Martin Heydon (Kildare South, Fine Gael)
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Ireland is recognised as a world leader in the horse racing and horse breeding industry. The industry employs in excess of 17,000 people around the country, particularly in rural areas where other employment prospects are scarce. I know this because approximately 4,000 people are employed in the industry in my own county of Kildare.

The bloodstock industry is worth over €l billion to the Irish economy. It has the potential to maintain and create more jobs if the proper structures and funding are in place to allow it to develop and grow. Ireland is the fourth largest producer of thoroughbreds in the world, producing 40% of the EU output, and 11% of the world total. Irish horses are exported to more than 35 countries around the world with a total value of over €150 million last year.

The industry has for many years been an important source of high value foreign direct investment as many high net-worth individuals are attracted here by our top class young horses. Our position as world leader should not be taken for granted and it will not be maintained without ongoing development and investment. We are open to challenge as a world leader. Many of our competitors are investing in their industries and providing facilities, prize money and infrastructure in order to attract the top horse breeders and owners to their shores. If we cannot match them and continue to breed top class race horses in this country we will lose our leading industry position with a resultant loss for the economy in terms of jobs and economic activity.

The investment by the French authorities in their bloodstock industry over the recent years in particular, illustrates the need never to take for granted our position as a world leader in the industry. The improved French prize money system and breeder initiatives have attracted an increased number of foreign owners to France.

There has been an increase in the number of top stallions in England and some of our top stallions have gone to France. Elusive City is an example of one stallion who has been lost from the Irish National Stud to stand in France.

A large number of mares come to Ireland each year to be covered by our top stallions. It is the practice to house these mares in small yards all over the country. This brings significant income to many local economies. If we do not retain our top stallions, we will lose those mares and that income.

To retain its standing at the top of the table, the Irish bloodstock industry needs a secure guaranteed funding stream allowing it to plan for its future and to make investment where required. Ours is one of the few horse racing industries in the world that does not have its own guaranteed funding model. Currently, the industry relies on an annual allocation from the Government through the horse and greyhound fund. The lack of a dedicated secure funding stream is a precarious position, particularly when budgets are tight. This is a problem for both the industry and the Exchequer and a solution needs to be found to help both. Exchequer funding from betting tax has fallen.

The recently produced Indecon report showed that in 1991 the Exchequer collected €38.5 million in betting duty. By 2001, this had increased to €68 million, but in 2011 only €27 million was collected. This creates a funding shortfall for the industry which has to be met from already-scarce Government funds. This is not sustainable in our current budgetary environment.

The industry does not want, and never wanted, to be reliant on an annual handout from the Government. In light of national financial circumstances and facing into further austerity budgets, the long-term goal of the bloodstock industry is to return to circumstances in which it can survive without the direct support of the Exchequer.

While moves to broaden the tax base on betting are essential, improvements in commercial activity by the racing and breeding industries are also required. I welcome the establishment of the joint HRI-Turf Club implementation task force and its goal of achieving significant efficiencies, as outlined in the Indecon report.

Although Ireland is one of the world leaders in horse racing and breeding, I raise this topic because, if we are not careful and do not have an adequately funded, properly structured multi-annual budget, at a time when we are being targeted by other leading countries, we could be passed out in the final furlong.

Shane McEntee (Meath East, Fine Gael)
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I am responding on behalf of the Minister for Agriculture, Food and the Marine. It is crucial that this matter be raised at this time because, as Deputy Heydon stated, the Government has a role in providing annual funding. The objective is to secure the 16,000 jobs involved in the racing industry. It would be nice to be able to say we will allocate so much for the next five years but that is not how it will happen. We will just have to fight for funding on a year-by-year basis.

The Deputy referred to the betting tax revenue of eight or nine years ago. There is much more betting in the State today, yet we are receiving half the tax revenue. We are trying to remedy that. I hope that by the end of next year, the results of our efforts will be evident.

The bloodstock industry is significant to this country. It is estimated to underpin 17,350 jobs and almost €1 billion in economic output. Exports, to 35 countries, were worth some €157 million in 2011.

Horse Racing Ireland, HRI, a commercial State body, was established under the Horse and Greyhound Racing Act 2001, which dissolved the Irish Horseracing Authority and extended the Irish Horseracing Industry Act 1994. HRI is charged with the overall administration, promotion and development of the industry with a funding mechanism established under statute.

The horse and greyhound racing fund was established under section 12(1) of the Horse and Greyhound Racing Act 2001 for the purpose of giving support to the horse and greyhound racing industries. In the period 2001 to 2012, a total of €786.75 million has been paid from the fund to the horse and greyhound racing industries in accordance with the provisions of the Act. Moneys are paid out of the fund in the ratio of 80% to HRI and 20% to Bord na gCon, as specified in section 12(6) of the Act. The total paid from the fund to HRI in the period 2001 to 2012 amounts to €629.4 million. State funding provided through the fund is pivotal to the development of the horse and greyhound racing industries.

The initial funding model for the horse and greyhound racing fund provided that the fund would each year be financed by an amount equal to the revenue from excise duty on off-course betting in the preceding year or the year 2000, increased by reference to the consumer price index, whichever was greater. This formula applied for the years 2001 to 2008 and was abandoned in 2009. The approach employed since 2009 has been for the Minister with responsibility for horse racing legislation to decide on the amount to be provided to the horse and greyhound racing fund, subject to the approval of both Houses of the Oireachtas.

At the outset, in 2001, the fund was financed entirely in line with the proceeds of betting duty, amounting to €58.9 million. However, because of the decrease in the duty collected on betting and the migration of betting to online tax-free platforms, an increasing amount of Exchequer support was required. The Exchequer contribution reached a peak of €39.9 million in 2008 and decreased to €29.3 million in 2012.

Given the importance of the horse racing industry and the challenges it currently faces, the Minister, Deputy Coveney, commissioned Indecon, following a public tender earlier this year, to conduct an independent review of certain aspects of the horse racing industry. Topics covered included, inter alia, legislation, governance structures, funding and management of the industry and the scope for streamlining the functions assigned under legislation to Horse Racing Ireland and to the Turf Club.

In its report, Indecon highlighted the importance and potential of the horse racing industry and affirmed that, with appropriate policies and structures in place, the sector can contribute significantly to the economic and social development of the country and the expansion of employment.

The Minister for Finance has published the Betting (Amendment) Bill, which, when enacted and implemented, will increase the yield to the Exchequer from betting duty. The Minister for Agriculture, Food and the Marine, Deputy Coveney, made clear his intention to address the other recommendations contained in the Indecon report. In this context, he intends to bring forward in the new year the necessary legislative provisions for the changes in the board and statutory committees of HRI. He also requested HRI and the Turf Club to establish a streamlining task force with a view to achieving the savings in administration as identified by Indecon. He is aware that this group has since been established and considers completion of this exercise an important prerequisite to future funding decisions.

Additional information not given on the floor of the House.

Deputies will be aware that, despite the current very serious budgetary circumstances and in recognition of the importance and potential of the horse racing industry, the allocation to the horse and greyhound fund was not subject to any significant reduction last year. The allocation for next year will be decided in the context of budgetary decisions. While the need for a secure funding model for the sector is recognised, the current budgetary situation places considerable constraints on commitments which can be made at this time. In this context, it is also important that the sector seek to explore maximising commercial funding possibilities, as recommended by Indecon. For the Government's part it will continue to pay particular attention to the development of the sector and the range of measures in train will ensure it can remain a flagship industry for our country.

Martin Heydon (Kildare South, Fine Gael)
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I thank the Minister of State for his reply. Having worked for four years in the racing industry and having grown up beside a two-stallion stud farm, I understand the value of the industry to small rural economies. I also understand the value and importance of the funding currently made available through the horse and greyhound racing fund. At times, we almost regard it as a cliché that Ireland is a world leader in the racing industry. Racing is an industry although many regard it as a sport. If one considers the figures and the number employed throughout the country, one realises the industry is doing extremely well to hold on despite the cuts. I accept the Minister did very well last year in not cutting funding for the industry too much but the cuts since 2007 and 2008 have been significant and have had an impact. That the industry is trying to hold on is a testament to the extent of the cuts.

The recession provides us with an opportunity to fix many of the problems in the country but, when one thinks of solutions, one concludes it is not a question of reinventing the wheel or finding something new and golden but of investing in our indigenous industries and what we are good at. The horse racing industry is an example. We have the expertise, climate, correct soil type and natural raw material in the horses. It is important to have the foresight not to keep cutting funding at a time when it is needed more than ever.

The Curragh Racecourse really needs to be upgraded. It is where we showcase our top horses. Its facilities do not reflect the standard of the horses or the standard that the industry stars portray for us around the world, thereby doing our reputation no service. We need to have the foresight to make the required investment.

In 1982, a tax of 20% was levied on bets. This was reduced to 10% by the then Minister for Finance, Mr. Alan Dukes. Subsequent reductions saw the tax fall to 2% and then 1%. In this same timeframe, most other Irish taxes increased. This needs to be borne in mind.

Shane McEntee (Meath East, Fine Gael)
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I understand where the Deputy is coming from. What he proposes is crucial because everybody knows there is an attack on the industry, particularly from France and other countries that want to take not only our horses but also our pride in the industry. While I cannot say what the budget will be, we are committed to continuing to fund the industry. When the recommendations in the report have been implemented by the Minister, Deputy Coveney, funding will be made available from sources that should never have been taken away from the industry. I speak for myself in saying the reduction of the betting tax to 1% was crazy. Although I was 16 or 17 at the time, and was not supposed to be betting, I remember that one always paid 5 p in the pound and never minded as long as one won. What was done was stupid, irrespective of the Government in power and even if our own people were involved. It was an awful mistake and we must return to the tax regime that existed theretofore.