Olivia Mitchell (Dublin South, Fine Gael)
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Question 4: To ask the Minister for Arts, Sport and Tourism if he envisages new funding arrangements for Horse Racing Ireland; and if he will make a statement on the matter. [10976/08]

Séamus Brennan (Dublin South, Fianna Fail)
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Government support for the horse and greyhound racing industries is provided under the horse and greyhound racing fund which was established under the Horse and Greyhound Racing Act 2001 for the purpose of further developing both racing industries. Under the provisions of the 2001 Act, the fund receives a guaranteed level of finance based on excise duty on off-course betting in the preceding year subject to a minimum level based on the 2000 amount adjusted for inflation. Any shortfall in the amount generated by the excise duty is made up by direct Exchequer subvention. In 2004 the Government agreed to increase the aggregate limit on the fund from €254 million to €550 million to allow for continuation of the fund for a further four-year period to 2008. Since 2001 the fund has provided a guaranteed level of funding for Horse Racing Ireland which will have amounted to more than €436 million by the end of 2008.

In 2008 Horse Racing Ireland, HRI, is to receive more than €61 million from the fund.

Since the establishment of the fund a major period of development of the horse racing industry has resulted. The funding has allowed Ireland to develop into a world centre of excellence for horse racing. Horse Racing Ireland has undertaken a capital investment programme that has underpinned growth in the sector.

In 2004, HRI launched a €250 million capital development fund for Irish racecourses, which is being spent over five years, to continue the substantial upgrading of racecourses. HRI will provide up to €135 million in grant aid and the racecourses will finance the balance from their own resources.

The allocation of €70 million under the new national development plan for capital investment for the horse and greyhound racing industries will assist long-term planning, which will result in the further development of a network of modern well-managed facilities that will continue to be attractive to the public.

To date, the fund not only has helped towards providing some top class racing venues and facilities but also has underpinned significant employment in the horse racing industry. The prize money it has facilitated has been an important boost for horse breeding, which is a significant net contributor to the economy and has an important role to play in generating employment, particularly in the tourism and agri-economy sectors, making it a significant regional employer and an important contributor to rural communities.

The current round of the fund is due to expire at the end of 2008. A review of the horse and greyhound racing fund will be undertaken this year and any extension of the fund will require the approval of the Government and the Oireachtas.

Olivia Mitchell (Dublin South, Fine Gael)
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I agree with the Minister that this is a highly important industry for many reasons, including employment and rural employment in particular. Horse Racing Ireland and the bloodstock industry together constitute one of our critical industries and it is appropriate that the State should ensure that horse racing is facilitated, if not subsidised. As this is such an expensive sport obviously it has difficulty breaking even and traditionally, betting has been used as a way of funding it.

However, the Minister must realise the present position simply is not sustainable. Even were a new fund to be created, I presume this would require legislation at some point during the year, it would not be sustainable for the taxpayer to pay more towards the sport of horse racing than to all other sports combined in respect of current expenditure. It is quite shocking to note that the Sports Council, which funds a considerable number of sporting bodies, received approximately €57 million this year while the racing fund, which admittedly also includes greyhounds, amounts to €66 million in current spending. This cannot be justified or sustained. Consequently, what thought has the Minister given as to how the industry is to be funded?

While I apologise for going on at some length, this is a complex issue. I understand the reason the tax rate has been reduced from 5% to 1% is because of the threat posed to bookmakers' shops by on-line betting. However, I am uncertain of the validity of that argument as I have not noticed any falling off in off-course betting. This year's results for Paddy Power PLC, show its profits were €72 million, half of which is attributable to on-line betting. However, the remainder came from the retail business that is done in off-course shops.

Charlie O'Connor (Dublin South West, Fianna Fail)
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If the Deputy wishes the Minister to reply, one minute remains.

Olivia Mitchell (Dublin South, Fine Gael)
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I note Paddy Power PLC has opened 18 new shops, ten of which were new and the rest being acquisitions. I find it hard to believe it could not sustain a higher rate of tax, if that is what is required. This is not a sport in which many people actively participate. Given the obvious limits to the State's resources, such funding should be going into increased activity, particularly for young people. While I recognise this is an extremely important industry to Ireland, such moneys should not be sourced from the sporting fund. Will the Minister reconsider the taxation issue or have any other bright ideas come up? Other countries appear to employ a mix of what we do but not all of them accept that on-line betting will be the end of off-course excise duty.

Séamus Brennan (Dublin South, Fianna Fail)
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On-line betting and technology certainly has changed the nature of many industries, including this one. The Deputy will recall this goes back to 2001, when the House enacted the Horse and Greyhound Racing Act. It considered it to be a formula to — pardon the pun — ring-fence the income and support for the horse and greyhound racing industries. The view taken in 2001 was that the formula was a guaranteed level of finance based on excise duty on off-course betting in the preceding year, subject to a particular level of shortfalls. This has led to Horse Racing Ireland receiving €61 million from the fund in 2008.

As I noted in my response, an opportunity exists to review the position. The current round of the fund is due to expire at the end of this year and a review of the fund will be undertaken in the course of 2008. If it is decided that an extension of the fund is needed, that will require the approval of this House by way of legislation and obviously it also will require the support of the Government. There will be an opportunity to review the position. This matter was examined carefully in 2001 when it was felt that given the importance of the industry, its size, the employment it offers and so on, a formula was needed for the future financing of the industry and that formula was arrived at in the 2001 legislation.

Everyone should be slow to disturb it if it is succeeding. However, that would not prevent the Government from reviewing it to ensure it is succeeding and that review is under way.

Olivia Mitchell (Dublin South, Fine Gael)
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May I ask a brief question?

Charlie O'Connor (Dublin South West, Fianna Fail)
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We are out of time.

Olivia Mitchell (Dublin South, Fine Gael)
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I understand Horse Racing Ireland has made a recommendation. Has the Minister received it yet? It also has recognised this is not sustainable. Has he received recommendations for alternative sources of funding?

Charlie O'Connor (Dublin South West, Fianna Fail)
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The Minister should respond briefly.

Séamus Brennan (Dublin South, Fianna Fail)
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I am unsure whether I have received a formal recommendation. I receive regular submissions from Horse Racing Ireland but I do not recall a specific one on that subject.

Olivia Mitchell (Dublin South, Fine Gael)
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Perhaps this industry should be financed from the Department of Enterprise, Trade and Employment rather than through sport.

Séamus Brennan (Dublin South, Fianna Fail)
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I also should point out that this area substantially is a matter for the Minister for Finance.

Olivia Mitchell (Dublin South, Fine Gael)
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I accept that.

Charlie O'Connor (Dublin South West, Fianna Fail)
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As the Member who tabled Question No. 5 is not present in the Chamber, I will move to ceisteanna eile.