Olivia Mitchell (Dublin South, Fine Gael)
Link to this: Individually | In context

Question 66: To ask the Minister for Arts, Sport and Tourism whether she has received representations from tourism operators on the impact that contraction in car rental supply will have on the tourism industry in 2010; and if she will make a statement on the matter. [14141/10]

Mary Hanafin (Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

I am aware from my initial contacts with tourism industry interests of potential difficulties in the availability and pricing of car hire during the peak summer period.

I understand that a number of events have brought about the contraction in the car hire fleet. Traditionally, car rental companies bought new cars from dealers. They required the dealer to agree a price at which he or she would buy the car back at a later date. This facilitated dealers and car rental companies to secure credit to make their purchases. Falling prices in the second-hand car market and overcrowded forecourts in 2008 meant that dealers made significant losses on the arrangement. I understand that, following that experience, dealers are no longer prepared to enter such agreements and, therefore, are supplying fewer cars to the rental industry. I have been advised that the problem is compounded by the levels of credit available in the economy and the trend by domestic motorists towards smaller, more carbon-efficient cars and away from the larger, automatic transmission cars more popular with many overseas visitors.

My officials and representatives of the tourism agencies have been in ongoing discussions with the tourism industry to help identify solutions that will ameliorate potential difficulties in 2010. I am open to considering any proposals that the industry may now wish to put forward in the light of the outcome of the debate on tax-based solutions during the passage through the House of the Finance Bill. It may well be that the existing car hire business model which is dependent on a high turnover of new car sales is no longer appropriate in the current market and will have to adapt to changed circumstances.

Accordingly, I would hope that the wider market would respond to the commercial opportunities arising. I would also be concerned that the car hire sector would exercise restraint in any scope for car hire rate increases arising from potential shortages, on the basis of the medium to longer-term damage that this would have on Irish tourism and, indeed, their own businesses.

Olivia Mitchell (Dublin South, Fine Gael)
Link to this: Individually | In context

I wish the Minister well on her first questions here in her new Ministry.

I realise that she is at least partly familiar with this problem, which has arisen, I suppose, as a result of a treble whammy - the scrappage scheme, the general recession and the lack of credit in the economy. She stated she would like the industry to refrain from putting up prices. The reality is most of them will be put out of business. At this stage it is a question not of putting up prices, but of trying to stay in business.

The impact of this is catastrophic in that there will be a maximum of between 10,000 and 12,500 cars available when at least 20,000 are required. Already cancellations of holidays are resulting, particularly from the American market. Obviously, Americans come for longer than a weekend in most cases and approximately 45% of them hire a car. Of those, the vast majority need automatic transmission cars, the shortage of which is even greater. If we are to lose that kind of business, it will have a significant impact throughout the country.

The other area that will really suffer is the bed and breakfast accommodation business, which is already suffering badly and 80% of whose customers hire a car. It will have a considerable impact right around the country, not so much in the cities but further afield.

According to conservative estimates of the impact of this, 1,500 jobs will be lost to the industry, €28 million will be lost in Government revenue and more than €120 million will be lost in revenue to the industry.

The Minister stated that the industry should not overcharge, and that is good advice assuming they can stay in business. However, the Minister for Finance suggested that rather than change the general taxation system or grant exceptions in the general area of taxation, a solution could be found in a direct subsidy from Deputy Hanafin's Department. I do not know whether he has communicated this to the Minister, but I wonder if she has any plans in this regard. If she has such plans, now is the time to announce them given that the season started effectively on St. Patrick's Day and Easter is approaching. If the Minister has plans to give a subsidy that would encourage the motor industry to provide cars at a reasonable price to the car rental industry, now is the time to announce them.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

I thank Deputy Mitchell for her good wishes. We share the same interest in this area of tourism, culture and sport, and I look forward to working with this Department.

There are a number of issues in this regard. I accept that there is a potential problem here for the tourist industry generally. However, the model that the car hire industry has been using has always insisted on new cars. The car hire industry will raise arguments about warranties, guarantees, etc., but perhaps it should be looking to include good-quality second-hand cars as well because there are thousands of them on the forecourts of the garages, and there may be potential in that area. There may also be potential for the car hire industry to use cars with lower CO2 emissions because these are obviously cheaper in VRT terms, and perhaps it could benefit from that.

In looking at the costs comparable to other capital cities, so far this month Dublin would seem to be comparable with major cities. Certainly, coming into the summer the prices on offer are comparable, but already we are seeing that August will be more expensive in Ireland than elsewhere. That is not acceptable because that will even damage the tourist industry that we have, notwithstanding that other people might be impacted about there not being a sufficient number of cars.

A subsidy scheme was introduced a number of years ago and it was a direct handout to the car industry. If we were to do that now, it would be money that would come from the tourism budget. It would come directly from other projects because no extra funding is available. It would be questionable as to whether it would conflict with EU state-aid rules because one would be subsidising directly, not merely to a particular industry but to a very limited one because four companies control 80% of the market.

There are issues surrounding it. I expect the tourist industry to make proposals to me as to what they see might be the solution, and I would be happy to engage with them on their ideas.

Olivia Mitchell (Dublin South, Fine Gael)
Link to this: Individually | In context

I realise there is no easy solution and no matter what the Minister does, it will cost money. It seems to me this is not the year to have the treble whammy, certainly not to withdraw an advantage that the industry had for the same reason, lack of supply, since the early 1990s.

I accept what the Minister stated about automatic transmission and lower emission cars. The trouble is that the Americans, by and large, can only drive automatic transmission cars which produce high emissions and the reality is that is the market we are going after. We are spending hundreds of thousands of euro on marketing in the American market, and it is throwing good money after bad if they then cannot drive when they get here because most of them will not come if they cannot drive.

The Minister is incorrect in stating cars will only get dearer in August; they are dearer now. If one compares car hire in Ireland and in Scotland, for instance, which is a comparable market and which is going after much the same kind of visitor, in Scotland they are up to 100% cheaper in some cases. It is not true to state that the shortage is not already hitting.

The Minister stated she will speak to the industry. What the industry will tell her is that if there is one action she could take, it is to reinstate the vehicle registration tax subsidy which has been withdrawn in the worst possible year to do so.

On the Minister's point about using second-hand cars, the reality is that we must maintain standards here. She knows if she went abroad she would get a new car. If one goes to any other country in Europe, one gets a new car rather than a second-hand car. If one starts going down that road of hiring second-hand cars, we can forget the tourist industry.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

A good quality second-hand relatively new car - I do not refer to one that is five or ten years old - would be better than no car at all if it is offered at a good rate.

Olivia Mitchell (Dublin South, Fine Gael)
Link to this: Individually | In context

It might not be, given the reputational damage.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

When I spoke of the survey of the costs, it was comparing capital cities. Differences will be found in price when one compares the west with parts of Scotland. Regarding the subsidies introduced several years ago, in 1992 the average payment was approximately €900 but gave only 1,260 cars extra. Even the whole value of the subsidy scheme is questionable. I am looking forward to receiving the report from the tourism industry and will be happy to engage with it on solutions it believes are applicable.

Mary Upton (Dublin South Central, Labour)
Link to this: Individually | In context

Question 67: To ask the Minister for Arts, Sport and Tourism if a renewal implementation group has been established to monitor the progress on implementing the recommendations included in the report of the tourism renewal group; the members of the said body; the number of times it has met; and if she will make a statement on the matter. [14068/10]

Mary Hanafin (Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

The report of the tourism renewal group, published in October 2009, set out the tourism sector's contribution to Ireland's economic and social development and its prospects in a changed world economy. It made recommendations in the form of a framework for action for tourism survival, recovery and growth from 2009 to 2013. This framework contains five survival actions to minimise the impact of current challenges and nine recovery actions to set tourism back on a growth path as the world economy recovers.

The renewal group also proposed that, given the progress made on implementing the actions set out in the tourism development strategy, New Horizons, a broadly similar approach should be adopted to the implementation of its recommendations including the establishment of a renewal implementation group.

In advance of formal mechanisms or specific implementation arrangements, departmental officials have been working hard to progress the recommended actions and measures. The focus initially has been on the survival actions which are being pursued with the tourism agencies and other relevant Departments and bodies.

My Department's priority has been on achieving progress on the framework rather than on formal mechanisms or processes. For example, building on the renewal group's framework for action, along with the Government's wider strategy for economic renewal, the 2010 budget recognised the tourism sector as a critical and labour-intensive sector for which it provided an increase in the overall tourism services budget. This included maintaining levels of investment in overseas marketing, as well as sustaining investment in tourism product through a significantly increased capital allocation. Budget 2010 also introduced further measures, both cross-cutting and tourism-specific, to support the sector and to help it recover.

Fáilte Ireland and Tourism Ireland have built in the relevant renewal group recommendations to their business and marketing plans for 2010. Departmental officials are also working with a range of other organisations to develop opportunities to focus resources, to achieve common objectives and to maximise the impact on tourism.

Notwithstanding that a formal renewal implementation group has not been established to date, good progress has been made on implementing the group's recommendations. Drawing on its report, and complemented by general supports for enterprise, the Department is identifying the right measures and working with other Departments and the tourism agencies to drive their delivery. The objective is to position the tourism sector for recovery and growth as the Irish and global economies get back on track. I am considering what mechanisms may best ensure continued good progress on establishing the framework for recovery and growth. I expect to make an announcement in that regard in the coming weeks, following consultation with appropriate interests.

Mary Upton (Dublin South Central, Labour)
Link to this: Individually | In context

I wish the Minister well in her new brief and look forward to working with her.

I am surprised the implementation group has not yet been established. We are only too well aware that the signals for this year, just like last year, are not good for the tourism industry. The report of the tourism renewal group, published in September 2009, recommended an implementation group of no more than four members with an independent chair be established for an initial period until the end of 2010. We are a third of a way through the year but an implementation group is still not in place.

I accept bits and pieces of the recommendations are being implemented by various agencies but that is the very problem - it is piecemeal. As well as that, these are survival not just recovery actions. The second action, the abolition of the air travel tax has not been introduced. Just yesterday, the Aer Lingus chief executive, Christoph Mueller, spoke again of its significance to the tourism industry.

When will the renewal implementation group be set up? Who will be its members, who will chair it and when can we expect real action from it?

Mary Hanafin (Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

I thank Deputy Upton for her good wishes and I look forward to working with her.

The real point is when are we going to implement the recommendations set out in the survival and the recovery actions. As I outlined earlier, some have been already implemented by the important agencies, such as Fáilte Ireland and Tourism Ireland, which have the responsibility for delivering them.

Some of the recommendations, however, are dependent on other Departments. The air tax issue, for example, falls under the remit of the Department of Finance. As was debated last week on Private Member's business, from a tourism perspective one could argue it may be damaging to the sector. Yet from an overall Government policy and the Department of Finance's view, it is seen as bringing in €125 million. It is difficult to know from what source a similar amount would come if the tax were dropped.

At this stage I have not decided if we need an implementation group, who should be on it or how it should be done. I am anxious to press on with the recommendations. If having a group will ensure that will happen more effectively, then I am open to considering its establishment. I certainly will be taking a lead role in driving these suggestions.

Mary Upton (Dublin South Central, Labour)
Link to this: Individually | In context

It is a waste of public money when a report is commissioned but no one wants to take on board its recommendations. It flies in the face of common sense. The group consisted of experts under the chairmanship of Maurice Pratt which came up with two sets of action - survival and recovery. The former term concerns me as it implies there is a need for the industry's resuscitation. If it is to survive, then these actions need to be implemented.

I accept some agencies have taken on board some of them. Is tourism a regular agenda item at North-South Ministerial Council meetings?

Mary Hanafin (Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

Tourism is an essential part of North-South co-operation which is why we are able to market Ireland as the island of Ireland. My ministerial counterpart in the North, Arlene Foster, has a keen interest in this and I look forward to working with her. I note Aosdána will hold its first meeting in Northern Ireland soon. There is great potential for further co-operation on a North-South basis.

The group recommended the need to re-affirm the value of tourism. If ever a name-change re-affirmed the value of tourism, it is the change to the Department's name with tourism first. It might seem to be semantics to some but it has genuinely re-affirmed the importance of the tourism industry to the economy and affirmed the work of the people on the ground. From a conference at which I spoke this morning, Knowing and Growing North America, and from meeting the Irish Tour Operators Association last Thursday, we are seen to be working on some of the actions recommended by the tourism renewal group.