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-ï¿½-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.