Seán Haughey (Dublin North Central, Fianna Fail)

Deputies are subject to pleadings from various interest groups, some with more robust cases than others. In the current climate, we must apply sound and balanced judgment to such pleadings. The Government's view is that in this case the impact of the air travel tax has been significantly overplayed. Do people really believe that the abolition of the air travel tax would lead to the number of tourists visiting Ireland rising significantly because the cost of coming here might decrease by €10?

The Government acknowledges that the tourism industry makes a vital contribution to employment, economic activity and exports. It also contributes by encouraging social inclusion and access to labour markets. With the support of the Government, the Department of Arts, Sport and Tourism and the tourism agencies, the tourism and hospitality sector can overcome the current challenges and make a major contribution to Ireland's economic renewal.

The 2010 budget recognised the tourism and hospitality sector as being both critical and labour-intensive and incorporated a range of measures to renew Irish tourism. The overall tourism services budget was increased by 2% on the 2009 figure to more than €153 million in 2010. The allocation for capital investment in tourism product development increased threefold to €21 million. This investment will be focused on completing the upgrading of some major tourism attractions, developing a select number of new visitor attractions, improving infrastructure for recreational cycling, walking and water-based activities and heritage attractions.

The tourism marketing fund has a provision of €44 million for 2010. This will enable the level and value of investment in overseas marketing of Ireland, as recommended in the report of the tourism renewal group, to be maintained in real terms in 2010. Better value for money in purchasing advertising space, currency advantages and once-off expenditure in 2009 relating to the redevelopment of Tourism Brand Ireland will ensure that there is no adverse impact from the nominal reduction in the 2010 allocation.

The Government further demonstrated its commitment to tourism by including it in a range of cross-cutting measures such as the employment subsidy scheme, the work placement programme, the credit review system and incentives for investment in energy efficiency. All of these schemes and programmes support sustainable tourism enterprises and employment.

Furthermore, tourism businesses accessed the second call for applications under the employment subsidy scheme, operated under the aegis of the Department of Enterprise, Trade and Employment, under which total support of €65 million is available to protect vulnerable employment. The industry will also benefit from the establishment of the credit review system for all SME sectors, including tourism. Further specific measures that will help tourism include the changes in alcohol excise duties and VAT and the rail travel initiative aimed at senior citizens visiting Ireland from abroad.

We have been experiencing the impact of an international recession of unsurpassed severity. Every major economy - including those of our key source tourism markets - is suffering. In Ireland's case, the position has been exacerbated by unhelpful exchange rate movements and the challenges faced by the domestic economy. Tourism worldwide saw a significant downturn in the second half of 2008 - this continued into 2009 - as a result of the global economic slowdown and loss of consumer confidence. There were just under 7 million overseas visitors to Ireland during 2009. This figure represents a drop of 11.6% compared with 2008. Outbound trips from Britain were particularly affected, with the euro-sterling exchange rate making it extremely challenging to attract visitors to Ireland and eurozone destinations generally. The motion notes that tourists from the UK were down 16% in 2009. However, this must be seen in context, particularly because, in the same period, visits by UK residents to Europe decreased by 16% and to North America by 20%.

In common with many other businesses, tourism businesses are experiencing difficulties with regard to capacity, costs and credit supply. These difficulties are exacerbated by lower visitor numbers. Some of these problems must be addressed by the tourism industry. Others are being addressed by the Government, for example, through NAMA and in the context of the supply of credit to businesses in general. The Government will continue to work with the industry to help it manage its way through these difficulties by stimulating demand, helping to address costs or securing access to credit.

Tackling the excess capacity that undoubtedly exists in the hotel sector is a complex matter and would ideally require a market response over time. This year is again likely to be tough for the hotel sector, with further adjustments taking place as the market responds to excess room supply. This process will gain further momentum in the coming months as more banks seek to clean their balance sheets and dispose of underperforming loans. These market-led adjustments are necessary to restore some level of equilibrium to the hotel market.

We share the concerns of business people with regard to costs relating to labour, local authority rates and energy. That is why we took measures to, for example, secure a reduction in energy prices last year. The fact that consumer prices in Ireland have now fallen back to 2006 levels shows we are responding flexibly to the crisis. This has been recognised by the European Commission and international markets and has assisted in restoring confidence in the Irish economy. The tourism industry has made great strides to reduce costs and increase productivity during the past two years.

The Government has decided that the joint labour committee, JLC, wage-setting system will remain in place as a protection for low paid workers. In that context, the Industrial Relations (Amendment) Bill 2009, which has passed all Stages in the Seanad and which is currently before the Dáil, will modernise and strengthen the existing system for the making of employment regulation orders, EROs, and will provide for that system's more effective operation. The legislation will also strengthen the manner in which the functions delegated to JLCs are supervised by the Labour Court and ensure that a clear set of procedures and principles, within which these functions are to be discharged and made subject to Oireachtas scrutiny, is set down.

When the Bill was published, the Government also announced that it proposed to introduce an additional provision - to be effected by means of a Committee Stage amendment - to facilitate the inclusion in EROs and registered employment agreements, REAs, of an inability-to-pay mechanism. This mechanism will be similar to that provided under the National Minimum Wage Act 2000 and will further strengthen the relevant provisions against future court challenges and protect employment in situations where employers are faced with severe economic challenges.

Commercial rates are a form of property tax levied by local authorities on tenants of commercial properties in their administrative area. The levying and collection of rates is a matter for individual authorities. The determination of the annual rate on valuation, ARV, which is applied to property valuations to calculate rates, is subject to decision by the elected members of a local authority in the context of its annual budget. The Minister for the Environment, Heritage and Local Government is nevertheless aware of the economic pressure on local businesses and in 2009 and 2010 he specifically requested that local authorities exercise restraint in setting commercial rates to support competitiveness in the economy and to protect the interests of communities.

The Government has made tough decisions but they are in the long-term interests of the economy and its people. These decisions have involved raising additional revenues and reducing expenditure. It is recognised by many international commentators that we are getting the balance right. In that context the full year yield of €125 million from the air tax is important. It is, in essence, a fair tax and its impact on tourism numbers has been overplayed.

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