Trevor Sargent
Ceist:35 Mr. Sargent asked the Minister for Arts, Sport and Tourism if a strategy exists to counteract the effect of high oil prices on tourism. [15351/04]
Amharc ar fhreagraTuesday, 25 May 2004
Ceisteanna (15, 16, 17, 18, 19)
Richard Bruton
Ceist:43 Mr. R. Bruton asked the Minister for Arts, Sport and Tourism if his attention has been drawn to the recent media reports on the competitiveness of Irish tourism; the actions the Government is taking to improve our competitiveness; and if he will make a statement on the matter. [15357/04]
Amharc ar fhreagra
Joe Sherlock
Ceist:44 Mr. Sherlock asked the Minister for Arts, Sport and Tourism if his attention has been drawn to recent comments from the chief executives of Fáilte Ireland and Tourism Ireland that the high price of alcohol and poor travel links out of Ireland’s cities are two of the main challenges facing the tourism industry; and if he will make a statement on the matter. [15381/04]
Amharc ar fhreagra
Seán Ryan
Ceist:58 Mr. S. Ryan asked the Minister for Arts, Sport and Tourism if his attention has been drawn to the new American Express foreign exchange holiday cost of living survey which found that the cost of eating and drinking makes Irish holidays among the most expensive in the world; his views on the fact that high prices are a deterrent to people visiting here. [15380/04]
Amharc ar fhreagra
Bernard J. Durkan
Ceist:251 Mr. Durkan asked the Minister for Arts, Sport and Tourism if he has identified any price hikes as an obstacle to the development and growth of the tourism industry; and if he will make a statement on the matter. [15687/04]
Amharc ar fhreagraFreagraí ó Béal (13 píosaí cainte)
I propose to take Questions Nos. 35, 43, 44, 58 and 251 together.
Since my appointment as Minister for Arts, Sport and Tourism in June 2002, I have spoken of my concern regarding the increasing levels of dissatisfaction evident in visitor attitude surveys about the value for money offered by the overall tourism experience in Ireland. I welcomed the fact, therefore, that one of the strongest messages from the tourism policy review group, in its report entitled New Horizons for Irish Tourism — an Agenda for Action, was that restoring competitiveness is the major challenge facing the tourism sector, and that the industry itself must offer better value to its customers if it is to maximise the opportunities for future growth.
It is too early to say what impact, if any, the current oil price levels will have on Irish tourism. A short-term hike may have little significance. However, if it is sustained over a longer period it could possibly generate inflationary pressures in economies generally. In regard to competitiveness, it must be borne in mind that competitor destinations are also affected by oil price increases.
Increases in oil costs impact on travel costs. However, our petrol prices have for several years tended to be at a lower level than those in many other western European countries. We are in an era of intense competition in which air fares dropped to unprecedented levels, which may in turn help to temper the impact of fuel price increases somewhat.
In recent years the tourism industry in Ireland has had to deal with a series of external shocks. We have successfully reacted to these shocks in a calm and measured way. The tourism agencies monitor the effects of these shocks on consumer psychology and travel behaviour and work with the trade to ensure that there are appropriate product and marketing responses. The oil price scenario will be approached in a similar manner.
There is no immediate single or easy solution to address concerns about value for money which I have stressed is not exclusively about pricing. Ireland has never been marketed as a low cost destination but during the years of significant growth in the 1990s it was competitive and was seen to be offering holidaymakers value for money. It has long been the case that inexpensive holidays have been available in other European destinations at certain times of the year. This may always be the case but it does not compare like with like. Competitiveness must be a function of the overall Irish tourism experience for customers relative to other competing locations, beginning with their initial inquiries about visiting Ireland through to their travelling here, where they go when they arrive, where they stay, who they meet, what they do and see, and their perceptions about price and quality.
In chapter 4 of its report, the review group assessed tourism in Ireland today and confirmed that there is no immediate, single or easy solution to address concerns about competitiveness. The group listed ten specific actions that require responses from both the private and public sectors, including proposals on taking responsibility for restoring competitiveness, inflation, benchmarking, customer relationship management, management capability, high standards for competitive advantage and training. None of the ten listed actions is directed to me or my Department. However, my role is to work, in so far as it lies within my power, towards ensuring that a coherent action plan is implemented quickly and effectively. To this end, I have established the high level implementation group to advise and assist in driving forward and monitoring the recommended actions set out in the report.
The first report of the implementation group is due in August and we will have to wait for it before we can assess the impact of the action plan on competitiveness and value for money and progress on other recommendations, including internal travel links. In the meantime, I am pleased to acknowledge certain developments in recent months that should result in tangible benefits for the tourism sector and make a difference to competitiveness and value for money such as minimal increases in the budget in indirect taxation and excise duties on products that are part and parcel of the tourism experience; the Fáilte Ireland initiative, in co-operation with the industry, to address the high cost of insurance for the sector and the accelerated implementation of the Government's insurance reform package which is bringing tangible benefits in the form of reduced premiums; the fall in the cost of accommodation as reported by the CSO; the significant drop in the average annual rate of inflation — at 3.5% in 2003, it was down from 4.6% in 2002 and it is forecast to fall further to 2.5% in 2004.
Is the Minister aware that numerous experts, including Dr. M. King Hubbert, predicted that US oil production would peak in 1970 — he was just a year out — and he also predicted that world oil production would peak between 2006 and 2013, which suggests that oil prices are on an upward trend, notwithstanding the current position? From this we must create an opportunity for our tourism industry.
If, as Dr. Hubbert stated, every country will have to face rising fuel prices, a study of the impact of oil prices on tourism is required. If we use our natural potential by producing fuel cells from wind energy, by using rape seed oil in public vehicles, providing subsidies for taxi drivers who use bio-fuels and transferring taxes on to energy and off employers' PRSI, we can create jobs and become more competitive as a quality tourist destination.
Does the Minister agree it is high time the tourism policy review group specifically examined the long-term impact of energy price increases? Rather than looking at the negative aspects, we should examine the positive aspects of how we can be a cost-effective quality tourist destination by producing as much of our own energy as possible.
Naturally, I would like to see us producing as much of our own energy as possible, as Deputy Gogarty suggests. However, issues regarding oil and oil prices come under the remit of the Department of Communications, Marine and Natural Resources. If the Deputy tabled a question to the Minister, Deputy Dermot Ahern, I am sure he would deal with the issues raised by him.
My understanding is that oil prices have been decontrolled for some time to encourage competition in the sector. Irish companies obtain most of their supplies on term contracts and there is nothing to suggest they are experiencing shortages. The holding of strategic oil stocks is a hedge against world oil supply disruption and it is not a mechanism for the EU to attempt to play the oil markets. I studied the figures published in Holiday Which — Winter 2004 and they seem to suggest that Ireland compares relatively well with other countries in terms of petrol prices which, hard pressed consumers may be surprised to learn, are 8% below the average.
Ireland seems to rank high in respect of food and drink prices — two essentials for tourists visiting this country — and recent media reports have suggested we are now almost the most expensive in Europe. The Minister's Department will soon prepare its Estimates for 2005 and I understand the expert group is examining the issue of VAT and excise duty. In that context, will the Government give serious consideration to reducing excise duty and the VAT rate which, at 13.5%, is one of the highest in Europe?
These are matters for the Minister for Finance.
These questions form part of the main issue.
The Minister has no responsibility for VAT.
If the expert group recommended a reduction along these lines, would the proposals be accepted by the Government?
As the Leas-Cheann Comhairle pointed out, it is not possible for me to express a view on behalf of the Minister for Finance whose remit it is to introduce next year's budget to the House in December. However, in the context of value for money it is important to point out that there are very good packages on offer in regard to access and accommodation, or both. As Deputy Deenihan stated, the price of food and drink remains a cause for concern. In that context, I welcome the initiative of the Irish restaurants association which has again this year produced a value for money menu for visitors to the country. It was spectacularly successful last year and will be very successful again this year.
The basic starting point in advancing any new strategy for tourism is to place it in the clear context of the value and strategic importance of the tourism sector to national and regional economic development and wealth creation, as identified in the report of the review group. I welcome that in his most recent budget, the Minister for Finance took account of submissions made on behalf of the industry. He has in the past been responsive to such submissions made by the industry and will continue to be. It should be remembered that the Minister for Finance, Deputy McCreevy, served with distinction as Minister for Tourism.
Fuel prices have a major impact on the tourism industry about which the Government can do little. Has a study been undertaken of the impact which increasing fuel prices can have on transport access to Ireland? It is important we have the means to get tourists here and that the costs of travelling here should not be prohibitive. Oil is $40 a barrel at present but there are forecasts that it may go as high as $100 a barrel. There is no guarantee that the price of oil will come down. Has there been any study of the impact of high oil prices on our access transport?
We are conscious of the need to maintain the low cost access to Ireland and we do everything we possibly can to encourage low cost access. I am not aware of any such report in my Department——
Is it time for such a report?
——but it would not come within the remit of my Department. Without being short with Deputies, they should put down a question to the Minister with responsibility for this, the Minister for Communications, Marine and Natural Resources.