Leo Varadkar (Dublin West, Fine Gael)

I propose to take Questions Nos. 7, 11, 29, 53 and 259 together.

The jobs initiative introduced a reduced 9% VAT rate from 1 July on a range of services, including hotels and restaurants. The Government also halved employers' PRSI for those on modest wages and introduced a visa waiver scheme that makes Ireland more accessible for tourists from important new and emerging markets. These measures were aimed at supporting the creation and maintenance of employment within the tourism sector as well as helping tourism businesses lower their cost base and allowing them to offer a more competitive product to tourists. The reduced VAT rate for tourism and leisure related products and services was important to correct a perception of Ireland being an expensive place to visit. This latter point is particularly important in terms of the British market, which is our main source of visitors and the market from which we have lost most share in recent years.

At this stage it is too early to assess accurately the impact of these measures on either tourism numbers or on employment in the sector. With regard to tourism numbers, we will need to consider the figures over a longer period to assess properly the impact of the initiative. In respect of the impact of the measures on sustaining employment in the tourism sector, the most recent figures from the CSO only relate to the third quarter of 2011 and do not fully measure the impact of the jobs initiative. Therefore, it will be later this year before we can begin properly to form a view on the effect of these measures on competitiveness and employment.

I am, however, pleased to report that overseas tourism numbers have increased by 6.8% in the year to the end of November, and I am also encouraged that employment in the accommodation and food services sector increased by 6,000 over the six month period between the launch of the jobs initiative and September 2011. I have every confidence the tourism industry will have exceeded the targets set for 2011 when the full year statistics are available approximately one month from now.

Improving the perception among domestic and overseas visitors that holidaying in Ireland offers good value for money was an important part of the jobs initiative measures. In this regard, I draw the attention of Deputies to the most recent consumer price index which shows that in the year to November 2011, the price index for restaurant and hotels is down 0.9% and down 1% for recreation and culture related products and services it is down 1%. However, the overall consumer price index was up 2.9% during the same period. It should be noted that the restaurant and hotels index is at its lowest level since March 2007 in terms of prices while the culture and recreation index is at the lowest level since March 2006.

These price reductions were driven by a wide number of factors, including the VAT reduction, and demonstrate the increased competitiveness of the Irish tourism market. Delivering value for money is crucial to the recovery of the Irish tourism market and this improving cost competitiveness is an important part of that.

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