John Paul Phelan (Fine Gael)

I welcome the opportunity to debate the issue of competitiveness in general, with specific reference to the Irish tourism industry. I support this motion in the name of the Independent Senators. I wish to cover a number of areas but previous speakers referred to my own neck of the woods, Kilkenny city, and its situation as highlighted on the national airwaves over the past number of weeks, particularly on "Liveline" on Radio 1. I reaffirm that the booking of hotels for single nights in Kilkenny is a major difficulty at weekend periods. I was surprised to read in some of the local media in recent weeks that a number of representatives of the city's hotel federation are expressing their opinion that there are enough beds to accommodate the visitors that wish to visit at any time of the year. From the examples that have been given here and in different local and national media, this is clearly not the case and there must be a significant expansion in the number of beds. Kilkenny is not unique but I want to put my personal views on the subject on record.

I am somewhat disappointed by the nature of the amendment. As an Opposition speaker, I would prefer a much stronger tone in the motion tabled by the Independent Senators. Over the course of recent years I have raised this issue at every opportunity in the House in my capacity as spokesperson on finance and, previously, as spokesperson on tourism for Fine Gael. I am disappointed the Government is seeking to defeat this motion, which clearly flies in the face of what most of the Government Senators have said tonight and what the Government has said in its own programme for Government, wherein it has acknowledged serious issues exist in regard to competitiveness. However, it has taken little if any action to reverse the backward steps we have been taking in the past few years.

The tourism sector is important to this country as there are over 140,000 people employed in the industry. Opposition Senators who have outlined the situations that have arisen and the cost factors that play havoc with the tourism sector are correct. I was amused and surprised by the tone of Senator Morrissey's contribution on the minimum wage. I welcomed the introduction of the minimum wage, as it was right to do so. Virtually all of European countries measured in the report referred to by Senator Quinn have minimum wages. Why do the Government and Government Senators say we have high costs in tourism because we have a minimum wage and that other countries have minimum wages that are lower than here? Why is the minimum wage at its current level? The reason is the cost of living. The minimum wage is currently appropriate but the Government is not doing anything to tackle the underlying causes of the high cost of living in this country. Everybody is affected by the high cost of living, whether tourists entering Ireland or Irish people who want to spend some time visiting different parts of the country.

This is a cyclical argument. If the overall level of wages increases, the costs within the economy will increase also. A halt must be called at some point, which is the role of Government. Neither the Government, through the remarks of the Minister of State, nor Government Senators have said this is the time to think seriously about this problem which has emerged starkly in the past few years. Ireland has gone from fourth in 2000 to 30th in 2004 in the World Economic Forum's global competitiveness report. I do not know our exact ranking now but I do not think it has improved. Why was there such a dramatic downturn in our competitiveness in such a relatively brief period of time? From the perspective of the Government, there does not seem to be any clear thinking as to why this problem has emerged.

The National Competitiveness Council has said that Irish prices rose by 22% more than those in other EU countries in the years 1999 to 2003. It is not good enough to suggest, as Senator Morrissey and others have done, that these are the problems of success. The economy had improved significantly in those few years but these are serious issues that have not been addressed by the Government in recent times. Some action must be taken sooner than the budget announcement at the end of this year.

Ireland suffers more than most other European countries because we have the second highest VAT rate in the euro zone for hotel accommodation and eating out. This is why such costs are comparatively high, a point referred to by other Senators. However, the Government has not taken any of the opportunities presented to it by Finance Bills and budgets of recent years to act. I regret that the Government has not done so but hope it will reverse its engines sooner rather than later. We should not need to wait until the next budget. I thank Senator Quinn and the other Independent Senators for raising this important issue. We should have debates on competitiveness and the issues surrounding it more often. I am glad to have availed of the opportunity this evening.