Gerald Nash (Louth, Labour) | Oireachtas source

I move amendment No. 1 to amendment No. 1:

To insert the following after "the 2 per cent USC ceiling band increased by 34 per cent or €6,898, going from €20,484 to €27,382": "further notes that:

— individual hospitality sector businesses are facing a number challenges;

— employment in the accommodation and food services sector is close to an all-time high of 190,000, and focus must be on addressing the structural issues required to sustain businesses in the sector to improve innovation, skills development, productivity and sustainability;

— average hourly earnings in the accommodation and food sector continues to be one of the lowest of any economic sector;

— the National Minimum Wage (NMW) remains below the level needed for a living income, and supports calls for it to be linked to 66 per cent of average hourly wages, above the Government target of 60 per cent from 2026;

— there is an 'inability to pay' clause in law for employers who are unable to pay NMW rates to enable them to seek an exemption from increases; and

— Ireland lags behind other European countries on the provision of worker's rights and benefits, and that auto-enrolment and statutory sick pay are long overdue;

calls for:

— the establishment of a State agency to support the hospitality sector, modelled on Teagasc, to boost sustainability and productivity, and provide research, advisory and training services;

— a strategy to drive down costs for small businesses focused on energy and insurance prices;

— increased discretionary powers for local authorities to levy a hotel bed tax if they wish, as is the norm in other European countries, to fund investment in the public realm of our cities and towns;

— reform of the outdated commercial rates system; and

— reform of outdated licensing laws to support the night-time economy".

This is perhaps the third motion this year alone that either specifically refers to or is related to this issue. That shows the level of concern Members of the House have about the current status of the hospitality sector and what is happening in the undergrowth in every town, village and city in the country. It is an important and well-intentioned motion. I have significant sympathy with hospitality owners who are going through a perfect storm at the moment.

I was a member of the Government that brought in the original reduced 9% VAT rate in 2011. The Labour Party sought to retain it right through that term of Government, often against some opposition, but it was the right thing to do at the time. I remember that much of the criticism at the time centred on the evidence, of which there was some, that after employment started to grow, the cut was not being passed on to customers and the pay and terms and conditions of workers in the sector were not improving. The economic circumstances of 2024 are a world away from 2011. We recall 2011 very well. We had a deep recession and liquidations, and the public finances were destroyed. We were reliant on the lender of last resort to pay pensions and public servants and keep show on the road. Unemployment was at 16%. I could go on.

The VAT reduction introduced in spring 2011 was a crucial innovation targeted at stimulating job growth in the hospitality sector, and it worked. At a time of high unemployment, low demand and economic recession, it was absolutely the right policy to pursue at the right time. Today, conversely, the country is at full employment. There are record savings in bank accounts and economic activity is hot. There is, therefore, a paradox of sorts here. On one hand, the economy and fiscal position have rarely, if ever, been stronger, yet there are valid concerns in the hospitality industry about hospitality businesses closing down. This reality on the ground takes some explaining and interrogation. On one hand, there always has been churn in the hospitality sector in good economic times and in bad, but there is something happening in the undergrowth to which we need to pay attention. We know the hospitality sector, along with retail, has been hit with a dynamic cost structure change to the traditional business model. I do not think we can discuss some of the challenges facing the businesses we are all concerned about without reflecting on the last few years and the experiences businesses have had.

We had the pandemic and the outbreak of the war being waged on Ukraine, which had a significant impact on the economy, and all the supports the State correctly provided to viable businesses to get them through a very difficult time. There have been casualties across the economy as those supports wind down. The number of liquidations and insolvencies in the hospitality and retail sectors were put on the record earlier, and this should concern us. Low margin, energy and labour intensive businesses, such as cafés and restaurants, have seen enormous jumps in food costs. As we know, the price of energy in Ireland is the third highest in the EU. Transport costs are through the roof and there has been no respite on insurance despite the much-trumpeted reforms. At the same time and amid those rising costs, these low margin, locally trading sectors have managed between them, to their credit, to add one third of all new jobs in our economy in 2023.

That does not tell the whole story, as we know. Hardly a day passes that I am not contacted by a constituent, many of them friends who have been running very good hospitality businesses for years. They are often owner-managers who would describe themselves sometimes as busy fools, working exceptionally hard in low margin businesses and taking an ever lower margin even though they are working extremely hard. When the businesses these people are running are gone, they are gone and it is only then that we will really miss them and their social importance. One person described to me this week how they are now working in the business and not on the business. They are on the floor all the time, taking on responsibility for every single aspect of the business and working on the front line when they should actually be managing their business. Every business closure is a tragedy. People see it as a personal failure. It is a tragedy for the owner-manager, the families involved and loyal staff too.

I am sceptical that a cut to VAT alone can somehow save every struggling hospitality business in the country. To claim that it would does the great people in this critically important sector for our economy a real disservice. For some, it is definitely the case that a cut to the VAT rate would stave off trouble in the short term and give some temporary respite. In truth, it would not go anywhere near addressing the real structural problems for the sector. I want to put on record the real problem I have with the lowest paid people in the country, those on the national minimum wage, being asked by some almost to take the blame for the difficulties encountered by some employers in an entire economic sector. This is not a good narrative and it is something that needs to be looked at. Overall, it is irresponsible and it is not winning any friends.

I say all this because I am serious about sustainable jobs and decent work. I say it because we need to have a similar seriousness from Government, those of us who want to be in government and the representative bodies about the serious structural reforms we need to make to support, sustain and change a sector that is crucial to communities and workers across the country. In doing so, the Labour Party has proposed an amendment to the Government amendment. Our amendment deals with the real problems and provides for proposals that could, if adopted, be a game-changer for an industry we need to do well and to survive and thrive. It is one of the most significant private sector employers and it needs to be supported. We need to be serious about how those employments are supported. We would do so, for example, by establishing a State agency, modelled on Teagasc, to support the hospitality sector, boost sustainability and productivity and provide research advisory and training services to build a real functioning and robust sector. We have developed a strategy to drive down costs for small businesses that is focused on energy and insurance prices and increased discretionary powers for local authorities to raise tourist levies to pay for investment in the public realm. Finally, we would reform the outdated commercial rates system, which is highly problematic, and the outdated licensing laws to support the hospitality business and our night-time economy.

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