Wednesday, 12 January 2011

Ceisteanna (769)

Chris Andrews


822 Deputy Chris Andrews asked the Minister for Agriculture, Fisheries and Food if he will clarify the specific performance related targets that the board of Horse Racing Ireland set the Chief Executive Officer to achieve a performance related bonus (details supplied); if he is satisfied that HRI and the Turf Club are being run on a prudent financial basis; the examination that has taken place into the way Exchequer funds are being spent and the return on investment in both organisations; if a person (details further supplied) who has undertaken consultancy work on behalf of HRI will be examining the productivity of HRI; if he is satisfied that this examination will be independent. [1006/11]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Minister for Agriculture, Fisheries and Food)

In accordance with the standard arrangements for State Bodies, the criteria on which the performance of the Chief Executive is measured and any specific performance-related targets are properly determined by the board of that State Body and not by the Minister under whose Department's aegis that State Bodies operates. In the case of HRI, therefore, the determination of the performance-related targets on the basis of which any performance-related bonus was paid was determined by the Board. Horse Racing Ireland is subject to annual audit by the Comptroller and Auditor General and at no time since its establishment has its efficiency or effectiveness been called into question. In addition, it has outsourced its Internal Audit function, which operates in accordance with the framework of codes of best practice as set out in the Code of Practice on the Governance of State Bodies and which report directly to the company’s Audit Committee.

In response to recent allegations HRI strongly rejected the claims made and the board of HRI, having met to consider those claims found them to be “wholly inaccurate and based on a flawed understanding of the racing industry and, in particular, the restructuring which took place following the enactment of the Horse and Greyhound Act in 2001.” Indeed, the authors of the report (KPMG) on which the Irish Bookmakers Association’s claims were based acknowledged that their analysis “did not, nor was it required to take account of the restructuring of the horse racing industry in 2001 resulting in the transfer of certain administrative functions of the Turf Club to the newly formed HRI.”

Contrary to claims that Horse Racing Ireland's costs are out of control, HRI make the point that their costs increased by 35 per cent between its first full year of operation in 2002 and 2009. Over that same period, there was a 28 per cent increase in the number of race meetings. They also make the point that, since 2008, their administrative costs have reduced by 28 per cent and the number of permanent employees in the HRI Group (including the Tote, the four racecourses it owns and Irish Thoroughbred Marketing) has been cut from 176 to 143 in the same period — a reduction of 19 per cent. In a recent letter received from HRI, the Chairman assured me that the “Board takes its responsibilities in relation to governance and cost control very seriously”. An independent review “Review of the Horse and Greyhound Racing Fund”, FGS Consulting, May 2009, of the Horse and Greyhound Fund was completed in 2009. It concluded that, while not all aspects of the total contribution of the sector can be definitively quantified, there is adequate direct and indirect evidence to support a strong argument that the horse racing industry is a major source of direct and indirect employment, giving rise to considerable domestic and exports earnings and is a key driver of substantial economic activity, especially in rural areas. The funding provided to Horse Racing Ireland supports a very important industry generating very substantial economic activity and making a vital contribution to the rural economy, including farm incomes. Furthermore, bloodstock breeding is a sustainable and environmentally sound activity.

The Dukes Report "Analysis of the economic impact of the Irish Thoroughbred Industry" A. Dukes (2009) concluded "The conclusion of this analysis is abundantly clear: a relatively modest amount of State funding has been very successfully leveraged by the industry to produce a strong dynamic impulsion. This compares very favourably with the returns from much higher levels of support to other areas of economic activity. Government funding must remain to ensure survival of this very successful industry and to continue its growth into the future as one of Ireland’s most dynamic agricultural sectors”.

With regard to the question raised by the Deputy as to the independence or otherwise of a named consultant, I have been informed that this individual was employed by a group comprised of 13 organisations including HRI, to undertake a study of Irish racing "Financing of Irish Racing", C McCarthy, October 2010. I understand that the study did not include an examination of the productivity of HRI.