Mr. Brian Kavanagh:

I thank the Chairman and the joint committee for giving me the opportunity to present to them and for the interest they have always taken in our sport and industry. The Bill represents the culmination of a review of the industry that was initiated by the Minister for Agriculture, Food and the Marine in December 2011 and incorporates the recommendations of a report prepared by Indecon economic consultants. The proposed new legislation strengthens governance and transparency within the racing industry and will create greater accountability to the Government in the decisions and membership of Horse Racing Ireland, which was one of the key recommendations made in the report.
The legislation will increase the number of ministerial appointees to the board and clearly assign governance and regulatory responsibility, clarifying previously grey areas such point to point meetings, finance and administration. It will provide a single transparent structure for the administration and financial management of the industry. It will eliminate duplication and increase efficiencies in areas such as finance, information technology and administration. The Bill proposes to establish a new statutory committee to focus on the requirements of persons employed in the industry and represent their interests on the board of Horse Racing Ireland. It will also establish a new statutory committee to focus on the requirements of the betting sector, both on-course and off-course, and represent their interests on the board.
The Bill requires HRI to provide any information requested by the Minister and the Turf Club to provide information for the Minister or HRI as requested. Under these provisions, the horse and greyhound racing fund can be paid over by instalments and the Minister may withhold instalments depending on performance against plans submitted by HRI or Bord na gCon. The Bill will allow the Department of Agriculture, Food and the Marine to undertake regular value for money reviews of the horse and greyhound racing fund and HRI. It will allow for the introduction of a framework agreement between HRI and the Turf Club on funding provided for integrity services, an issue raised by the Office of the Comptroller and Auditor General during the course of its audit. It provides that there will be no change to the role of hunt clubs in the running of point to point racing.
Horse Racing Ireland welcomes the proposed Bill and the transparency and clarity it will bring to the running of the industry. As Mr. Keeling said, the horse racing and breeding industries are significant contributors to the rural economy and it is appropriate that the governance and financial structures should reflect that importance. Several key economic facts are worth considering, although I am sure they have been presented by the various delegations that have appeared before the committee. The industry contributes €1.1 billion annually to the economy and provides 16,000 jobs, mainly in rural areas. Irish horses are exported to some 37 countries every year, to a value of more than €200 million. There are 6,500 breeders in Ireland, 15% of whom are overseas investors, spread across every county. Racing festivals contribute some €260 million per year to local economies. The Galway races, for instance, which take place the week after next, are worth €60 million to the local economy. In 2013 attendances at race meetings grew to 1.24 million, including approximately 80,000 tourists. I understand our marketing department submitted material to the committee in advance of the meeting, including our fact book containing useful and interesting facts about the industry.
Horse Racing Ireland would like to see the Bill implemented at the earliest possible date. Since the review was commissioned by the Minister for Agriculture, Food and the Marine, the industry has been eagerly waiting legislation and several board changes have had to be deferred pending its introduction. The Bill will be the third in a series of Acts of the Oireachtas which create a more democratic and inclusive structure for the governance of racing in Ireland. The previous Acts are the Irish Horseracing Industry Act 1994 and the Horse and Greyhound Racing Act 2001, the second of which created a representative governing body for the industry and transferred various functions to that body. These Acts were introduced with general all-party support. In bringing forward the 2001 Act the then Minister for Agriculture, Food and Rural Development, Mr. Joe Walsh, explained the thinking behind it thus:

[T]he Government considers racing to be strategically important because of the employment it creates and sustains at all levels and the significant contribution it makes to rural development, farm and other incomes, the business and services sector, tourism, the economy as a whole and the international reputation of the State ... There was a large body of opinion in the industry which held the same view as mine ... that better efficiencies of operation and cohesion could be achieved if at least all the main administrative and financial streams of the racing business could be brought together into one new body ... From now on, all elements of the industry will deal with one body in relation to their participation in racing and their financing arrangements.

The recommendations made in the Indecon report which are reflected in the proposed Bill were that through streamlining, further cost savings could be made in the industry. Participants in horse racing - owners, trainers and riders - are levied charges by both HRI and the Turf Club. These charges are a significant burden and the board of HRI is committed to reducing and rationalising them. This year, as a first step, we implemented a 10% cut in the charges levied on our clients. The intention is that savings generated from streamlining, as proposed in the heads of Bill and estimated to amount to a minimum of €1.5 million per annum, will be passed on to owners, trainers and riders through a further programme of cost reductions and rationalisation. The high level of charges, particularly race entry fees, are acting as a disincentive to owners to have horses in training in Ireland as opposed to in other countries. The Indecon report was based on 44 submissions from various industry bodies and individuals and there has been an extensive period of consultation to produce the heads of the Bill. The industry recognises the responsibilities that come with being in receipt of Exchequer funding and the requirement to be as efficient and transparent as possible.
While Horse Racing Ireland is supportive of the Bill, there are two specific areas of concern to which we wish to draw the attention of the committee. The first relates to head 9, liability for the thoroughbred foal levy. Our concern is that there may be an unintended consequence of the proposed wording whereby British breeders whose foals are born in Ireland may not be required to pay the levy as they will be able to register their foals in Britain. This is because Britain and Ireland operate a single stud book, which is very useful in the free movement of horses between the two islands. This anomaly can be corrected by simply amending the wording of section 38A(2) of the 1994 Act, as set out under head 9, to read: "The levy shall be paid by the owner of a thoroughbred foal born in the State in advance of registering the foal in a stud-book in the State". Likewise, we are proposing a small change in section 38A(2A) in order that it would read, "A person who maintains a stud-book will not register a foal if the owner or keeper of the foal is unable to provide proof that the levy has been paid". These changes would leave it beyond any doubt that the payment of the statutory foal levy was a precondition to the registration of a foal.
The second issue we wish to raise relates to the horse and greyhound racing fund, as set out in head 15. The proposed wording of section 12(9)(c) of the 2001 Act, as inserted by the Bill, envisages a situation where funding may be withheld by the Minister in certain circumstances. This is a new development and as there is a large group of people within the industry whose livelihoods depend on the funding of the horse and greyhound racing fund, we ask that these provisions be reconsidered and the existing provisions in section 12 of the 2001 Act retained.
The Indecon report made recommendations in five separate areas, namely, funding, size and structure of the board, streamlining of functions between HRI and the Turf Club, marketing and competitiveness, and legislation. The proposed heads of Bill deals with the second through to the fifth of these but do not resolve the funding issue which is critical to the future of the industry. I understand this issue does not relate directly to the committee and is the subject of separate legislation which is moving through the Oireachtas. In the past five years Horse Racing Ireland has suffered annual funding cuts of €15.9 million on average, while at the same time our direct competitors in Britain and France have seen an increase in funding. The solution to this dilemma is straightforward and would save the Exchequer approximately €30 million per year. It involves addressing the betting tax anomaly which sees one third of all betting in Ireland avoiding tax, while that which is taxed is subject to the lowest rate of betting tax in the world.
HRI wishes to see the recommendations on the funding of the horse racing sector set out in the Indecon report implemented as soon as possible. We ask the committee to take this into consideration in its deliberations. These recommendations include the introduction of measures to secure a significant increase in taxation from betting, a multi-annual commitment of funds to support the development of the horse racing sector and greater funding certainty to support medium-term planning for integrity services.

As betting revenues increase, there should be potential to significantly reduce general Exchequer expenditure on the sector. All betting operators should be required to obtain a licence. Taxation for betting exchanges and remote betting should be levied on the same basis as for traditional bookmakers. Taxation on betting should be on a place of consumption basis. The rate of betting duty should initially be set at 1% and reviewed after one year and effective compliance measures should be introduced. As I said, this is a matter for the Betting (Amendment) Bill, which is not the responsibility of the Minister for Agriculture, Food and the Marine.

It is essential that these issues are addressed. Otherwise, Ireland will continue to lose ground to its international competitors. Our industry is a great industry. The people involved in it have a great passion for it. Horse racing and thoroughbred breeding are one of the few industries in which Ireland has proven natural advantages in terms of our climate, land and people. To be fully able to develop this industry, the funding structure needs to be put on a permanent basis. This is what was envisaged in the 2001 legislation but this has gone awry due to changes in betting taxation, particularly the decision in 2006 to reduce the betting duty from 2% to 1%.

I thank the committee for the opportunity to present to it and for its interest in this sector. The chairman and I are happy to respond to any questions members may have.