Barry Cowen (Laois-Offaly, Fianna Fail)
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Question 6: To ask the Minister for Transport; Tourism and Sport if he has carried out any studies into the effect of the 9% VAT reduction, the halving of the lower rate of PRSI and also the effect of the growth incentive scheme on tourism numbers; and if he will make a statement on the matter. [26590/11]

Pearse Doherty (Donegal South West, Sinn Fein)
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Question 14: To ask the Minister for Transport; Tourism and Sport the extent to which the recent jobs initiative impacted on visitor numbers to Ireland in the July to September period; and if he will make a statement on the matter. [26497/11]

Bernard Durkan (Kildare North, Fine Gael)
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Question 217: To ask the Minister for Transport; Tourism and Sport the extent to which the tourism sector has managed to prevail in the on-going economic climate; the degree to which the industry is likely to expand over the next five years; and if he will make a statement on the matter. [26799/11]

Leo Varadkar (Dublin West, Fine Gael)
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I propose to take Questions Nos. 6, 14 and 217 together.

The jobs initiative introduced a 9% VAT rate from 1 July on a range of services, including hotels and restaurants. The Government also halved employers' PRSI for those on modest wages. These measures are of considerable benefit to tourism businesses, lowering their cost base and allowing them to offer a more competitive product to tourists. The industry needs to play its part in passing on these cost reductions.

At this stage it is too early to assess the impact of these measures on either tourism numbers or on employment in the sector. With regard to tourism numbers, we will need to consider the figures on an annual basis to assess properly the impact of the initiative. With regard to the impact of these measures on sustaining employment in the tourism sector, the most recent figures from the CSO relate only to Quarter 2 of 2011 so do not measure the impact of the jobs initiative and it will be later this year or early next year before we can properly form a view on the effect of these measures on employment.

Based on these and other relevant figures, the VAT cut will be reviewed before the end of 2012 with a view to deciding if it should be continued. Although the CSO figures are not yet available, it should be noted that a recent survey by the Restaurant Association of Ireland showed that in July and August 490 new jobs were created in the sector and attributed this in part of the jobs initiative measures and to the change in joint labour committees, JLCs.

The growth incentive scheme, essentially a rebate scheme for airlines in return for passenger growth, is one of the three elements of an aviation package aimed at increasing tourist numbers. The package also includes a commitment to abolish the travel tax, subject to agreement on the reinstatement of routes and the restoration of lost capacity, and a more targeted co-operative marketing of new routes from key source tourism markets. The impact of the overall package can be measured only when data for the full year is available. The abolition of the travel tax has been deferred pending a further review of the situation next spring. However, I am pleased to report that overseas tourism numbers increased by 11% for the year to the end of July in comparison to the same period last year, and I have every confidence the tourism industry will exceed the targets set for this year.

Robert Troy (Longford-Westmeath, Fianna Fail)
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The Minister stated it is too early to state what major effect this has had and I take this on board. How is the Minister monitoring this to ensure the savings are passed on? I accept a large majority of people in the hospitality sector are passing them on, but some are not.

The Minister also mentioned the operation of the growth incentive scheme. What has been the response of the airlines to this scheme?

Leo Varadkar (Dublin West, Fine Gael)
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The measures only commenced in July. Therefore, it will be a few months before we have the statistics from July, August and September. That will give us a chance to judge the effect of them then. The measures I am most interested in are jobs in the sectors concerned and tourist numbers. I am much more interested in the reduction being passed on in terms of new jobs being created than, necessarily, it being passed on directly to consumers. It was a jobs initiative after all. I am pleased to see that at least in the restaurant sector employment appears to have increased. We do not yet know about the hotel sector but we will have a good idea of that when the quarterly national household survey figures come out in a few months time.

On the airlines, the response was not what we had expected. Airlines welcomed the proposal to abolish the travel tax but were not prepared to commit to do anything unless other measures were introduced, including reductions in airport charges, which we could not manage. I will announce agreements in the next few weeks on co-operative marketing. Essentially, the money that we are continuing to draw from the travel tax will be invested in co-operative marketing with airlines and tour operators. I will announce the details of that when it is finalised in a few weeks time.

Sandra McLellan (Cork East, Sinn Fein)
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The initiative was largely welcomed by the tourism and hospitality sector. I am interested to see how many full-time jobs it will create. Like Deputy Troy, I would like to know if there is any indication of the percentage of businesses that have failed to pass on the savings. I know of a few myself, as I am sure everyone else does. Does the Government have any comeback in those instances or is it just a matter for the markets to deal with?

Leo Varadkar (Dublin West, Fine Gael)
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I do not have figures on how many of the industry players have passed on the reductions. They are required to pass it on in law in the sense that the rate is not 13.5% anymore - it is 9% - but one cannot stop them increasing their prices by 4.5% to make up the difference. There are many factors involved in price. Many say, correctly, that energy prices have gone up significantly and had it not been for this measure they would have had to increase their prices but instead they have frozen them. I am happy that the Irish Hotels Federation and the Restaurants Association of Ireland have called on their members to pass on the VAT reduction to consumers. When I travel around the country, pretty much every hotel I stay in has a little sign from the Irish Hotels Federation saying it has passed on the VAT reduction. I am not sure whether that is there for my benefit.

Robert Troy (Longford-Westmeath, Fianna Fail)
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They know the Minister is coming.

Leo Varadkar (Dublin West, Fine Gael)
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I will check out the Ferrycarrig Hotel in Wexford tonight and we will find out. The major objective of the Government in doing it was to sustain and create jobs in the sector, not necessarily to make it 4% cheaper to go to a restaurant or stay in a hotel.