy of the Minister for Tourism must be to get people to the country to spend as much as they can and let the individual operators fight between themselves to get them here. It is early days yet and hopefully by the end of the year everyone will get a fair share. At the moment it looks very good and hopefuly it will stay like that.

We will now move to subheads C, D.1, D.2 and E. I suggest that we also take subhead F, appropriations in aid.

I am concerned about this section of the Estimate because of the decrease in funding by about £3 million for An Bord Tráchtála and the effect which that is having, from what I am told, on the efforts of Irish exporters to sell their product. There seems to be less money available to them and this is restricting their efforts to sell their products abroad. Generally speaking, the grants are in the region of £2,000 to £3,000. However, the money available is being dispersed over a wider area. I would like the Minister to comment on this. My information is that the small indigenous sector especially is suffering because of this.

As the Minister knows, the international market place is becoming very competitive. We are now facing more competition, not only within the EU market but also from external forces outside that market. Irish exporters, despite their very good performance over the last ten years, are going to be faced with stiffer competition. I am concerned by reports that the limited amount of funds available will restrict promotional activities overseas. The Irish Trade Board will also be somewhat restricted in its promotional activities because of the decrease in funding. The Trade Board has been doing a very good job for which it must get credit.

I mentioned international trade and there has been an 18 per cent increase in the German market, a 46 per cent increase in the Japanese market and a 25 per cent increase in the US market. These markets are very expensive to service. Our exporters need encouragement and financial incentives to maintain their presence here and to compete.

I would like the Minister to refer to export credit insurance. There is a decrease of 48 per cent in the Estimate. However, some of our main competitors such as the United Kingdom, Germany and France are all taking the opposite view and are increasing export credit insurance to their exporters. Irish exporters will be subjected to a greater amount of competition from these countries. Export credit insurance has created many political problems in recent years. We need to look at it all again in an objective and practical way, otherwise the competitiveness of Irish exporters will be affected. England, Germany and France have much more friendly regimes, if one could call them that, for their exporters.

I made a lengthy contribution on the export of services. As the Minister mentioned and as we have seen in various reports such as the Taoiseach's report, this is an area with major possibilities for Ireland and should be given every encouragement. I would like the Minister to respond to some of the matters which I have raised. It is an area in which we have considerable expertise and potential.

Deputy Deenihan referred to export credit and grant-in-aid for ABT, so I will deal with those two matters. He made a lengthy and well thought out contribution. There is a small decrease in the grant-in-aid available to ABT. However, this must be seen in the light of the difficult conditions in 1993. In September and October 1992, when we were preparing the Estimates, there was a pending currency crisis and exporters were having a very difficult time. The 1993 Estimate reflected the concern of the Government to help our exporters.

The 1994 grant-in-aid allocation is £34.78 million which is an enormous increase on the 1988 figure. We have had no complaints in the Department or from ABT regarding the decrease in grant-in-aid. This year, ABT set out new criteria for some of the schemes, make them more flexible and so on. It has worked very well and we have not had any complaints about it.

The figure this year for exports from indigenous firms will be greater than the target set in the Programme for Government. My target is to have indigenous exports up to £5.5 million by 1996. I am very confident that we will easily achieve that by the end of the programme. This will be a very good year for exports and we have had no complaints in that regard.

I accept that for the Irish economy to grow we must be out in the marketplace encouraging firms. That is what An Bord Tráchtála is for and they are very successful. One hears more complimentary remarks about An Bord Tráchtála than any of the other State agencies. On occasion there may be some aspects which some people might not like but I think they do an exceptional job. Deputy Deenihan referred to export credit insurance which is a little complicated. Under normal circumstances, the Estimates for Departments represent moneys expected to be paid in the year in question under a given heading, for example, administration or grant-in-aid. Export credit insurance is unusual as the 1994 figure is the amount paid in claims in the year ended 31 March 1993.

The system operates on a reimbursement basis so the 1994 figure does not reflect the amount the Government will pay this year. The figure of £5.92 million represents the amount paid in the previous period for export credit insurance on foot of losses.

The Deputy raised other questions about export credit insurance and correctly stated it caused political difficulties in the past. There is an ongoing debate in all countries as to whether the State should be involved in the provision of export credit insurance. One can take the liberalist view which is that the market should decide these matters. An entrepreneur or business person should be able to provide insurance and if the market is not prepared to provide it, the State should not have to get involved. The other extreme is that the State should provide political and commercial risk insurance for exporters and have as liberal a regime as possible.

Some years ago my Department commissioned a consultancy study which recommended that the State should cease providing commercial risk insurance and allow market insurance underwriters to cater for that aspect. It recommended that the State should cover political risk, assess the risk involved in various countries and charge appropriate premia. Since the end of 1991 the State provides only political risk insurance.

We take a prudent approach to insurance policies because we are dealing with taxpayers' money. If people are not prepared to put up their own money, they should not ask someone else to do so. We will not have a liberal policy which would put the State at risk. Neither I nor my officials would be doing our job correctly if we did not adopt a cautious approach.

The Deputy said it takes three weeks to get a decision. However, the parties supplying and receiving the goods have to be assessed so that is a relatively short period.

The question of the right approach could be debated for hours. People could hold genuinely opposite views on what should be done in this regard. The present approach, which I see no reason to change, is that we insure political risk. We will continue to do this while adopting a cautious approach. This will avoid a situation where the State would have to pay out gigantic claims.

Deputy Deenihan also raised the question of services. There are no figures available for service exports which are comparable to those relating to merchandise exports. However, the task force on jobs and services pinpointed a figure of over £2 billion per annum. I agree it would be desirable to have the best possible data on services to assist us with policy formulation and the allocation of resources.

The interdepartmental group set up to advise on the implementation of the task force's recommendations will be examining this area. The group is also examining other important areas, including the existing taxation regime, improved focusing of the responsibility for services within Government Departments and State agencies and the adequacy of available resources for assisting the services sector.

The Programme for Competitiveness and Work contains a commitment that appropriate resources will be given to An Bord Tráchtála to enable it to give the right level of support to service exporters. It already has an interdepartmental services department which devotes considerable attention and support to the services sector. This is specifically underpinned by European Union Structural Funds.

The last available figures for international trade date back to September 1993. This is not acceptable as it makes it difficult for exporters to identify trends in the market place and they are also deprived of other valuable information and precise details. There may be an administrative problem. I ask the Minister to explain why the information is not available.

The reason is very simple. From 1 January 1993 the internal market started to operate correctly. No European Union State keeps statistics on trade between countries of the European Union. Monthly trade figures are no longer compiled.

In the past the publication of monthly figures presented a great opportunity for the Minister of the day to announce that he or she was delighted with the trade figures and had achieved another record. When I took up this ministry, I had only one opportunity to make such an announcement, in December 1992. Previous Ministers made the headlines every month but I was deprived of that great honour.

The Minister is not a bragger.

The new figures are being compiled by the Revenue Commissioners. When the system is on stream it should be possible to have the figures earlier. An Bord Tráchtála keeps an ongoing record of statistics on 1,200 companies. Their evidence will show that the figures are up considerably.

I do not know what feedback the Minister gets from his officials but the current strength of the Irish pound against sterling creates trading difficulties for some of our exporters. This is particularly evident in the food and other sectors. Indications in the market are that sterling is strengthening but if the punt gets stronger there may be job losses. It will definitely affect the competitiveness of Irish businesses exporting to England and those competing with English companies supplying the EU and other markets.

What steps is the Minister's Department taking to ensure that the crisis we experienced at the end of 1992 and in early 1993 will not recur? Is there anything the Department can do? What policy, if any, is the Government developing to deal with the currency problem? Are we examining the currency problem with a view to protecting Irish exporters? The Central Bank would have a role here in the reduction of interest rates and it could also sell Irish pounds, as it did recently.

I would like to hear the Minister's views because this is creating considerable worry for a number of exporters. A small change over a sustained period could result in job losses and the closure of businesses. I recently heard of a person who lost £40,000 on a transaction involving £1 million. One such transaction in a week could seriously affect the survival of a company.

I recently answered a question in the Dáil on the exchange rate and my views have not changed in the interim. If there is a problem for exporters it is as a result of two things. The first is the success of the Irish economy with low inflation, low interest rates and the public debt under control.

The second problem relates to the weakness of sterling. If an exporter is totally dependent on currency to gain an advantage in the market, that exporter will not last too long in business. There has been low inflation and low wage costs in recent years due to the successful partnership agreements between the unions, employers and Government. There has also been low interest rates of late and that must benefit exporters.

I am not responsible for sterling. If anyone can predict how sterling will go next year, he or she should speculate and make a fortune on the market at this stage. Currency is a matter for my colleague, the Minister for Finance, Deputy Ahern, and the Central Bank. I am not too concerned about exporters and we have no plans to assist them. However, the situation will be kept under review.

Since the last currency crisis, I asked An Bord Tráchtála to hold a number of seminars to brief companies on their importance of having a treasury management function. Due to the stability of the exchange rate mechanism for many years business people got out of the habit of having a section of their business involved in currency. In the 1970s every rational company had full-time activity in treasury management when we were tied to sterling. However, due to the stability of the ERM, businesses no longer have that expertise and I asked An Bord Tráchtála to hold regional seminars to brief companies about this matter and this was done.

We also established a small expert group, including representatives from the exporters' association, whose main job is to devise the best packages for small and medium enterprises in the treasury management area. This group will report by the autumn and it will have regard to the sectors perceived as being most vulnerable, including food, clothing and furniture. We are keeping matters under review and there are no plans at present to intervene. We must take a long-term view of what will happen to currency. The Government is satisfied that everything is fine but much will depend on what will happen to sterling and other international currencies.

I accept what the Minister has said. Mr. Kenneth Clarke MP is responsible for the performance of sterling and not the Minister. However, our problem is peripherality, our high transport costs, particularly in the indigenous industry sector and that almost 40 per cent of our exports are to Britain. Effectively, we must operate in a sterling area. Deputies would like the Minister and the Department of Finance to ensure that the Irish currency does not overtake sterling as it could mean significant job losses in the food industry.

The Department of Finance or the Central Bank, given its previous regime, should not be in a position to say that there are more important things than jobs in the Irish exporting industry because I do not consider that there is anything more important. We must stress this point, rather than trying to score Brownie points in some mythical development in the European system. This is what happened before and we must avoid that again at all costs.

I congratulate the Minister for his administration of his Department and I hope he will make the strongest possible representations. In my constituency, firms such as Cadbury's, have a treasury department. Three hundred to 500 jobs could depend on having exactly the right conditions, vis-�-vis currency. Cadbury’s compete with its parent company in Birmingham and in order to have a little edge, it is important not to totally supersede sterling.

Currency is relevant to the people in my area, not just from a tourism point of view but from the point of view of the mushroom and other industries. If jobs are to be maintained, there must be a definite policy on currency.

Last year, I raised the cost of insurance which is causing major problems for both the car hire business and taxis. In the car hire sector, a person under 30 years of age cannot get insurance. When tourists come to my local town, Monaghan, they cannot get a car. However, if they go to a town in Northern Ireland they can get a car at a reasonable cost. This is causing significant problems for the tourism industry. The Minister should use whatever influence possible to ensure that roads, which are or might be suitable for tourism, are repaired. As Deputy Deenihan said, it is impossible to encourage tourists to return, if they have had a bad experience.

I thank the Minister for responding to matters I raised in my contribution. However, he did not respond to a number of points on the restaurant sector and concern in the tourism industry about VAT harmonisation. What preparations are the Department and the Government making to ensure that all tourism related activities remain at the 12.5 per cent rate than the 21 per cent rate? If the rate was increased, it would destroy the industry's competitiveness. The Minister should refer to those matters and respond to my call to have the restaurant sector included in the national tourism council. This is important because the sector respresents a major part of the tourism industry and employs 27,000 people.

One of the areas in which An Bord Tráchtála has been most successful is in lessening our dependence on the UK market. It is still too high but it is much better than it was 25 years ago when approximately 70 per cent exports were to the UK, with the remaining 30 per cent going elsewhere. The percentage has effectively moved in completely the opposite direction.

An Bord Tráchtála has tried to diversify in markets abroad. Successful Irish businesses are also trying to diversify, rather than having a dependence on one market. However, in so far as anyone can look into the future, the UK will always be our main market due to its accessibility. I take the Deputy's point. As Minister for Tourism and Trade, it is my job to ensure that we get the best possible opportunities. I will bear the Deputy's comments on currency policy in mind in another forum. I am sure Deputy Broughan is not the only one who thinks that way.

I dealt with questions about currency earlier. Deputy Deenihan raised the issue before Deputy Crawford arrived and we discussed it at some length. Regarding insurance, the Deputy is correct. The cost of insurance, not just for the car hire sector but for many other sectors also, is becoming a major deterrent in terms of people doing business. The Department of Enterprise and Employment will bring forward proposals in this regard but the solution will not be easy. Without doubt, the cost of insurance limits the availability of car hire and restricts enterprises in a variety of areas. I can name four or five sectors in which insurance costs are putting people to the pin of their collar to stay in business.

Deputy Deenihan asked about restaurants. I recognise the importance of the restaurant sector. However, in the context of the small business loan scheme we did not consider it a sector that was totally dependent on tourism. We did not, therefore, include it in that scheme. We will see how the scheme operates this year. If the scheme had been open to restaurants I would have been swamped with applications from every restaurateur in the country. We based our decision on the fact that restaurants are not totally dependent, as are other sectors, on tourism. That is, of course, a value judgment and I and my Department might be wrong. However, if I included every sector in the scheme I would have received a far greater number of applications. Applications for about £71 million were made before 13 May. The figure would probably have been 30 per cent higher if restaurants had been included.

I will consider having the restaurant sector represented on the Tourism Council. The restaurant association is involved in four other bodies which are represented on the council. I tried to have each sector represented, but if those were the sentiments felt in that sector, I have no objection to looking at it again.

The Deputy also asked about VAT harmonisation. Further harmonisation of the rates would have a serious effect on a number of labour-intensive services which are at the lower rate. When the European Union reviews the VAT regime the Government, in view of our high unemployment figures, will seek to maintain the current VAT rate on labour-intensive services beyond the transitional period. It is mainly labour-intensive services which are at the lower rate.

This concludes our consideration of the Estimate for the Department of Tourism and Trade. I thank the Minister, his officials and the secretary of the committee, Mr. John Roycroft. I also thank the Deputies who attended, particularly Deputy Deenihan who made a major contribution.

The Select Committee adjourned at 1.23 p.m. until Tuesday, 14 June 1994.