Michael D'Arcy (Wexford, Fine Gael)
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Question 45: To ask the Minister for Arts, Sport and Tourism when it is envisaged that an alternative system of support for the horse and greyhound industry will be in place; if he has had an input into the decision process in this regard; if he will confirm that the 2009 allocation by his Department to the industry is secure; and if he will make a statement on the matter. [23639/09]

Pat Rabbitte (Dublin South West, Labour)
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Question 50: To ask the Minister for Arts, Sport and Tourism if the review of the horse and greyhound fund will be published before the end of this Dáil session; if it will be debated in Dáil Éireann; and if he will make a statement on the matter. [23603/09]

Martin Cullen (Waterford, Fianna Fail)
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I propose to answer Questions Nos. 45 and 50 together.

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. 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 €68.1 million has been allocated to the fund for 2009 and a regulation which increased the level of the fund by €63.907 million has been made by the Minister for Finance.

Funding of the agencies involved 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. These industries account for an estimated 27,500 direct jobs, generate substantial economic activity and make a vital contribution to the rural economy, including in the context of farm incomes. The funding given to the greyhound racing sector assists in sustaining a tradition that has existed for hundreds of years and in underpinning the economic activity in what are in many instances less affluent regions. This funding has allowed Ireland to develop into a world centre of excellence for horseracing. Horseracing 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 throughout 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. In finalising the review of the fund I intend to take into account the comments made by the members of the Oireachtas during recent discussions at meetings of the Joint Committee on Arts, Sport, Tourism, Community, Rural and Gaeltacht Affairs and in the House during the making of the Horse and Greyhound Racing Fund Regulations 2009. I have already given an undertaking to the joint committee to engage in a discussion on the review and I will adhere to this.

Olivia Mitchell (Dublin South, Fine Gael)
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I thank the Minister for his reply. We discussed this matter on a number of occasions recently, both at the joint committee and elsewhere. I do not intend to comment on it in detail now. However, when we discussed the outputs for the year it was discovered that the target outputs keep changing. The first target was to introduce a new fund for a number of years but this morphed into a complete re-examination of how the organisation would be funded.

The year began with an increase in betting tax and the intention was that this would fund the horse and greyhound racing industries for the year, with little need for general Exchequer moneys. However, following successful lobbying from the betting industry, the tax has been reduced to 1%. This move was explained away by a statement to the effect that it would be better to seek a new source of funding - from Internet betting, etc., - for the industries involved. I would like to believe the latter was true but the Minister previously indicated that he has considered the matter and discovered it would be almost impossible to arrive at a new funding mechanism. Has any real thought been given to finding a new source of funding or is what is being done a mere exercise in window-dressing aimed at mollifying those who lobby loudest?

It was expected that a tax of 1% would yield between €30 million and €40 million. If the levy is reduced to 1%, from where will this money come? Will it be provided from general Exchequer funds or from the sports budget?

Martin Cullen (Waterford, Fianna Fail)
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All of that money will still come in. The Deputy is referring to the 1%. There was an increase to 2% and then the clawback of the tax occurred. The truth is that I will not know the outcome until the end of the year. The shortfall will be made up by the Exchequer because my Department does not have funding available to meet it. We will be obliged to wait to see what will be the outcome.

In fairness to those involved in the industry, it became clear, following the recent and dramatic change in people's fortunes, economic activity, etc., that the gain would have been quite marginal. It also became clear that, if we had proceeded on the basis originally intended, many small operators would have been obliged to close down and that many people in rural areas would have lost their jobs.

The taxation relating to this issue comes under the remit of the Minister for Finance. Key officials in his Department have been engaged in an examination of the taxation side of this matter for some time. They also have been considering some of the issues to which the Deputy refers. Therefore, two Departments are involved in investigating the matter but the officials from the Department of Finance are taking a strong lead role in respect of the taxation side. They want the issue to be resolved and we are being extremely supportive in assisting them in reaching that point.

Mary Upton (Dublin South Central, Labour)
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The Minister stated that the review will be published in due course. I had understood it would be published before the end of the current Dáil session. Will the Minister confirm if this will be the case? The review is going to be extremely important, particularly in the context of how we might move forward.

The betting tax was predicated on a figure of 2%. As Deputy Mitchell stated, this was reduced to 1% following strong lobbying. Everyone has a great deal of sympathy for the small bookmakers. However, the key question - the Minister is not going to answer it today - revolves around from where the money to meet the shortfall will come. I accept it is a difficult matter with which to deal, but what is the position with regard to offshore betting? Will it be possible to address this matter?

Martin Cullen (Waterford, Fianna Fail)
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My view is that it must be addressed. There has been an enormous growth in the level of offshore, telephone and Internet betting. I have just highlighted that the fundamental difficulty is many of the companies are not based in Ireland and as a taxing authority we do not have the ability to tax in another jurisdiction. That being said, other ways and means are being reviewed as to how we may address this. As I said before, I thought it was in the industry's interest to work with us in coming up with a solution as to what would be a reasonable percentage to the Exchequer, which would comfortably fund the horse-racing industry.

All who work in or are involved in the horse-racing industry, big and small, have a vested interest in seeing this matter resolved. The industry accepts that the Exchequer is no longer going to fund or make up any shortfalls from now. If we are going to have a fund for the next five years, it has to come from the resources that are being gambled within the industry, to replenish that fund on an annual basis.

Olivia Mitchell (Dublin South, Fine Gael)
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I am not sure what the Minister is saying. Is he saying that it cannot be funded by the taxpayer? Yet, he has ceded to the Department of Finance a 1% levy, and this means he will be short €30 million to €40 million in his Department. Is he saying now that the income of the horse and greyhound industry will effectively be halved this year? If so it is a disaster for the economy, never mind the horse-racing industry, given its importance throughout the country, and in terms of bringing in foreign exchange. It is worth some €200 million in direct exports, not to mention the revenue earned from horse training, which is a major source of employment in the country. Is the Minister now saying that the industry's revenue is going to be halved and we are only hearing about this half way through the year?

The Minister says that the Department of Finance is taking the lead on taxation. Of course it is. However, Deputy Cullen is the Minister who is supposed to defend this industry and he has to assert himself at the Cabinet table. Yet, he has let the income be halved with no clear view as to how the revenue will be replaced.

Is the Minister talking about a ringfenced fund in the future if an alternative source of revenue is to be identified? If not, will the Department of Finance take it back into the general Exchequer, even if it identifies a source of funding? Will there be a special fund?

Martin Cullen (Waterford, Fianna Fail)
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The legislation has a specific ringfenced fund and that will be the intention - certainly mine - for the future. I do not know how the Deputy extrapolated from what I was saying, in a general sense, that the whole income of the industry will be halved this year. I did not suggest that at all. I do not know-----

Olivia Mitchell (Dublin South, Fine Gael)
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The Minister does not know.

Martin Cullen (Waterford, Fianna Fail)
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The industry is feeling the effects of the economic downturn like everybody else.

Olivia Mitchell (Dublin South, Fine Gael)
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I am talking about the Exchequer, the €67 million fund that is guaranteed and was granted at the beginning of the year.

Martin Cullen (Waterford, Fianna Fail)
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There should still be an income if matters go right, of at least €35 million to €40 million, which would leave a shortfall of somewhere in the region of €25 million or €26 million, but we do not know, as yet, what the outcome of that is going to be, and so I am waiting-----

Olivia Mitchell (Dublin South, Fine Gael)
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This means, in effect, that half the revenue is virtually gone, even though it was guaranteed by the Minister.

Martin Cullen (Waterford, Fianna Fail)
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That revenue was based on the assessment last year of increasing the tax.

Olivia Mitchell (Dublin South, Fine Gael)
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The industry did not take away the tax. The Minister agreed to it at the Cabinet table, and now half the revenue the industry was expecting is gone.

Martin Cullen (Waterford, Fianna Fail)
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The point I was trying to make to the Deputy was that it would not have come in as the downturn and the change has been of such a nature that it would not-----

Olivia Mitchell (Dublin South, Fine Gael)
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Nevertheless, the Minister is not going to persuade me that a 1% reduction in tax is going to have no impact. Of course it will.

Brendan Howlin (Wexford, Labour)
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The Deputy should please allow the Minister to answer.

Martin Cullen (Waterford, Fianna Fail)
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Of course it will have an impact. I did not say it would not have any impact. However, the impact it would have had would, in effect, have put an enormous number of people onto the social welfare system, thereby moving people out of employment.

Olivia Mitchell (Dublin South, Fine Gael)
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What impact will this have on the industry?

Brendan Howlin (Wexford, Labour)
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Please Deputy Mitchell. I shall allow a final supplementary from Deputy Upton.

Mary Upton (Dublin South Central, Labour)
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I am seeking a timeframe on the review because that is what we need in order to clarify a number of these questions.

Martin Cullen (Waterford, Fianna Fail)
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I am somewhat in the hands of the experts who are working on this with the Department. I hope it can be finished fairly shortly. My intention, as I said to both Deputies Upton and Mitchell, was to get this back to the committee before the end of this Dáil session. It is still my wish that should happen. I should like to have that discussion because it would be helpful for me.