Michael Ring (Mayo, Fine Gael)

I move: "That the Bill be now read a Second Time."

The National Tourism Development (Amendment) Bill 2011 provides for an increase in the level of capital funding that can be voted to the National Tourism Development Authority, Fáilte Ireland, for the purpose of supporting tourism product development. Before moving on to the detail of the Bill, I wish to outline to the House the importance of the tourism sector. Even after the decline of recent years, the tourism and hospitality sector continues to be a major economic force in the economy, providing an estimated 180,000 jobs. It brings revenues into every part of the country and provides job opportunities for people across a range of skill levels.

The estimate for expenditure in 2010 by overseas visitors, including carrier receipts, is approximately €3.4 billion. In addition, estimated spending on domestic tourism in 2010 was €1.3 billion, making the total expenditure on tourism in the national economy in the region of €4.7 billion. As for tourism performance, after a number of very successful years of growth, Ireland saw a reduction in overseas visitors in the second half of 2008 that continued into 2009 and 2010. Ireland was not unique in this regard as travel worldwide was affected by the global economic slowdown. Fortunately, 2011 has seen a welcome return to growth and I am confident this upward momentum will be maintained. In the first six months of this year, visits from North America increased by 15% and from Great Britain by 8% compared with the first half of 2010. Notably, visits from other long-haul markets and mainland European countries increased by more than 17%. In addition, people appear to be holidaying at home in greater numbers this year and I commend them on their support for the domestic tourism industry.

Comparisons with the first half of 2010 are distorted by the impact of severe weather in the early part of the year and the volcanic ash on travel between March and May last year. That being so, the increase in overseas travel to Ireland is not solely due to the recovery of business lost due to the volcanic ash and weather issues of 2010. Numbers from North America and from other long-haul markets are almost back to 2008 levels. Indications of recovery are supported by evidence from the trade and data from private sector surveys showing Dublin hotel occupancy rates up almost ten percentage points. Ireland has retained its title as least expensive destination in western Europe according to the latest www.hotels.com hotel price index published last week.

While the recent figures are encouraging, one cannot afford to be complacent. I am confident however, that with all those engaged with Irish tourism working together with the relevant agencies, Ministers and Government, we can ensure the quality and competitiveness of the Irish tourist offering will be continually improved and the industry will generate increased earnings and more jobs as part of our economic recovery. The Government is playing its part through measures such as the VAT cut, reduced employers' PRSI, and the visa waiver scheme to support competitiveness, as well as key investments to upgrade our tourism products and attractions. This Bill is a technical adjustment to existing legislation but is important in facilitating the continued support for capital investment in tourism product.

The decision of the Minister for Finance to reduce to 9% the level of VAT that applies to a range of labour-intensive tourism services provides a much-needed support to this sector of the economy. It improves still further the competitiveness of our services for tourists, particularly accommodation and restaurants. The VAT reduction was introduced for an 18-month period and its implementation will be monitored. I am pleased to note the strong encouragement given by the Restaurants Association of Ireland and the Irish Hotels Federation to their members to pass on the VAT cut to their customers. The Government is also helping businesses to enhance their position in the international tourism marketplace by reducing significantly the cost of employing people by halving employers' PRSI for those on modest wages. It should be remembered that the total cost of employment from the employer's perspective not only includes wages but also the employer's share of PRSI. This reduction lowers the cost of employment for the employer without affecting employees' earnings. The visa waiver scheme, which is perhaps the most radical change in Irish immigration policy or practice since the coming of the Single Market, shows the Government is serious about doing everything it can to support the tourism sector.

While the Minister, Deputy Varadkar, confirmed recently that the Government has decided to retain the €3 travel tax pending a further review next spring, a significant proportion of the revenues taken in from that tax will be used to support inbound tourism. This support will see significant additional funding being used for co-operative marketing with airlines, airports, ferry companies and tour operators on inbound routes into Ireland over the coming months. We will focus in particular on opportunities to enhance access from the British regions, the United States, Germany, France, Belgium, the Netherlands and Luxembourg. Tourism Ireland will lead the marketing campaign to promote inbound travel into Ireland in co-operation with airlines, ferry companies, tour operators and airports. Those participating in the programme will be expected to make a contribution to the cost, thus leveraging a final investment in excess of the Government contribution.

In the domestic market, I recently launched Fáilte Ireland's latest Discover Ireland autumn breaks brochure. The brochure will be available online and in Discover Ireland tourist offices until the end of November. The range of special offers in our autumn brochure and online is a reflection of the determination of tourism businesses to fight for every potential inch of business in the market. The brochure features 200 special offers from throughout Ireland, with offers from hotels, guesthouses, bed and breakfasts and self-catering holiday homes. The brochure highlights some great holiday ideas, including top autumn festivals and includes a special focus on the Dublin festival season.

The Government's support programme for capital investment in tourism product is provided through Fáilte Ireland's tourism capital investment programme. The programme has operated on the basis of three broad strands. The first is the development of new attractions and the upgrade of existing visitor attractions. The second strand concerns the development of tourism infrastructure, primarily through supporting local authorities to develop appropriate facilities for tourists, including walking and cycling routes, jetties and moorings, angling stands, access routes to areas of scenic interest, as well as signposting and orientation facilities in heritage and historic towns. The third strand relates to the development of outdoor and other active pursuits such as water sports, boat rental, equestrian and horse riding facilities, and so on. The aim of the investment programme is to provide the necessary public infrastructure to help develop tourism as well as providing sustainable visitor attractions that match the expectations of the international visitor.

Naturally, as with most funding schemes, there are many more applicants than there is capital funding available. Under the National Tourism Development Authority Act 2003, responsibility for the management of tourism related funding programmes has been devolved to Fáilte Ireland, which considers applications for funding based on the tourism benefits that each proposal will provide. To achieve the best use of public funding, it is crucial that the limited funding is put towards the projects that will have the most effective impact on tourism both in terms of increased visitor numbers and the enhancement of the visitor experience. In this regard, the Fáilte Ireland executive will undertake a full appraisal process, including financial evaluations, legal and other due diligence of all applications made under the programme. When it has been completed, the Fáilte Ireland executive will bring the application before a capital investment appraisal group, which has been established to examine the proposals and make recommendations on funding. It includes external experts with particular expertise in financial appraisal and economics, together with Fáilte Ireland's chief executive and a representative of the Department of Transport, Tourism and Sport. Final approval of the appraisal group's recommendation is made by the board of Fáilte Ireland.

In the initial years of the programme, 2007-08, Fáilte Ireland targeted infrastructure provision by local authorities, such as walking and cycling routes, beach management works, access to angling waters and so on. It also supported the historic towns initiative for walking routes in designated towns of historic merit. A total of €23 million was allocated to Fáilte Ireland in those years for such projects.

In the following years, the focus expanded to include the provision of support for re-investment in major tourist visitor attractions and the development of facilities for visitor activities. Notable projects allocated or approved for grant aid to date include Dublinia, Waterford Viking Triangle, Sliabh Liag Cliffs in Donegal, Athlone Castle, Mizen Head Bridge in west Cork, Mayo Greenway and King John's Castle in Limerick.

From 2009 to date, 45 projects have been approved for funding of just under €76 million. The level of outstanding commitments under the programme means the current legislative limit on the funds advanced to Fáilte Ireland will no longer be sufficient. This gives rise to the need for the Bill before the House which I will outline in more detail.

The National Tourism Development Authority Act was passed in 2003 to dissolve Bord Fáilte Éireann and CERT limited and establish the National Tourism Development Authority, Fáilte Ireland. Section 24(1) of the Act gives the Minister for Transport, Tourism and Sport, with the consent of the Minister for Finance, the power to advance, out of money provided by the Oireachtas, such sums as the Minister may determine. Section 24(2) limits the amount of money that can be advanced by the Minister to Fáilte Ireland as capital expenditure on projects or enterprises to €65 million.

Since its establishment in 2003 to the end of 2010, a total of €44.411 million has been advanced to Fáilte Ireland for capital expenditure on projects or enterprises. This leaves a total of just €20 million available to be advanced to Fáilte Ireland before amending legislation is required. It is anticipated that expenditure in 2011 and 2012 is likely to exceed the existing cap and this necessitates an increase in the limit. My Department and the Department of Public Expenditure and Reform have agreed a new legislative cap of €150 million, based on this year's allocation and possible future allocations. I am bringing forward this Bill to make the necessary legislative change and commend it to the House.

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