Olivia Mitchell (Dublin South, Fine Gael)
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Question 43: To ask the Minister for Arts, Sport and Tourism the progress that has been made on the review of the funding of the horseracing industry; and if he will make a statement on the matter. [8855/09]

Martin Cullen (Waterford, Fianna Fail)
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Government support for the horse and greyhound racing industries is provided through the Horse and Greyhound Racing Fund, which was established under the Horse and Greyhound Racing Act 2001. Under the provisions of the Act, the fund has received a guaranteed level of finance each year from 2001 to 2008. This was based on excise duty on off-course betting in the preceding year, subject to a minimum level based on the year 2000 amount adjusted for inflation. Any shortfall in the amount generated by the excise duty was made up by direct Exchequer subvention. In 2004, the Government put in place regulations to increase the limit of the Horse and Greyhound Racing Fund from €254 million to €550 million to continue the fund for a further four years to 2008. By the end of 2008 a total of €545.8 million had been paid out of the fund. The remaining balance in the fund at the start of 2009 was €4.2 million. Some €69.6 million has been allocated to the fund for 2009.

The rationale of the fund is that the horse and greyhound racing industries need certainty about funding support on a multi-annual basis and that the mechanism for such certainty should be derived from the duty generated from off-course betting. Prior to 2001 the horse and greyhound racing bodies were funded with annual grant-in-aid allocations as well as 0.3% of turnover and a fixed fee from off-course betting.

Funding of both of these agencies supports two very important productive industries and helps to sustain the important role of horse and greyhound breeding and training enterprises in the development of the rural economy. Together these industries these account for an estimated 27,500 direct jobs, generate very substantial economic activity and make a vital contribution to the rural economy including farm incomes. This is often forgotten. The funding given to the greyhound racing sector helps in sustaining a tradition that has existed for hundreds of years and in underpinning the economic activity of what are in many instances less affluent regions of the country.

This funding has allowed Ireland to develop into a world centre of excellence for horseracing. Horse Racing Ireland has undertaken a capital investment programme that has underpinned growth in the sector. The fund has also contributed significantly to the almost €90 million that has been invested in the improved facilities now available at greyhound tracks around Ireland. A review of the fund is nearing completion and will be submitted to the Government in due course in the context of deciding on the future funding of these industries. Any extension of the fund will require the approval of the Government and the Oireachtas. I will shortly bring proposals to the House as there is a technical requirement for me to do so.

Olivia Mitchell (Dublin South, Fine Gael)
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The Minister does not have to preach to me about the importance of the industry. I accept how important it is to showcase Ireland, for its jobs and as a foreign exchange earner. It is also important to the rural economy. This year, a figure of €69 million has been allocated in the budget. The Minister is on record as saying it will come from the increase in taxation. The levy increased from 1% to 2%.

Martin Cullen (Waterford, Fianna Fail)
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Not all of it.

Olivia Mitchell (Dublin South, Fine Gael)
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I suspect there will be a revenue shortfall. Will the Government make up the shortfall or will the industry only receive what arises from the increase in taxation?

The sector is suggesting we should capture some of the revenue spent on Internet betting. The William Hill chain is closing its shops, although this might not be a great loss, but even Paddy Power is saying that three quarters of its profits come from online betting and telephone betting. There is much revenue to be captured. Has any progress been made on devising a way to capture some of the benefit of this expenditure by people?

Martin Cullen (Waterford, Fianna Fail)
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The fund has been reduced this year in the Estimates process. As we went through this I had discussions on the matter. The fund is €69 million, reduced from over €80 million. There was acceptance in the industry that it had to take the hit. The industry, Deputies Mitchell and Barrett and I were ad idem that resourcing must come from within the industry. The taxation must be self-financing. I have provided for €69 million but betting tax will not yield that amount. It remains to be seen how much it will yield. I had to be certain in respect of the industry's investment profile to provide certainty in respect of what the year would hold. The review is under way and Deputy Barrett is involved in part of that.

There has been a great expansion in betting but the problem is that the vast majority of this is Internet betting and telephone betting and this money is going offshore. Even 0.5% of the figure would make an incredible difference to the industry.

Olivia Mitchell (Dublin South, Fine Gael)
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It is massive.

Martin Cullen (Waterford, Fianna Fail)
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A figure of 0.5% is very small and 1% would do wonders. Experts who know far more than I are trying to get their heads around this. Only two of the companies operate in Ireland and much offshore betting is done with companies that do not operate in Ireland. The major problem is how to get at the tax of a company that operates somewhere else. Some of the companies are offshore altogether.

In the United States it has been banned. The authorities could not get at it so they banned it, with hefty fines for anyone caught betting on the Internet or by telephone. These options are on the table although I do not wish to send out the message that this is the option we will use. There are enough interests in the broad industry for everyone to come together to share so that this industry, which is wonderful for its members and economically important for the country, can survive. A small burden could be borne to maximise the taxation from the industry and this would be more than sufficient to put the horseracing and greyhound industries in excellent shape for the next decade and beyond.

Olivia Mitchell (Dublin South, Fine Gael)
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Can the Minister clarify that the figure of €69 million is guaranteed for this year, no matter what the income from the levy?

Martin Cullen (Waterford, Fianna Fail)
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Yes.

Olivia Mitchell (Dublin South, Fine Gael)
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There is now urgency to finding a source of revenue for the industry. I presume the Minister is looking at what is happening in other countries. It would be wonderful if we could capture it but the question is how to do so.

Martin Cullen (Waterford, Fianna Fail)
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No country has fully found a way to manage this. We are grappling with new technology. Someone suggested to me that there are new products coming out that will make this matter even more complex. Nevertheless we must deal with it. The means to address this is within the industry, which knows what is going on and is in a position to manage it. Fairness across the industry would resolve this matter.