Mr. Brian Kavanagh:

We are grateful for the opportunity to meet the joint committee this afternoon to discuss the overall performance, operational matters and corporate plans for Horse Racing Ireland. The chairman, Mr. Nicky Hartery, I and Mr. Jonathan Mullin, our head of communications, are here. Horse racing and breeding is a significant industry in the country, producing almost €2 billion in total expenditure annually and supporting 29,000 direct and indirect jobs. More than 1.3 million people attend race meetings every year across 26 racecourses throughout the country. Using some key metrics for this year, the domestic racing industry is performing well. Our published figures for the first half of 2019 showed attendances at Irish race meetings increased by 9%. Betting with on-course bookmakers rose by 11.5% for the first half of the year. Those numbers point to the popularity of racing in Ireland, which makes the business side of racing and breeding more viable for operators throughout the country. In the first six months of 2019, the number of horses in training increased by 3.5%, the number of active owners increased by 8.5%, and new owners registered increased by 9.5%. These numbers show increased participation in the industry, and that is good news for towns and villages throughout the country that benefit from local employment and spin-off secondary expenditure.

Last August, the committee received copies of Deloitte's regional economic impact reports, which detail the impact that horse racing and breeding have in rural Ireland. These reports were a region-by-region analysis of a 2017 Deloitte report that showed the economic value of the thoroughbred racing and breeding industry to Ireland as being €1.8 billion per annum, generating employment, both direct and indirect, of 29,000 people and annual sales of €438 million. These are significant figures and, when broken down by county, the economic figures for counties traditionally associated with horse breeding and racing are noteworthy. For example, more than 2,500 jobs in County Tipperary are supported directly and indirectly by racing, and those jobs fuel almost €400 million in annual expenditure in that county. Each industry will have its own clusters and there are clearly centres of excellence for horses in places such as Tipperary, Cork, Meath, Kildare, Carlow and Kilkenny, where the scale of the impact is strong and cannot be replicated everywhere.

The Deloitte report makes clear that there is a strong regional spread of this rural industry throughout the country. In the midlands, which we categorise as Laois, Offaly, Longford and Westmeath, there are an estimated 1,200 direct and indirect jobs supported by racing and almost €100 million in annual expenditure in those four counties. These are significant numbers. In the north west, in Sligo, Leitrim and Donegal, which might be regarded as a quiet area for horse racing, there are 120 jobs and more than €12 million in expenditure. These are relatively significant figures and I am confident that they will grow. Donegal has shown a great trend in recent years towards producing young jockeys of the highest calibre, which perhaps demonstrates a growing interest in the county in working with horses and participating in our industry. In the west, in Mayo, Galway and Roscommon, racing and breeding support almost 1,000 jobs with more than €100 million in expenditure. By any measure in that region, 1,000 jobs are very significant.

This is an industry that delivers on Government investment and a sport that continues to be one of the most popular activities in the country. However, those positive figures mask some serious concerns in areas that we know need care, attention and investment. Ireland has many advantages when it comes to horse racing and breeding. The most fundamental advantage of all is our land and our climate. The country is suited to rearing horses. Our limestone soil is good for bone structure development. We have a tradition of horse care among our people that is the envy of the world over. It is not a cliché to say that no matter where one is in the world, whether Australia, Japan or America, if one is at a racetrack or training yard, one will quickly see and hear Irish people. Those talents are world renowned and the reason people come from around the world to Ireland to invest in the horse business. Ireland has always had a close affinity and skill with the racehorse. A recent report showed that there were 50 thoroughbred horses per 10,000 people in Ireland, a multiple of any other major racing nation. The equivalent ratio in the UK is four horses per 10,000 people. It shows the intensity of the industry in Ireland compared with other countries.

Most of the almost 7,000 registered horse breeders in Ireland are scattered around the country, and 92% own five brood mares or fewer.

Although horse racing sometimes has an image as the sport of kings or the domain of big battalions, I reiterate that 92% of breeders, who are the backbone of the industry, own five brood mares or fewer.

The headwinds we are facing will have an impact throughout the country. Brexit is the biggest headwind of all. Regardless of what happens in Britain in the next few months, there will be no soft Brexit for Irish horse racing and breeding. After Brexit, Ireland will be isolated geographically from its key export market. As a way of putting in context how important the thoroughbred export market is to rural Ireland, I would like to mention that Ireland produces more thoroughbreds each year than Great Britain and France combined. Just over 9,000 foals are born in Ireland every year. This is more than the UK and France combined. Ireland is the third biggest producer of thoroughbred horses in the world. Approximately 60% of the horses we produce every year are exported, and 80% of those exports go to the UK. We cannot ignore the fact that Britain is an irreplaceable market for the Irish thoroughbred. Our real fear, as reported in The Irish Fieldand other racing media last week, relates to the political desire in Westminster to put in place domestic policies and incentives after Brexit that would aggressively give an advantage to the British breeding industry. There has been some talk about a supply imbalance and an excessive dependence on Ireland for the supply of horses. If that happens, there is no doubt that Ireland will be the country that is most negatively affected. We need to invest significantly in the horse racing industry to combat the impact of Brexit and any potential protectionism from our main markets.

Horse Racing Ireland has developed a strong strategic plan for the next five years. The plan, which is before the Department of Agriculture, Food and the Marine, needs Government support and funding. We know that with the support of the Government, we can develop this industry further in a way that brings about growth in rural employment and increases economic output. We are happy to discuss any aspects of our plan, which is necessarily ambitious, with the joint committee. The plan sets targets for increased participation across all levels of the industry, including the flat, jumps and point-to-points. It includes an ambition to develop a second all-weather track, which would be a key piece of infrastructure for the industry. This development could include a training incubation hub based at the track, which would be used by young start-up trainers to help them to get a start in the industry and to provide the kind of assistance that will lead to growth in employment and economic activity in rural Ireland.

We need to invest in equine welfare and staff welfare programmes. Our strategic plan provides for a total redevelopment of the Irish Equine Centre in Johnstown, County Kildare. As the chairman of Horse Racing Ireland, Mr. Nicky Hartery, told this committee last year, the industry is renowned for the care that racehorses get. We have seen in other jurisdictions – primarily in America and most recently in Australia – that it is crucial for standards of care to be maintained at the highest possible levels. The current facility that houses the Irish Equine Centre in Johnstown is not fit for purpose. Significant investment is needed to maintain what is, in effect, the industry's current insurance premium. It goes without saying that a disease-free herd is essential to underpin the trade in bloodstock. The role the Irish Equine Centre plays for the State in ensuring the health and welfare of racehorses and many other types of animals cannot be underestimated.

We recognise and understand that budget 2020 was a standstill budget that was written under the threat of a no-deal Brexit. It left many things the way they were before the budget. If the industry is to prosper and grow, increased funding is necessary to support the ambitions in the strategic plan. The good news is that the means to do this is now in place. In our view, it would be much better if horse racing in Ireland, rather than competing for funds with other causes from the general taxation pool, were to be funded as it is in many other major racing countries through taxes generated by those who choose to bet on the sport. We are grateful for the encouragement we have received to this end from the Minister, Deputy Creed. We look forward to future positive engagement with the Minister and his officials on making the strategic plan a reality when the uncertainty around Brexit has been removed. Our plans for racing and breeding in Ireland will provide a dividend for Government support and an economic return for rural Ireland. We believe this can be done at a reduced cost to the Exchequer.

Historically, the Government helped to fund the horse racing and breeding industries through the horse and greyhound racing fund, which included levies collected from bets placed in Ireland each year. Until recently, the rate of betting tax levied in Ireland was one of the lowest of any country in the world. Since it was decided in budget 2019 to increase the rate of betting tax from 1% to 2% of turnover, the yield has increased by more than €50 million per annum. This year, the amount of money raised from betting tax will be greater than the amount of money distributed to the horse and greyhound racing fund. We believe there is an opportunity to put in place a long-term, secure and sustainable funding base that will allow this vibrant but vulnerable rural industry to maximise its potential. This surplus can be used to invest in an industry that is delivering strongly for rural Ireland by protecting from the potential effects of Brexit and by copper-fastening the healthcare standards enjoyed by our horses. Investment in this ambitious and realistic strategic plan will lead to increased employment across the villages and towns of Ireland. I thank the committee for giving us an opportunity to discuss the industry and our plans. I will be happy to address any questions that members of the committee might have.