Pat Deering (Carlow-Kilkenny, Fine Gael)
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I apologise to our witnesses that the committee's previous business went on a bit longer than expected. Before we begin, I remind members and witnesses to ensure that their mobile phones are completely turned off.

I welcome the members of the Irish Harness Racing Association, Mr. Arthur Cooper and Mr. Mark Flanagan, and thank them for coming before the committee to discuss the report on the Irish harness racing sector undertaken by Indecon International Economic Consultants and commissioned by the Department of Agriculture, Food and the Marine.

Before we begin, I bring to the witnesses' attention the fact that they are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

I invite Mr. Cooper to make his opening statement.

Mr. Arthur Cooper:

Good afternoon. The Irish Harness Racing Association, IHRA, thanks the committee for the opportunity to review the Indecon report, provide an update and detail the ongoing development and progress of the industry. The committee's confirmation of support for the harness racing industry and the IHRA has been noted. Commenting on the Indecon report, the Minister for Agriculture, Food and the Marine, Deputy Creed, recently stated, "I acknowledge the potential of the harness racing sector and we have the basis on which to proceed." It was acknowledged in the Seanad last December that this committee "on an all-party basis, has been very supportive of the Irish Harness Racing Association's potential for several years" and that "The agriculture committee continues to support it on an all-party basis". The IHRA is grateful for these comments.

Following the release of the Indecon report, and more so during the past six weeks, there has been discussion about harness racing going forward and the IHRA's current position on governance, potential and enthusiasm. One word that has not been mentioned is "expertise". There has been talk of the IHRA needing to view things as a beginning, a first chapter and an opportunity to enter into a meaningful relationship. However, what seems to be forgotten in these conversations is the fact that the IHRA venture in its current standing commenced more than four years ago. Through business expertise, this venture has moved beyond a beginning, written several chapters on progress and development and forged meaningful relationships with key players both locally and internationally and, most importantly, with Government on an all-party basis. Enthusiasm has been an important ingredient in driving this venture. However, enthusiasm alone is of no value if there is not a level of expertise. It is the IHRA's level of business expertise and acumen that has driven this venture to where we stand today, so much so that Indecon recognises that the IHRA is "at a critical juncture" with "the potential to expand".

Today's presentation is important for all of us because it is the first formal opportunity the IHRA has had to bring everyone up to speed on the progress and development of the industry over a period that extends beyond the past 12 months. It is now 12 months since the IHRA completed its engagement with Indecon and eight months since the report was delivered to the Department. These past 12 months have seen major developments that will continue the ongoing progress toward a successful and vibrant harness racing industry.

Included in these major developments was the successful Pari Mutuel Urbain, PMU, meeting that took place in June 2017. This was the first Irish harness race meeting to be broadcast and bet on in France, which is globally the largest harness racing market. The meeting was conducted in Dundalk and its significance as a milestone cannot be overestimated not just for the sport, but also for Ireland. Turnover in France on the four races amounted to €750,000. The feedback from the PMU and Le Trot was that this meeting performed well ahead of budget and received a better response than other racing normally held at that time of day. Significantly, across all racing codes - thoroughbred, greyhound and harness - this meeting provided commissions higher than ever previously received for Ireland from tote wagering. I ask the committee to keep this statistic in mind as this was only the first Irish harness meeting ever broadcast and wagered on in France. In the context of the turnover that was achieved on this meeting, the Indecon report provides a key insight into the difficulty now being faced by the IHRA. Indecon states:

[T]here is potential for the harness racing sector to expand significantly and to enhance its economic contribution but we note there are significant barriers to development which the sector faces. These include the absence of suitable track facilities to televise meetings and this is inhibiting the growth of the sector. If the potential of the sector is to be realised there is a need for increased investment.

Indecon also notes, "Unlike for thoroughbred racing, there is currently no contribution to prizemoney from the Irish Government." One of the returns on investment Indecon notes for horse owners is linked to prize money. Using its own initiative, the IHRA has delivered more than a threefold increase in the aggregate prize money on offer since 2013, or a cumulative 49% per annum growth for the past three years. In 2017, total harness racing prize money amounted to €685,000. This year, the IHRA is budgeting industry turnover in the region of €1 million. In total, thoroughbred and greyhound racing received a budgetary appropriation of €80 million, for which greyhound racing's portion was €16 million. I reiterate that the IHRA was able to achieve more international tote commission revenue from just one race meeting being broadcast internationally than the other two racing codes have generated. This was achieved with no financial support from the Exchequer.

Moving on to the key points from the Indecon report, the first recommendation states, "Responsibility for the operation of the Harness Racing industry in Ireland should be vested in the IHRA." I am pleased to announce the operation of Irish Harness Racing is now centralised in the IHRA. This means that all decisions regarding all aspects of the industry, including capital and other expenditure, are determined by the board of the IHRA, with all income accruing to the IHRA. In addition, the operation and management of racetracks and races will move from the individual clubs to the IHRA. Therefore, the first recommendation has been completed.

The second recommendation states, "Indecon are fully supportive of IHRA plans to enhance their corporate governance to align with best practice." Regarding governance, Indecon stated:

[T]he governance structures at the commencement of this review were not developed as yet to an adequate level to align with the best practice. However, this is accepted by the IHRA and they have set out how they propose to restructure the industry and governance reflecting the growing scale of activity.

The key point to note here is that Indecon specifies "at the commencement of this review", not at the end of or during it.

What is more Indecon said that the IHRA accepted this view and furthermore set out "how they propose to restructure the industry and governance reflecting the growing scale of activity". For the entirety of 2017, the IHRA set about addressing the matters of governance. It can report that recommendations provided by Indecon for early implementation of IHRA plans to enhance its corporate governance to align with best practice have been progressively adopted over the past 12 months. We can confirm that the following items identified within the report have been addressed: expanding the skills of the board, including the appointment of new independent directors; enhancing risk management and control, including establishing an order and risk committee; implementing and monitoring a risk register; establishing enhanced internal controls and checks; and ensuring the IHRA board operates in accordance with best practice governance and procedures. Board size has increased, with greater levels of experience and expertise being identified and brought in, while board training has been ongoing. Sub-committees are being established and have been put in place thereby enhancing internal controls and checks. It is also important to note, as Indecon has done, that corporate governance for the IHRA is not something that is only beginning to be addressed with the release of this report. Corporate governance has been going on for the IHRA over the past four years. Abiding by practices of corporate governance has been a standard for IHRA through the entire journey.

This was a prerequisite when engaging in forging its relationship with Le Trot. The IHRA is now entrusted with the oversight of hundreds of thousands of euros each year, managing prize money subsidies from France. To be admitted to the Union of European Trotting, UET, the IHRA had to undergo vigorous audit requirements. Upon successful completion of this audit, full membership was then granted. The following point is also critical: for the IHRA to have its races broadcast and wagered on globally in many nations, integrity and governance need to be in place and at an international optimal level. Indecon has not said that the IHRA is not fit for purpose in its current form. It has recommended that responsibility for the operation of the harness racing industry in Ireland should be vested in the IHRA. This has been achieved and "Indecon are fully supportive of IHRA plans to enhance their corporate governance to align with best practice".

I would like to discuss other aspects of the Indecon report. The report has proved to be a wonderful resource for the IHRA to measure progress and to identify what still needs to be done. As the Minister for Agriculture, Food and the Marine, Deputy Creed, has highlighted:

[The Department]... commissioned the report in good faith and we recognise the potential of the IHRA to become the kind of body with which we can engage in a structured way and into which we confidently invest taxpayers' money... The Indecon report provides for that so we have that basis on which to proceed.

It is for this reason that the IHRA has identified the delivery of the report to the Minister in May as a milestone in the four year journey and a matter of significance in the past 12 months pointing towards the exciting future of the industry. The IHRA is now working toward addressing the five recommendations identified as within the report and accepts the position of the Minister when he says: "Our only requirement is that the IHRA now deliver on the Indecon requirements."

Recommendation 5 states: "Indecon recommends that the pilot integration programme implemented should continue." Indecon also states: "To help address this issue [of road racing], the IHRA developed a horse appreciation and education programme which was given Government funding, and was run in 2016. The purpose of this initiative was to offer a horse and welfare education programme to those who are 'road-racing'." The first pilot programme was very successful. However, for the project to be sustainable over the long term appropriate facilities and infrastructure are necessary. This was made abundantly clear when several graduates expressed their frustration in 2016 that after having successfully completed the course, there were no facilities available for them to continue and to reinforce what they had learned. This meant they could not buy a horse as there were no training or stabling facilities available for use. Importantly Indecon also makes this point: "Effects [sic] should also be made to encourage past-programme participants to engage in the sport." The IHRA wants a successful training programme to encourage people to be integrated into harness racing. Unless the appropriate training and racetrack facilities are in place, this education and integration programme will fail to achieve its key objective and purpose.

The report also highlighted that the Government has previously supported several urban horse projects that involved in one case an allocation of €2.25 million. This was in contrast to the relatively low cost of the IHRA pilot programme of €22,000, which was entrusted to the IHRA by the Department. The Minister stated in December that "As a signal of good faith, we are committing in the region of €50,000 to the Irish Harness Racing Association for 2018 as a continuation and expansion of the pilot project". This goodwill gesture by the Minister is appreciated, but more important is the question of whether it would assist in, or contribute to, resolving the road racing social issue. It is the belief of the IHRA that equal to providing those funds is the execution of those moneys.

The IHRA knows that it is pointless handing over funds if they do not deliver on the targets being set here. Unless there is a racing venue and training facilities the integration programme cannot succeed in being all that it needs to be. The IHRA will identify the needs of this programme in its five year strategy document. However, until these infrastructure matters for a post-integration programme are addressed, the IHRA does not want to use and in turn waste public money on a programme that cannot deliver the long-term benefits for which it was designed. The IHRA looks forward to working with the Minister and his Department. However, the only way there can be true public gain is by addressing this appropriately and thoroughly. Within the recommendations Indecon concludes: "The Harness Racing industry in Ireland is now at a critical juncture. Previous experience of other countries... [has] shown that there is the potential to expand, and an expansion may also be achievable in Ireland." The IHRA knows that to prepare a comprehensive five year strategy plan requires certain processes to be undertaken. These processes will take several months to complete before being ready for presentation.

At present, the IHRA is formulating a programme to ensure stakeholders, members and other interested parties are engaged in the consultation process. The IHRA is keen to have all voices heard. Included in the strategic plan process is the evaluation of racetrack development. This will need to occur before State funding can be forthcoming. The IHRA recognises and appreciates the requirements of this process. However, it also notes this will inhibit its international market development and the integration programme. The remaining recommendation from the Indecon report states:

The Board of IHRA should identify a funding programme to support the expansion of the sector including the role of Exchequer seed funding for the sector.

THE GOVERNMENT SHOULD CONSIDER PROVIDING SOME SEED FUNDING FOR THE SECTOR...

The IHRA board is preparing a document that identifies the seed funding requirements to support the expansion of the sector. This is a costed programme, as required by the Indecon report, identifying the areas of expenditure. This will be prepared over the next weeks and will be available. The IHRA accepts that this seed funding is provided on a pilot basis and its results will be evaluated before further funding, in other words, State funding is considered. The key areas for the seed funding allocation are process costs for the preparation of the five-year strategy plan; legacy expenses incurred in preparation of the Indecon report; UET audit, governance and membership; Le Trot and France negotiations; international representation on committees; governance and governance training expenses; data development to an acceptable international level; and maintaining and enhancing the welfare and integrity of racing. The Indecon report states that the IHRA does not currently have employees or significant resources. At present, there is no confirmed amount for seed funding being requested nor is there an indication within the Indecon report that this seed funding is conditional on the IHRA delivering a five-year strategic plan. They are two separate items within the Indecon report.

Recommendation 4 of the report makes the distinction between State and seed funding and, collectively, we all must do the same.

The IHRA achieved many milestones during the past four years. We will continue to deliver during 2018 and we hope the Department, the Minister and the committee will continue to support us. We hope a realistic amount of seed funding is appropriated to the IHRA in the coming month to ensure it can deliver to the Department and Minister the strategic plan that is necessary to ensure State funding is forthcoming.

Indecon has indicated that expansion of the sector is possible and that both seed and State funding should be considered. This month two years ago, in 2016, the committee released its report. On that occasion there was a recommendation that the IHRA receive appropriate funding to develop the sport of harness racing from an increased funding stream. Today, we know the Minister, Deputy Creed, and the Department are on board, as are all parties. The IHRA is ready to do the work to deliver. As the Minister, Deputy Creed, has said, the Department has stated it has a fund and a document on which it can make progress. Let us all make progress in 2018 and let us begin by providing the IHRA with an appropriate seed funding allocation.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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I thank Mr. Cooper for a very comprehensive analysis of the Indecon report.

Jackie Cahill (Tipperary, Fianna Fail)
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That was a very comprehensive presentation, as we are used to receiving from Mr. Cooper. He spoke about the parimutuel being the most successful. Will he put a figure on what percentage the IHRA received from that international betting pool?

Mr. Cooper outlined very clearly the standards the organisation will have to adhere to if it is to have a successful industry that will attract betting throughout Europe. The IHRA has done things very well. For a body starting up and in embryo stage, it has done things exceptionally well.

Mr. Cooper spoke about the seed funding required by the IHRA. He veered away from the major question, which is exactly how much money we are speaking about. Mr. Cooper spoke about prize money. How much prize money per race was given by the IHRA last year? Mr. Cooper spoke about percentage and spoke about prize money increasing by 38%, but 38% of a small figure could still be a small amount of money. How much prize money will the IHRA require if this is to be put on a proper footing? We have a formula between Horse Racing Ireland and the Greyhound Board, which is 4:1 with regard to the distribution of Exchequer funding. Horse Racing Ireland is of the strong view that an increase in betting tax could make this self-financing. The IHRA probably has the same view, that if it could get its business up and running it could make it self-financing.

Will Mr. Cooper put flesh on what he is saying? Committee members have met the witnesses on a number of occasions at this stage, and the IHRA has convinced us it is capable of doing the job. It has convinced me that it is capable of doing it well. The IHRA is at a crossroads now, as the €50,000 that was provided is not enough to get it to the next stage. How much money is required to get race meetings up and running properly and have tote pools which, in turn, will be self-financing and will allow harness racing to progress to the next stage with regard to providing its own circuit and race track? Accommodation and the housing of ponies and horses is also essential for the business. Mr. Cooper balked from stating the exact amount of money required to get the IHRA to the next stage. It has done tremendously well and has convinced us it is doing everything by the book and correctly. I am confident that everything is covered with regard to regulations and testing horses, and it is essential that this is done. I would like more flesh on exactly what is needed to get the IHRA to the next stage. It would be a shame, given all the work the IHRA has done, if it is left floundering. If another 12 months goes by, it will be 12 months wasted.

Pádraig Mac Lochlainn (Sinn Fein)
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Similar to other committee members, I have been very impressed by the professionalism and enthusiasm of the IHRA in my interactions with it. This is why it has had the all-party support of the committee for quite a number of years. That commitment has probably strengthened over time. The concern has been that the IHRA has also won the admiration and support of the international organisation and it receives substantial investment from other states but, unfortunately, this has not been matched by our own. I hope this is about to change significantly.

With regard to the Indecon report, I will zoom in on its fourth recommendation and the issue of State seed funding. It states State seed funding could be provided on a pilot basis and its impacts evaluated before any further funding is considered. This is the key phrase, if we get to the nub of the issue. Obviously, the €50,000 for the integration programme will continue. As Mr. Cooper stated, more than €2 million has been invested by the State. That is a separate issue. It is very important because we had a very detailed exchange with the Minister. I welcome the fact the Minister explicitly stated he supports what the IHRA is trying to do and he acknowledged his confidence in the organisation. It appears to me from everything he said that he supports Indecon's recommendations.

My concern is that he appeared to state the IHRA needed to have a five year plan before it could get any funding outside the €50,000 integration fund. It is very important that the committee locks down this issue today. To be very fair, I am conscious no profit is being made by the IHRA and it is purely about passion and professionalism. We are taking liberties to expect the IHRA to keep doing this and certainly to expect it to implement the very reasonable recommendations, particularly in terms of safeguarding public investment. We know there have been problems with regard to the funding received by other greyhound and horse racing organisations. There have been corporate management issues and we do not want these repeated. These are reasonable recommendations. I welcome the fact the IHRA has totally embraced them, but there is only a certain amount it can do to implement them without seed funding. It is critical that we deal with this today and that the committee continues to ask that the Minister-----

Pat Deering (Carlow-Kilkenny, Fine Gael)
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There is a phone or device causing interference.

Pádraig Mac Lochlainn (Sinn Fein)
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I apologise. I assume the IHRA has had some degree of dialogue with the Department of Agriculture, Food and the Marine since the publication of the report, and I assume it has had a chance to probe through the issue of whether the Department will provide the seed funding. My interpretation of the recommendation is very clear. State seed funding could be provided on a pilot basis and its impacts evaluated before further funding is provided.

It is clear to me that what Indecon recommended was State seed funding. Logically and reasonably, it would be provided to enable the IHRA to implement the full recommendations and then to draw down the type of funding that would be significant and necessary to move forward. What is the IHRA's view on that? What is the Department saying to the IHRA to assist this committee with a process of trying to make sure the IHRA is getting everything it needs and that the year 2018 takes the IHRA closer to achieving its potential.? We have been supportive for quite a while now. That is my core question in terms of getting clarification on the seed funding.

Willie Penrose (Longford-Westmeath, Labour)
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I thank the witnesses for their presentation. It is comprehensive as usual. I wish to consider the Indecon report and what has been done since. There was a long period during which the report was not published. However, notwithstanding it not being published, a fair amount was still known about what might be in it. I refer in particular to the context of governance structures. Has attention been paid to the recommendations pertaining to governance structures? I refer especially to the appointment of additional non-executive directors. Has the IHRA set about the establishment of the five sub-committees? The various aspects of welfare and integrity and stakeholders are all very important, as is an audit and risk committee . In terms of public moneys, as the IHRA will appreciate, it is important that all those elements are in place. We have no doubt that the IHRA is deeply committed and very professional in its outlook. We also have no doubt, from our interactions and representations even today, that the IHRA will ensure full compliance with all of the technical, health and safety, audit and risk and various other requirements associated with sport. We have had other sporting participants where we have had to ensure that various legislation is amended to bring them up to speed.

The critical point, as noted by Senator Mac Lochlainn, is whether the IHRA is being coy about indicating what level of seed funding is required in the context of the recommendation of the Indecon report. Can the IHRA say we need €300,000 or €500,000 or whatever it is? It has been indicated that a certain level of seed funding would be forthcoming and that would be subject to evaluation to see how things are getting on. While we may never be at the French level, in the context of our population, for the IHRA to take off, grow and develop, what is needed to attract bigger attendances?

How many races have taken place in 2017 in Ireland? There were 11,000 or 12,000 in France but how many can we showcase to ensure that opportunities for expansion and growth are going to be available? Prize money is a big issue and the witnesses have spoken of parimutuel betting and the potential income streams that arise from that. Can that be explained in more detail?

Facilities for racing are important. As the witnesses said, two years ago we were on a committee that made recommendations and probably opened the door slightly ajar for them to get through. How are things going at that level in respect of racecourses? Dundalk was important but is any other racecourse now becoming more amenable to the IHRA proposals? In regard to the potential for television coverage, where does that fit in? What level of income and media rights are associated with this particular sport? Is it the equivalent of what is available at the Horse Racing Ireland level in terms of the ordinary courses across the country?

A breeding programme has been initiated. Could the potential numbers involved and the opportunity to expand significantly be outlined? There is a diversionary programme, as I call it, for road racing, which is important. It takes people off the roads and away from the dangers associated with that. Some moneys have been invested in getting that up and running. The crucial question for us is what level of investment is required to ensure that harness racing reaches its potential? That is important. The first step is establishing what level of seed funding is required.

Does the IHRA attract sponsorship for racing and if so, to what level?

Pat Deering (Carlow-Kilkenny, Fine Gael)
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I thank the Deputy. We will take those three questions first, starting with Mr. Cooper, and then the other three members.

Mr. Arthur Cooper:

I will start and Mr. Flanagan will no doubt be able to answer and add to some of the things that I say. Going back to Deputy Cahill's initial question about the percentage that we receive from the PMU, the international standard rate of 3% is what we receive. That is basically what the figure is anywhere around the world when dealing with major totalisators. Of that €750,000 turnover achieved in France, we receive 3% in commissions on that.

With harness racing, there is probably more a propensity towards having a totalisator than towards fixed odds bookmakers. That said, in Australia there is a move away from the totalisator towards more bookmakers. We look towards bookmakers as being an opportunity. I am in negotiations with a number of operators globally from a trotting perspective or from a harness racing perspective. We are trying to come up with appropriate arrangements. The longer-term aim with these deals being put in place at present is to incorporate Ireland in that. That will be right across Europe. When it comes to the PMU, which is the big one in the world, 3% is the turnover there.

The governance side of things was mentioned. A fair portion of what we are looking towards with regards to seed funding - we will come on to a figure on that in a moment - is on enhancing the whole governance side. I will start on the sub-committees, which I think everyone has brought up thus far. One key thing we need to do concerns the internal side of things. We now have in place five sub-committees. We have breeding, racecourse, integration, stakeholders and welfare and integrity sub-committees. Three of those sub-committees will have open floor membership. Members and stakeholders can apply to be part of those committees. That includes the racecourse along with the stakeholders sub-committees. They can apply to be on there and we want to have representation from our stakeholders on those committees.

All committees will have a minimum of two IHRA board members. The chairmen of each of those sub-committees will be an IHRA board member, so it will funnel up to the main IHRA board. We have brought in independent directors to the audit and finance and risk sub-committee and they primarily make up that particular committee along with two members of the IHRA board. That includes audit, finance and risk, so we are enhancing ourselves in that area.

We consider the welfare and integrity committee to be probably equal with the audit and finance committee as the most important of the committees. With that particular committee, we have brought in a number of experts from around Ireland. We have veterinary surgeons, we have-----

Mr. Mark Flanagan:

There are four independent people on that and three IHRA directors. We have two veterinary experts sitting on that, namely, Mr. Marcus Swail and Mr. Peadar Ó Scanaill. That is an independent kind of board. Integrity is a big part of our business. We have to make sure the integrity of the industry is upheld. That is very important.

Mr. Arthur Cooper:

That sub-committee was formed 12 months ago and has met on a regular basis. It actually monitors the whole racing and testing etc. We consider that as number one, particularly with the programme going international.

As for the prize money, the PMU, or Le Trot, has a requirement that we have a minimum of €5,000 per race for those PMU meetings. Consequently, a portion of that 3% goes straight back to the stakeholders and those in the industry from a prize money perspective. On a week-to-week basis, Mr. Flanagan has some figures.

Mr. Mark Flanagan:

On average, trotting would be €2,000 per race.

For pacers, which is a different form of racing, it would be approximately €500 to €700. Le Trot allocated €192,000 to us this year but we have to make up €288,000 in order to draw down that €192,000. That is €192,000 that is coming directly into the Irish economy from France in 2018. In 2017, it gave us €158,000. Again that is 40% of the allocation and we had to come up with the other 60%. We envisage our total prize money this year to be approximately €750,000. It is a fair portion.

Mr. Arthur Cooper:

Le Trot is very specific about the amount of prize money. It wants to support us. This support was in order to give us more meetings. I will come onto that in just a moment. With regard to the betting tax, of course we would also like to partake. One of the issues which we have always faced, and on which we have always argued, is that the betting tax goes to the greyhounds and the thoroughbreds. While it is not a huge amount, a portion of betting still takes place on harness racing here in Ireland and we do not see any of the tax on it. We believe that we are entitled to some form of remuneration from that betting tax. With the plans I have in place, and in negotiation with the various operators, I would like to think that we can increase the share of and entitlement to the betting tax for harness racing once we get the track and everything up and running.

Does that answer the committee's questions? There was one other thing I was going to say on the governance side of things. With the sub-committees now in place, and with things like the governance training and so on, we want to have a pyramid. We have the board and then the sub-committees, which report up to it. The board has already undergone training over the last 12 months. We saw Indecon 12 months ago. It outlined areas we needed to look at. We have looked at them. Board members have now had formal training. We intend to give them more. The board members have to fund all this training themselves in order to get themselves up to a certain level. From there, we realised that the sub-committees were also in need of governance because they play very important parts and roles within their various disciplines and consequently, will also need corporate governance training. The whole governance issue is very important and it is to the forefront of what we seek to enhance. We believe that if we get the governance right then a lot of things will flow from there.

The bringing on of independent directors was a recommendation. We brought them on six or eight months ago. They are independent directors with expertise in specific areas including the areas of audit and finance, and governance. That is the situation with regard to governance. Does that answer the Deputy's question?

Moving on to Senator Mac Lochlainn, Mr. Flanagan just touched on the French matching funds, which are really important. This year alone Le Trot will give €192,000. This amount has increased over recent years. France has been very generous to us and supports us in a very big way through subsidised horses and prize money subsidies. Instead of the stakeholders racing for €500 or €700, all of a sudden they are racing for €2,000. Therefore they are encouraged to get more horses. What does that mean in turn? Those horses have to be fed, they have to be shod and they have veterinary issues. There is a flow-on effect within the economy from the money which France gives to us for that prize money subsidy.

Mr. Mark Flanagan:

There were 370 horses raced in Ireland last year. As Mr. Cooper has said, all those horses have to be fed and they have to go to the track so there is a lot of movement in horses.

Mr. Arthur Cooper:

Le Trot has been looking after us for the last few years but, like anyone, it wants to know what the return will be. It questions us when we keep telling it that the Government is very supportive because it is not seeing anything in return for its support. It wants us to succeed. We will touch on the breeding in a moment but the French have put a lot of money in and are asking when they will get a return.

On the meeting with PMU, we have another meeting coming up in June of this year. We are getting five races. We are projecting more than €1 million in turnover for that particular meeting. We did not get any more meetings this year. Looking at the history of how the French bodies have normally operated, we would have expected a couple of extra meetings this year. We did not get any this year. I suspect one of the reasons for that is that, having supported us this far, they are starting to question how much more support they must give before they get a return. I anticipate that if this meeting goes well and if we progress in the next 12 months, we will get a couple more meetings next year. Within the next five years we are aiming to have between 20 and 25 meetings a year. These would include seven or eight races. We would have turnover of between €2 million and €3 million per race meeting from France on those 25 meetings. All of a sudden we would be getting revenue of €3 million. It is not that far away. We can achieve revenue of over €3 million in commissions from France if the structures are in place and if France sees that we are prepared to assist it, because it has assisted us. The matching of France's support is very important. Other nations have also been very supportive. Australia has supported us and was very generous in its comments in the Indecon report on what we have achieved so far.

Recommendations 4 and 5 were also mentioned. They are two separate recommendations and, unfortunately, I think they have been melded together in previous conversations. As Senator Mac Lochlainn rightly points out, the issues of seed funding and State funding are totally different. The IHRA agrees with the Indecon report in that State funding can only come once we have prepared the strategic plan. We accept that in the first instance but, as Indecon has stated, we should be entitled to some form of seed funding. It now comes down to what we are doing to justify that seed funding. We are in the process of putting that document together. It is not far away from completion. I will be distributing a copy to everybody before it goes out. The five or six points I have mentioned will be spelt out within it. Last year we were talking about €770,000. We are waiting for some final tenders to come back. I cannot actually give a final figure but it will not come in at €770,000. However, we anticipate - and we will justify this - that we will probably be looking for between €400,000 and €500,000 in seed funding to get us over the line and to deliver between now and August. A lot of time and effort will be spent on the strategic plan this year. We understand it is the most important thing.

While we would love to have Portmarnock developed tomorrow if we could, we accept the process that needs to take place. We recognise that it will not happen this year. First we must have the strategic plan in place which, as I have said, will take a number of months to conclude. That strategic plan will outline the proper development, what we want from a track and stabling facility, and the justification as to why it will cost a given sum of money. That is what the full amount will be. In the short term I anticipate that the seed funding will be between €400,000 and €500,000. After that, we expect it will take a couple of million euro to develop the track and stabling.

That then leads on to the training or integration programme. If we go ahead and use the €50,000 this year, it will end up like the situation two years ago. Some of the graduates from that time are drivers now and some have a driver's licence. All bar two graduates of that initial programme from two years ago came to a little lunch we held for them to celebrate up at Dundalk. They said they really got a lot out of the programme and would like to race a horse but they had nowhere to stable or train. Were the track to be developed I would be able to put it out internationally immediately, because there are a number of markets out there that would take us tomorrow.

After meeting several years ago, our interlocutors in Australia have said that if we held meetings there, and raced at certain times, they would put us on straight away. There are markets that will take us. It is not just a matter of having an international track. We envision merging the two together with the integration programme. It can constitute the use of State funding for two very important areas.

We want to get this programme up and running. We want to do it around the country. However, we do not want to waste public money if there is no follow-up. As Indecon point out, there should be a follow-up programme. If that is not in place, why go ahead and do it? Let us get everything done correctly. In the strategic plan we will devote a full section to the integration programme, the way believe it should operate and how it can benefit the country going forward. We need to keep State funding and seed funding very separate. We met with representatives of the Department of Agriculture, Food and the Marine just prior to the publication of the Indecon report. Since then, we have been in regular communication with them via email. With Christmas and new year over, we will be meeting the Department tomorrow. We will discuss what seed capital will be required and explain that we have now completed the report's first recommendation. We are completing the second recommendation, but that will be an ongoing process. We will discuss training, integration and our reasons for thinking that the sum of €50,000 should not be spent at this point. We will also explain how the strategic plan should come together and will be required of the Department

Mr. Mark Flanagan:

Deputy Penrose asked how many race meetings are held. We had 45 race meetings on the island of Ireland last year. That made for a total of approximately 400 races.

Mr. Arthur Cooper:

I will address the question of breeding. That is something I did not touch on because I was only supposed to speak for ten minutes. Breeding is the area where we see a terrific economic opportunity for Ireland. We have always said that. Two years ago, France got on board. They saw the opportunity as well. We bought subsidised mares, pregnant by good stallions, which were foaled a little less than 12 months ago. They will be re-served during this coming year. Regarding prize money, we have put together a stakes programme worth €125,000 to encourage breeders. That is intended for three-year-olds and four-year-olds born of these home-bred horses. I was recently in contact with some stud farms in France to inquire about the right type of stallions to be used for the mares. Our French partners want us to import a lot more pregnant mares or mares for serving. We currently have a couple of shuttle stallions in Ireland.

Mr. Mark Flanagan:

We are in negotiations to lease two stallions from France this year. That is ongoing.

Mr. Arthur Cooper:

That is where we see the future. What we would love to achieve in 25 years is exactly what Horse Racing Ireland, HRI, has done. In 1992 HRI started by developing the breeding industry for international markets. Europe is on our doorstep. They need horses. We look at Ireland and see a real economic opportunity. Like everything we do, however, it must be nurtured. We want to develop this breeding industry so that in a decade it will be something of which Ireland can be very proud.

Dundalk Stadium was mentioned. That concern has been very generous to us. It is the only racetrack in Ireland that we are using, apart from Portmarnock Raceway and some locations in the North. We also race on grass. We use Dundalk Stadium for the LeTrot PMU premium meeting. Hopefully they will be kind enough to come to some arrangement with us. I do not want to go into financial details here, but that commission is very nice, with a 3% headline on that turnover of €750,000. However, there is significant expense in using a third-party racetrack for which payment is required. If we had our own track we would not have to pay rent. The cost-benefit breakdown of renting is one of the reasons we did not push as hard as we could have for conditional PMU meetings. Dundalk is a great site and looks very well on television. When I was in Paris last year I watched the meeting, and both Dundalk and Ireland came across very well. They put together a very good programme. I would award full marks to Dundalk Stadium. The management has been very helpful to us last year and this will hopefully continue this year.

We have markets lined up in Australia. I am in discussions with partners in North America. There are very good opportunities to bring Irish harness racing there on a regular basis. This will not come about for at least 12 months, or at least until a strategic plan has been drawn up and funding is forthcoming. We cannot get a track in the next six or eight months with the current state of play outlined in the Indecon report.

Sponsorship was also mentioned. Yes, we do get sponsorship.

Mr. Mark Flanagan:

It is quite small, but we do get sponsorship. We have one local sponsor in North America. A sum of €120,000 has been pledged over the next three years. We race once a year in west Cork, which generates significant revenue for the local economy there.

Mr. Arthur Cooper:

Hopefully that answers the members' queries.

Martin Kenny (Sligo-Leitrim, Sinn Fein)
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I thank both of the witnesses for their very comprehensive presentation on the issues facing harness racing. We have met many times, and to cut to the nub of it, I am a firm believer in priming the pump. If we want any industry to start and to function, we have to invest in it during the initial stages and get it to the stage where it can continue on its own, hopefully generating a return. That must happen with this industry.

As well as meeting with our witnesses, I have looked into what happens in France and other countries. I am aware of how large this industry is, how much money it makes and how well it is doing. I agree that there seems to be real potential here. This sport has an added social value in that it takes these people off the roads. It reduces the anti-social element which many people associate with harness racing. That can be turned on its head, creating something very positive. Huge kudos would result from the Government investing money for that return. Over time that investment will come back in spades.

I give full credit to the witnesses for the work they have done. The five recommendations of the Indecon report are very clear. The witnesses appear to have gone a long way towards fulfilling the parts of those recommendations which fall to them, even if, considering the circumstances, they have not gone all the way. The remaining requirements concern the seed funding. State funding is vital. In 2016 Sport Ireland invested in a range of organisations. Basketball Ireland received €588,000 that year, while Cricket Ireland received €355,000. A total of €10 million was awarded to a range of very small, niche sports across the country. Harness racing is something which can generate a return and can be developed into an industry which would contribute to the economy. Many of these sports will not do that. That does not mean they are not worthy. They are clearly very worthy of every penny they get. However, this would allow the Government to invest in order to create something which will give something back. The work the witnesses have done is very worthwhile, and I think all the members of the committee that have heard this presentation, and those who have met with the witnesses separately, would agree.

All the people on the committee have heard the witnesses and met them outside of this meeting and they would feel we can, as a committee, recommend to the Minister and the Department that the €500,000 - rather than the €400,000 - that the witnesses say they need right now would be money well spent. It would be a proper investment. Further down the road there is talk of needing much larger sums and we would have to look at that when the time comes. It would be worth doing that if we can see this is about establishing something and specifically an industry that would create a return.

I have been quite critical in the past of many industries and groupings in the country getting large amounts of money every year who seem to be doing very well but continue to need State funding. It is important to state at the beginning that there must be a stage when the State must pull back from groups of this nature. We need to say that these guys have been propped up and kept going for so long and there comes a time when the State must pull back a little and say we cannot continue it forever. Those groups must find their way in developing an industry that would pay for itself.

Looking at international examples and as far as I can see, harness racing has the potential to become self-sustainable but it will not do so unless we invest in it initially. I fully endorse the comments of the witnesses and the plan put forward. I assume the five-year plan would be fully costed and it would set out a stage-by-stage process outlining how this would become sustainable. The committee should recommend to the Minister and the Department that the seed funding of €500,000 should be found in order to bring us to the next stage. We should have confidence to do that as a committee at this point. I wish the witnesses all the best and I hope the money will be spent very wisely. I hope not too many people will get a big salary or attend junkets. I am sure that would not happen.

Charlie McConalogue (Donegal, Fianna Fail)
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I know this matter has been discussed well by previous speakers and in the responses to the questions. I join with others in commending the ongoing work being done by the association. I also think there is tremendous potential and it deserves our support. As a committee we have made it clear we are very supportive of that seed funding being forthcoming promptly. We do not have the capacity at committee level to allocate funding but it is crucial to see a pathway that can be developed quickly being established between the association and the Department so as to ensure ongoing engagement and bring us to the stage where the seed funding can be promptly delivered. When the Minister was here the last day, we outlined our clear support for the potential of harness racing and the need for seed funding to be made available. In response, he outlined a number of benchmarks that the Department, as paymaster, felt needed to be achieved.

How much engagement has there been with the Department? Given the support that the committee has for developing the industry and the seed funding, we need to keep in contact and ensure there is ongoing and urgent engagement between both parties in order that everybody can be satisfied that the association is doing what it can. The association should get the seed funding it needs to be able to move forward.

Mr. Arthur Cooper:

The Indecon report is very clear with regard to the seed funding and State funding. When we do our strategic plan, everybody might say there is no future in it but we need to get to that point. That is where the seed funding side comes in. We must be able to get to the point where the strategic plan can enable that analysis in order that this committee, the Minister and the Department can ascertain whether the area is worthy of investment. This would be an investment for the industry's future. The strategic plan will be fully costed and it will include the cost of redeveloping Portmarnock or a new track. That is what we are working towards. We accept we will not be in a position to have any form of Portmarnock redevelopment over the next eight months as by the time we do all of that, the year will disappear. We have our personal targets on what we want to achieve and that information is available.

I will comment on the integration programme. Apparently, on RTÉ this morning there was a debate on the road racing issue and how it is wrong etc. We would like to think our integration programme would be a potential solution. It will not happen overnight and this is a generational change. We are targeting those going into the activity rather than those who have done it for their entire life. If we can do it around the country in a progressive fashion and there is an ability to get horses, training programmes and a training track under the one umbrella, in the long term it will succeed. We have always argued that Europe does not have this problem because there is an established trotting industry, with an amateur driver side of things. There are equivalent operations in France, for example, who can race at meetings. From a longer-term perspective, we can make a difference, although this will not happen overnight. The return on investment will very much be part of that strategic plan. With the seed funding document we will list what we are looking for and where the economic benefits on that side will be included. As we have noted, we believe there is a massive opportunity for this country on the breeding side.

How big can harness racing be for Ireland? One must remember that on mainland Europe, this is the number one horse racing sport. It is bigger than racing thoroughbreds. Even if we just steadily increase the numbers, from a breeding perspective we could become the supplier to Europe in the long term. That is where we see a big opportunity. From a racing perspective, we would love to say we could be self-sustaining as quickly as possible but that will only come about when we have international meetings and domestic betting.

We were lucky enough a couple of years ago to have Satellite Information Services, SIS, in the UK cover our meetings and bookmakers were given an opportunity in that context. I look at schedules around the world to identify where there is an opportunity. Last year, one country said it needed trotting at certain times of the day and asked if we could supply it. I am looking for opportunities to sell our product and get our 3% back on that turnover so that we can be as self-sustaining as possible once the initial investment in the industry has been made. The development of the racing side and the international and integration programme can come together with the overall investment from the State. The long-term strategic plan will spell that out. The Indecon report is very clear in its statement on seed funding to the effect that the latter should be totally separate from State funding and that we should be entitled to it.

I like to think that we have developed a very good relationship with the Department over the three or four years we have been visiting it. There are some very understanding staff there who get what the horse racing industry involves and we have had some good conversations with them. The last time we were in there was a few days before the Indecon report came out. We did not realise it was coming out so soon. We had a very open discussion about the funding that is needed. This was followed by the Indecon report coming out. Then there was the 21 November session, then the debate in the Seanad and then it was Christmas. We wanted to see officials from the Department in December but the timetables did not work out. The Department suggested early January when we were next over. I said we would be coming to this meeting and the Department suggested we get together after this session. We will be meeting the Department's representatives tomorrow. We hope a roadmap will be put forward of what it needs in order for us to be able to move forward and go through the five recommendations. It is not just a question of horse racing. Animal welfare must also be considered and we have met the relevant officials. They are the ones we approached about the integration programme. I have been in contact with them this year on how to move forward with that. We hope the Department's door is open so that we can meet on a monthly or bimonthly basis and update it on our progress.

Mr. Mark Flanagan:

Over the past three years, the stakeholders of the IHRA have invested up to €1 million in horses to get us to this point. That is a significant investment by the stakeholders. The French are giving €192,000 in 2018 and between subsidies and prize money have given us approximately €700,000 in the past three years, which is a significant contribution. Mr. Cooper referred to the betting tax of 1%, which is worth €50 million to the Exchequer. Between 15% and 20% of bets are placed on harness racing. When we go to international meetings, it is clear that any money appropriate to an industry should go to that industry. However, this does not happen. Instead, it goes to the greyhounds and horse racing. There is money there that should be appropriated to us because it is being bet on our industry. The international community that we are part of is very clear on that too.

Pádraig Mac Lochlainn (Sinn Fein)
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The money coming from France has to make up 40% of the total amount, which is a good investment, but the IHRA has to co-finance the rest. How will it make up the rest or does that depend on the seed funding?

Mr. Mark Flanagan:

The stakeholders make up most of the rest of that money. It is dependent on them. That is a big request to them to continually invest. They are as committed as we are and they are behind us but it is a lot to ask them to invest each year. The returns do not come back. France is giving €192,000 but that is conditional on us getting €288,000, otherwise the Irish economy loses that €192,000.

Mr. Arthur Cooper:

We have a budget of approximately €1 million in turnover this year. That is up significantly on three or four years ago when it would have been a maximum of €400,000. Much of that is to do with France but it is also sponsorship. We have to try to be as rigorous as possible.

Mr. Mark Flanagan:

There is a big meeting in France next Saturday and Sunday week. We are sending over our leading apprentice to race in Vincennes on Saturday week. There will be €3 million in prize money on those two days. Ireland has been invited as one of 18 countries. Le Trot has invited the Minister to attend on those days. The French Ministers for finance and agriculture will be there. It is a very high profile international meeting.

Mr. Arthur Cooper:

ThePrix d'Amérique, which is due to be held on Sunday week, is the biggest trotting race in the world. "Tribal" is not the right word but in recent years there have been some really good contests between a couple of very good horses, with half the crowd behind one side or the other. The crowd is very enthusiastic, wearing scarves and caps in the drivers' colours for each side. This year, the champion, who won in the past two years, was defeated in the trial races and that has opened it up. There are some very good Swedish horses coming over for the race.

The Minister has received an invitation. It is a bit like the derby meeting here. Many important dignitaries and significant politicians will be in attendance on that day. That is where the UET has its annual meeting. This year an apprentice driver is going over for the first time. Drivers have been invited to other meetings. We ran second in the race there in December. This all promotes Ireland and it is all self-funded.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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I thank Mr. Cooper and Mr. Flanagan for their presentation. Their enthusiasm has not waned since the first day they came before this committee. I thank them for attending.

This is a cross-party committee and very much supports what the IHRA has been trying to do and will continue to do so. The Indecon report has put a roadmap in place with certain targets the IHRA has to meet. It is obviously prepared to do that and its constant engagement with the Department is crucial. I wish the witnesses the best of luck tomorrow at their next meeting with the Department. We will present a copy of the transcript of these proceedings to the Minister and will follow up on the requests that have been made in respect of seed funding and other issues today.