Róisín Shortall (Dublin North West, Social Democrats) | Oireachtas source

I welcome this Private Members’ motion and debate on a sector in this economy and country that is critically important. It is essential that there is a complete examination of what is actually going on here. The Independent Group proposed this Private Members' motion, which is welcome as it enables us to have full debate on the issue in the Chamber. However, it will not solve the problems impacting a significant number of players within the hospitality sector. We need a much closer examination of what is currently going on because we know the sector is not homogeneous. There is wide variation in it, extending from the very big hotel chains in our main cities to the small coffee shops in villages around the country. It also includes many other elements related to hospitality. It is not a case that one size fits all or that one solution would deal with all the issues in the sector.

We know the performance of businesses in the hospitality sector varies enormously. There are individual circumstances relating to location, size, quality of service provided, cost base, the competitive environment in the local area and many other factors which impact the viability or otherwise of businesses.

One of the difficulties relating to the sector is that it is not possible to distinguish subcategories within VAT categories. That is what we are told by the Government. That needs to be tested. We need to see if it is possible to have more targeted measures in respect of VAT. That has not been clarified and the claim is being made that other European countries have been able to separate out elements within EU VAT categories. We need clarification on that. We need to be clear about what the rules are, what is possible and not possible and whether we can vary the rates within a particular category. That needs to be verified.

We need claims being made on both sides of the issue to be verified. We need to have evidence and definitive information on what is going on in the sector. The return to 13.5% VAT in August has undoubtedly impacted all businesses in the hospitality sector but the impact varies widely. For some, it may be the final straw; for others, it will result in a reduced profit margin, which is not in itself a bad thing. Policy changes based on evidence are critical, rather than the broad brushstrokes we have heard about from the industry and its representatives. It is not the case that the entire industry is in difficulty, not by a long shot. Those of us living in Dublin, and the same applies in other parts of the country, see evidence of the hospitality sector booming. I was around town on Friday of last week and could not believe the level of activity. Everywhere was packed: pubs, restaurants and coffee shops. There were queues outside restaurants and pubs. It struck me at the time it is hard to argue anything other than that the hospitality sector is booming in that area and in that element of it. I am not suggesting that applies across the board - it does not - but the idea that reducing VAT back to the 9% temporary rate would solve problems for people across the board is not logical. That is why a more detailed examination of what is going on is needed. The fact some elements of the industry are booming distracts from the fact other elements are struggling and need supports. We need a way of responding to those businesses that provides financial support, improves their sustainability and enables them to survive.

The Government claims a number of the schemes it announced have not been drawn down fully. Is that the case? If so, will the Minister of State tell us the reason they have not been drawn down fully? Were there problems with the accessibility of the schemes? Was there too much paperwork involved? What kinds of businesses within hospitality were not able to draw them down? We need a closer examination of what is going on. We need details of the number of businesses closing. It is claimed two hospitality businesses are closing every day. Is that a high or low number relative to what happened previously? What kind of number is it relative to new businesses opening? We need that kind of basic data. The point is often made, and I heard a business owner on the radio this morning making it, that the reason for the closure of businesses is difficulty getting staff. This is the sector with the lowest paid workers in the country. That is not an argument for delaying an increase in the minimum wage. We need a root-and-branch examination of the issue to ensure we know exactly what the problem is and how we can target supports to businesses that need them most. Business representative bodies consistently refer to the high cost of living as being a major problem in ensuring competitiveness and that gets back to the Government in terms of cost of housing, in particular, and cost of living.

In relation to this blunt instrument approach, it should be unthinkable the Government would give tax breaks to the fast food industry, which is also part of this sector. At a time when we have serious problems with the commercial determinants of health and a major problem with obesity, the idea of giving a tax break to the fast food industry is not on. We need an independent examination of the issues and to respond accordingly.

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