Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

I thank members for their attendance. One of the unusual elements of the budget is that the House and, in particular, this committee must approve an increase in the HGRF because of the way it has been set up. Essentially, the ceiling must be increased each year by the Oireachtas in order that the money can be drawn down. That is why we are discussing this motion and not a series of other issues relating to budgetary decisions requiring Oireachtas approval. With regard to how the fund has developed, members will be aware that a number of years ago, it reached its ceiling and we need to increase the fund and sanction that increase to continue to finance the horse racing and greyhound industries. That is what I am asking the committee to do.

I would like to put in context the decisions we have made on the HGRF in the budget. This is not about simply subsidising a sector. The State is making an investment in two industries, which give back many multiples of what we put in financially, never mind all the other benefits they generate for Ireland in terms of reputation, sporting prowess and excellence. The horse and greyhound industries are worth approximately €1.5 billion a year to the country. They employ 28,500 people and even though many others will, politically, have a go at the horse racing industry, in particular, because wealthy and successful people are linked to the sport, the vast majority of people involved are not super wealthy. They are ordinary people who provide services and products to the industry, work in stable yards, get up at 5 a.m. to train horses, and breed horses. More than 85% of Irish thoroughbred horses are bred on farms with fewer than two mares.

It is important to put in context why this industry is so important to Ireland and why, if we do not continue to support it financially as a State, it will be at risk of losing its competitive edge, in particular to Britain or France. France is investing more than €700 million of state money in horse racing. We propose this year to put €44 million into ours. At the same time, Ireland continues to export 40% of all thoroughbreds exported from Europe each year and to breed the best. The top six horses in the recent Melbourne Cup were Irish-bred. Six of the top ten two-year olds in the world are Irish-bred. We need to make a decision because the HGRF has been cut by 28% over the past five years. We are spending less on the fund now than when it was introduced in 2001 with an allocation of almost €59 million. We are now spending €55 million, having cut it again this year by another 2.5%. In 2008, the fund received more than €76 million and now we are at €55 million which is split between horse racing and greyhound racing on an 80:20 basis. The notion that we could knock another €10 million off this amount, which one party sought in its pre-budget submission, and expect the industry to remain at No. 1 in the world in breeding and training is not realistic.

In my view, we have to make some savings. As a country, we have made considerable savings in this fund over the last five years, when budgets have put us under pressure. If we continue to take a substantial amount of money out of this sector, we will reduce significantly the prize money that is available in Irish racing at a time when prize money in France and Britain is increasing significantly. That would risk relegating the Irish racing industry to the status of a second-rate nation. Racing is the only sport in which Ireland has consistently led the way internationally over the last 50 years. I refer to the breeding and training standards we have set, for example. We continue to produce jockeys of a high standard in Ireland. Many other sectors are supported by the racing industry.

If there is one message I want to send today, it is that people should not see horse and greyhound racing - particularly horse racing - simply as sports that people attend and bet on, etc. They comprise an industry that employs almost 30,000 people in every county in Ireland. It employs people in many rural areas that do not have alternative sources of income, for example, in parts of counties like Tipperary, Kildare and Cork. Even though the industry has downsized significantly since the end of the boom, it continues to contribute to local economies by injecting an economic stimulus into them. I hope this committee will endorse expenditure of €55 million on these industries. In my view, that represents fantastic value for money because of what we get back. It seems to me that expenditure of €55 million to maintain a €1.5 billion industry is a good investment. It is not a subsidy for a privileged sector, as some people like to portray it. That is why we have made the decisions we made in the budget. We chose not to cut the budgets of certain sectors. Vulnerable and smaller farmers in disadvantaged and mountainous areas will not face a cut as a result of this budget. The funding given to Bord Bia is not being cut in this budget because I am asking the board to do more. Likewise, we have limited the cut being imposed on the horse and greyhound industry in this budget. It is appropriate that there was some cut. We have limited the cut in a way that will allow us to maintain the prize money offered by the industry and will give us a fighting chance, at least, of maintaining the kind of extraordinary position Ireland holds in this international industry and continuing to set the standards.

I appeal to people not to view horseracing as a sector we should be slashing. There are many vulnerable sectors that need to be protected at the moment. If we take a short-term view and slash the funding given to the horseracing industry, we will be at risk of losing the international position we have held in this regard for 50 years. My view is that if we lose that position, we will never get it back again, especially in light of the resources that are available in countries like France, Britain, the United States and Australia - and countries in the Middle East to a certain extent - with which we are competing. The industry is also developing in China. If we allow this to slip, bearing in mind the size and spending power of Ireland, we might never again be able to recover the kind of extraordinary position we have earned over the last 50 years as a consequence of the work of the phenomenal people who have set the industry's breeding and training standards.

There is evidence to suggest that the new money that is coming into the international racing industry is not coming into Ireland in the same way that it did in the past. The people in question are buying Irish horses, but they are not choosing to train them here in some instances. That suggests we need to think about how we can ensure the top horses in the world, which are bought by the wealthiest people in the world, continue to be trained and developed in Ireland. During the last phase of the international money to which I refer, which came predominantly from the Arab world, a number of individuals chose to invest significantly in studs and training yards in Ireland, thereby adding to the industry and employing thousands of people. At the moment, new money is coming into racing from countries like Qatar. They are buying Irish-bred horses, but are they training them here? Are they investing in breeding and training yards in Ireland or are they going to France or Britain? We need to ask ourselves such questions.

The decisions I made were based on trying to allow this industry to maintain its position in a competitive international market. I want to ensure Ireland stays on top of the world with regard to the breeding, training and horse-riding standards we set. I made the largest cut I could make while being honest about giving the industry the oxygen it needs to survive through this country's difficult period of recession. All of this is being done in the context of the 28% reduction in this fund over the last four or five years. On that basis, the decisions we have taken are more than defendable. They have been made in the context of the fundamental reform of the racing industry. I asked Indecon to produce a report and make specific recommendations about how we can ensure public money is not wasted or duplicated when it is spent on the horseracing industry. We are implementing that Indecon report now.

I have made it clear to those involved in the industry that if they expect me to try to maintain strong funding levels, I expect them to buy into the reform process that is under way to maximise value for money. The Government is trying to find alternative sources of funding to finance this industry. This job was started by the last Government, to its credit. The horse and greyhound fund used to be funded almost entirely from revenue from the betting tax. Before this Government came into office, it was decided to reduce dramatically the percentage of betting tax that applies to betting linked to this industry. Like the last Government, we are looking to open a new funding stream for the Department of Finance in this sector. To that end, we intend to introduce a betting levy for online and remote betting, which is a growing sector for obvious reasons. Many people now use their iPhones to bet rather than going to bookmakers' shops. We will introduce that new revenue stream next year. I expect it to lead to a significant closing of the gap between the current level of betting revenue and the funding given to the horse and greyhound fund. At present, it covers approximately 50% of the cost of the fund. We will close the gap to ensure the revenue stream to the Department of Finance increases. We hope that in time, it will match the output in terms of the public money we are providing for this sector.

Many things are happening here. The reforms recommended in the Indecon report are being implemented. The new revenue stream that will come into the Department of Finance will help to cover the cost of this fund. As I have said, this process was started by the last Government. We will finish that job. Most importantly, I do not want this Government to preside over Irish horseracing's loss of competitive edge on the international stage. I really feel passionately about this, especially in light of our extraordinary history in this sector and the extraordinary people who continue to work in it. The extraordinary investment we attract from abroad into the sector is good for the Irish economy at a time when good news stories are needed. If the committee would like some proof of the good news stories and challenges that are being encountered in this area, I will conclude by listing some of the indicators with regard to how this sector is doing. On the negative side, the average number of horses in training decreased by nearly 13% between 2011 and 2012. Over the same period, the level of on-course bookmakers' betting decreased by 9.25%, the total number of racehorse owners decreased by 8.3% although there are still well over 4,000 owners in Ireland, total prize money decreased by 3.5% and race sponsorship decreased by 3%.

I will set out how the industry is performing in response to these recessionary pressures. Bloodstock sales have increased by approximately 19% this year. Public bloodstock sales were worth €81 million last year - that does not include private deals - but that figure has increased to well over €90 million this year. This is reinforcing Ireland's reputation as a quality breeder of bloodstock.

In bloodstock sales alone, we are getting back almost what we are putting into sponsoring the whole industry. Tote betting is up 11.3%, Irish foal and horse sales are up 6.5% to €156 million, total attendances at race meets are up 3.3% despite all the pressures and the number of new owners coming into the sector is marginally up. This is a sector under pressure but one that is responding to that pressure. We need to continue to ensure it has the infrastructure to be able to maintain that position and, from that point of view, I hope the committee will support the increase in the horse and greyhound fund ceiling this year.