Seanad debates
Wednesday, 18 May 2005
Tourism Industry: Motion.
4:00 pm
Feargal Quinn (Independent)
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I move:
That Seanad Éireann:
—notes with alarm the publication in the past week of the latest American Express Holiday Cost of Living Index which revealed that Ireland now ranks second only to Norway as the most expensive holiday destination in Europe;
—while conscious of the present low level of access fares to this country;
— the constant efforts of the tourism industry to offer good value to our visitors;
—records its concern at the continuing erosion of national competitiveness that these figures reflect, especially their possible knock-on effect on Ireland's attractiveness as an investment destination and as a source of export earnings.
The findings by the American Express survey are bad enough but my real concern arises from the absence of comment in the newspapers. When a heavyweight international survey found, in a report published last week, Ireland to be the second most expensive holiday destination in the world nobody batted an eyelid. The newspaper that carried the story referred to the comment of the Minister for Arts, Sport and Tourism the preceding week to the effect that rip-off Ireland was a myth. At the time the cost of Irish holidays had risen by 26% and the cost of holidays in the United States dropped by 20%.
I am not suggesting the Government can solve these problems. That is largely due to the value of the dollar and so on. I was jolted, however, by the lack of concern or interest. I am also disappointed today by the Government amendment to the motion.
I grew up in the tourism business. My father ran the Red Island Holiday Camp in Skerries. That is a great way for anybody in business to grow up.
Batt O'Keeffe (Cork South Central, Fianna Fail)
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I visited there last week.
Feargal Quinn (Independent)
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Growing up in a holiday camp was a great start from a business point of view and would provide good lessons for anybody regardless of whether he or she is involved in tourism. Every week 500 guests travelled by boat or plane, from England, and we met them with buses. The deal my father made with them was that it was an all-in holiday, everything was included. The guests paid on the day they arrived and it would have been a breach of contract to try to take more money from them.
That is an important message for every business. It is not understood in Irish terms or by tourism in Ireland as it should be. I see no sign of it being understood at Government level. It is essential if we are to succeed that we encourage our guests to return. My father measured success by the number of guests who came to him at the end of the week to say they had a good time and were returning the following year. Bringing the customers back is the basis of every business.
Statistically, Ireland is not doing too badly in that regard. A reasonable number of people come to Ireland but figures released today show a decline in the number of visitors to the regions. Many people have been critical of the numbers coming to Dublin for stag night weekends over recent years. They are not being drip-fed into the regions. Today's figures show that Dublin is doing well but the rest of the country is not. One of the benefits of tourism is that it can be spread throughout the country.
Price is not the only factor. The experience is important, whether with an airline, in a supermarket or a hotel. One sometimes pays a great deal more to stay in a high grade hotel than in another hotel. Those messages must be promoted. That is why I have put down this motion.
I was in Brazil recently visiting supermarkets and was impressed to see many men doing the shopping in a very up-market store. I mentioned this to my guide who explained that these were the chauffeurs doing the shopping for the ladies of the houses. It is a reminder that we do not look at price alone but at the whole experience.
I look forward to an open and wide-ranging debate on this subject. I quoted the American Express survey to underline a fact which does not need underlining, namely, that Ireland's high prices are no longer our secret. When this issue was highlighted last year there was what I consider to be an unworthy ministerial response. I am not sure I have heard that this year. It was suggested that anybody drawing attention to the problem was somehow or other letting the side down. This survey, and the wide international coverage it was given last week, should put an end to the notion that we can keep this little cat in the bag. The world knows what our visitors in recent years have been telling us over and again. Ireland is an expensive place in which to spend one's holidays.
The survey compared the cost of a tourist shopping basket of items in 12 different countries worldwide and found that Ireland was second only to Norway in price. It carried out two surveys, one including rent-a-car, and one without rent-a-car, but we are still the second most expensive country. The survey looked at the cost of 13 holiday expenses from the cost of having coffee, drinks and meals to the price tag on such holiday essentials as camera film, postcards and sun screen.The Irish shopping basket totalled over €211, virtually double the cost of the Italian one. It was €115 dearer than the lowest cost country, Thailand, which I can understand, which added up to only €96. Some examples from the survey show the overall trend. For example, a tube of factor 15 sun screen sets visitors in Ireland back €15.08 — higher than anywhere else in the world — whereas in South Africa it costs only €1.69. Camera film is another item that is expensive here with a price tag of €6.23 whereas in South Africa it costs only €1. A snack lunch for four, including drinks, costs €62 here, more than €40 more expensive than in Thailand where it costs €21.
Separate from the holiday shopping basket, the survey also looked at the cost of car hire and how it varied throughout the world. Ireland came third highest at €150 for three days car hire. This compares with only €54 in Spain. As I well know, comparing shopping baskets can often be misleading. I have often argued this issue because every individual shopper buys a different basket of goods.
This comparison has credibility because it focuses on the relatively narrow range of items bought by holidaymakers. It is worth pointing out it did not include the cost of getting here. One of the few bright spots in the picture is that the cost of getting here is relatively low because of cheaper air fares. On the other hand, those cheap air fares are available to most places that holidaymakers might choose. Therefore, there is no way we can argue that low access costs give us a competitive advantage.
The reason I tabled this motion is that it is high time we faced up to the wider implications of the fact that Ireland has become a high cost country. This survey is not the only one of its kind to draw the same picture. It is clear to everybody that Ireland is a high cost place for everyone, not just holidaymakers. I shall give an example. Last year an international survey of the cost of living in 114 capital cities ranked Dublin 14th in the world. Another in The Economist magazine recently confirmed that Dublin is more expensive than New York. It is not only our tourism business that is at risk, important though that may be, a high cost Ireland affects every aspect of our economic future. It affects our ability to attract incoming investment and our ability to produce goods and services for export to the rest of the world at competitive prices. The level of our cost base is, therefore, an important factor in our overall economic future.
What can we do about this? A response should have two prongs. We should take the issue of costs more seriously. I do not believe the Government is doing that. We should give priority to keeping our costs from getting further and further out of reach of our competitors. We should not simply acknowledge that Ireland is a high cost country and a high cost economy and wash our hands of the matter.
We are a high cost country and the reality is that we will remain one. It is a one-way street and we do not have an option to travel in any other direction. However, at the same time what matters a great deal is by how much we are more expensive than other places. If we can keep our costs within reach of the others that is one thing, if the gap continues to get wider that is another issue. We have to keep vigilant about costs, even if it is no longer realistic to hope we can ever get back to a position where we can use our costs as a competitive advantage. We should try to hold our costs at the present rate.
The Government will tell us that today it announced a consumer strategy initiative. Clearly there is something we can do and I am sure some steps are being taken. The difference is that it is not just costs, it is innovation also and innovation does not come from looking at the costs issue on its own. The example we have often taken is that of open book costings. If one asked Aer Lingus ten or 15 years ago to look at its costs for going to London it would have said it could not reduce them. Yet, when a competitor comes in with innovative ideas the costs come tumbling down. It is not simply a question of asking whether these costs are legitimate and if it is fair to charge given prices. The Government's step today does not go anywhere near addressing this problem.
The other prong is that we realise the importance of increasing the value of what we deliver. If we can no longer be a low-cost country, and I do not think we can, we can still aim to be a high value country, in other words, we must seek to justify our prices in terms of the overall value that the customer gets. In the case of tourism, this means that we should aim at giving our visitors a holiday experience that exceeds anything they can get anywhere else. We need in our tourism product to create a "wow" factor. We need to offer holidays that will leave visitors impressed with the quality of what they get during their time with us. We need to send them away not only satisfied with their holidays but with, what we call in business, making them missionaries. They have to go out and talk to others. It is a much cheaper form of advertising than anything one can pay for by having tourists speak as missionaries when they recommend to others a place to visit.
My recommendations raise the bar very high but it is the only way we can carve out a secure future for our tourism industry. As long as we take a need-to-know attitude to what we offer our visitors we put at risk the whole future of the industry. If we do not set out to offer something that is very special, sooner or later our costs will catch up with us and cripple the industry. The need for this approach goes far wider than tourism.
In tabling this motion I was not just thinking about tourism. What is true of tourism applies to everything else we do. It applies particularly to what we offer our foreign companies who invest here. I am old enough to remember the days when IDA Ireland used to claim that Ireland was a low-cost place to come to, a good location with a cheap and willing labour force. Those days are long gone.
Mary WhiteFeargal Quinn (Independent)
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I think it did. I know the Senator has a link. I can remember the time when it said Ireland was a low-cost place in which to invest but those days are long gone. What we emphasise now is the education of our people and their ability to carry out high value tasks. Some people did that in the past also. What we have to remember is that anything we offer in these terms is offered by other countries.
I was in India last year and was very impressed by the education standards there. In my own company when we needed help in technology we had to go to India for it. What will happen when those in India and China say they have got the education that the Irish have and that their costs are a fraction of those in Ireland? We have got to challenge both of those areas and we have a long way to go. They will say they can deliver the same education but at a much lower level of cost. How can we survive in the light of that challenge? Increasingly, it is the challenge we will have to face and failure to do so will inevitably lead to the consequences outlined in the survey to which I referred.
I am concerned at the Government amendment. I thought the Government might table an amendment in which it would accept the first part of the motion and then go on to point out what is being done. The amendments proposes to delete the content of the motion, thereby appearing not to recognise the challenge. I hope I hear words that are different and that this does not become a confrontational issue because it is one on which we should all set our hearts on addressing.
Joe O'Toole (Independent)
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I second the motion and I thank my colleague, Senator Quinn, for tabling it. To reiterate some of the points he made, this afternoon I checked the American Express holiday cost of living index on Google. The first two pages that came up showed the Thailand tourist board and the Spanish tourist board, one claiming to be the cheapest in the world and the other claiming to be the cheapest in Europe. This is a marketing issue and confirms what Senator Quinn has said.
This is an important issue to debate. Neither Senator Quinn nor I have any problem with the amendment to the motion. I ask the Minister of State to consider adding the amendment as an addendum to the motion. I do not think Senator Quinn would have the slightest difficulty with that proposal. The motion and the amendment are not contradictory. I ask the Minister of State to accept the motion just as Senator Quinn and I can accept the amendment. The motion contains no criticism of the Government. I question the wisdom of putting down an amendment to this motion. I may be missing the point and the Minister of State will inform me if I am. I ask him to consider accepting the motion.
I wish to concentrate on the positive aspects. For the past two years, the Irish rate of inflation has been in the lower end of the European scale. There has been a very marginal levelling off of 1% or 2% over the course of the past two years.
The two biggest cost factors highlighted by the survey are car rental and a restaurant meal for two. The cost of car rental is related to insurance and illustrates and reinforces the importance of getting insurance costs in line. The insurance cost for car rental in Ireland is the reason for the exorbitant price and this should be examined. I am vice-president of the Personal Injuries Assessment Board and am glad to see some improvement taking place in that area. I hope more will follow and the House will be discussing the subject next month but it will be a slow process.
The other issue is that of restaurant prices. We cannot quibble with the report because we all know that a dinner for two in Ireland is more expensive than anywhere else in Europe. We should examine the reasons for this. I will illustrate the requirements which must be fulfilled by Irish restaurateurs.
I was sitting in this seat in the House 15 years ago when the regulations for the establishment of restaurants were introduced. Senator Ross and I were on the point of being thrown out of the House because we objected to them. We regarded them as making it impossible to open a restaurant. France is the next on the list to Ireland in terms of expense. I suggest that when Members are next in France they walk into a restaurant and count the number of doors and toilets, and inspect the kitchen. I know of a young man who opened a sandwich bar recently. It had seating for fewer than ten people. He did everything by the book and complied with all the health and safety regulations. The local authority had a problem with the toilets. He explained he had installed a toilet with wheelchair access but the local authority regulations called for the provision of a staff toilet. He was forced to use some of his kitchen space to install an unnecessary toilet for the never more than three members of staff who ever worked there. He then had two spanking new toilets in a place where people stay for a few minutes at a time.
I ask the Minister of State to consider the regulations which must be complied with in order to set up a restaurant and which are all about cost. There must be a certain number of doors between the kitchen, toilet and dining areas. These regulations do not apply in most of Europe and this is an issue we should consider. We can do something about the cost of restaurant meals and car hire.
I raised an issue recently and received a lot of nasty mail as a result but I will raise it again. When I travel in Europe I always price the basic nine or ten-inch pizza margarita because it is a good indicator, like the hamburger index. I bought one in a beautiful, sit-down restaurant last week in Ireland. It was the cheapest pizza I had eaten since I was in Italy about two years ago. It cost €6.75 in a nice restaurant which was brand new, with good food and the proper ambience. This may be a sign things are changing.
People are beginning to question the prices. I was in a pub last weekend where a woman in the company called for the barman to inquire the reason for the difference in the price of a pint between one round of drinks and the next. There was a reasonable explanation given. However, it is good to see people querying prices because in the past we were not used to asking about the price of goods. As we become better off as a nation, I think we are becoming more confident about questioning prices.
For the first time in 20 years, bed and breakfast houses are facing serious competition from hotels. The costs of hotel and bed and breakfast accommodation are being driven down. I know of a hotel owner who was concerned that the hotel was not achieving full occupancy, even though it is up to scratch. He spoke to the manager who explained that the surrounding guesthouses were full every night because they were charging prices 30% cheaper than the hotel. The owner said he wanted to see the cars parked outside the hotel every night and told the manager to do whatever was needed with the price and it happened overnight.
Ireland will never become an area noted for low prices. I raised with the IFA on a number of occasions the reason Irish lamb is cheaper in France than in Ireland. The IFA could do what it threatened to do about food prices.
I recently travelled by train from Bristol to Falmouth which is a three and a half hour trip, like the journey from Dublin to Cork, which cost over €80 return, £55 sterling one way and £56 return. The following week I took a return train journey from Rosslare to Dublin and it cost €24. Train travel is a lot cheaper in Ireland than in France or in the UK but it is cheaper in Spain and Italy than in Ireland. I have been a little disjointed in my contribution but this has been deliberate. I want the House to take a close look, as Senator Quinn requested, at the issue. Even though our prices are high, they are not high in every area. We should consider what is low and what is high and take action on high prices inasmuch as we can. We should sell Ireland in terms of quality and level of service.
I second the motion and I ask the Minister of State and the Government side to consider changing the amendment to an addendum to the motion.
Kieran Phelan (Fianna Fail)
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I move amendment No. 1:
"To delete all words after "Seanad Eireann" and substitute the following:
notes the continuing strong performance of Ireland as an international tourism destination and, while conscious of the competitiveness challenge facing the tourism industry here, notes with approval the Government's response to that challenge through the proposals for reform of general consumer protection arrangements and the implementation of the detailed two year action plan set out in the September 2003 report of the Tourism Policy Review Group entitled New Horizons for Irish Tourism: An Agenda for Action, incorporating a range of supporting initiatives and programmes on the part of the tourism State agencies."
I welcome the Minister of State to the House. I am delighted to speak on this important issue raised by Senators Quinn, O'Toole, Henry, Norris and Ross. We all have seen reports in the newspapers and on television about the significant variations in the price of accommodation, meals and other entertainment. At the weekend I read an article in one of the Sunday newspapers which stated that Ireland is the world's second most expensive place to visit. This is not a situation of which we as a country should be proud. We have all heard stories and seen for ourselves the extent to which prices have risen in many areas. Depending on the area, prices have risen, come down or spiralled out of control. In many cases the price increases are driven by greed and not by the need to meet wages and cover costs.
Thankfully the cost of travel by air to Ireland has fallen dramatically in recent years. This has resulted in more tourists coming to our shores for short breaks, many of them on weekend breaks. Much credit must be given to our national carrier, Aer Lingus, and Ryanair for the service they both provide by bringing so many tourists into the country. Shannon Airport recently received a huge boost with the introduction of new flights to Spain, Sweden, Italy, Belgium and France. It is predicted that this massive investment by Ryanair in the Shannon region will deliver 1.5 million extra passengers for the airport this year, bringing a huge boost to tourism and jobs in the mid-west and establishing Shannon as the low cost gateway to Ireland.
Likewise Cork Airport is booming and the announcement last week that two weekly transatlantic flights are to operate from Cork Airport is great news for the Cork region and a great vote of confidence in the airport. In 2003, 2.2 million passengers passed through Cork Airport, and I have no doubt that these new routes will add thousands of passengers. To the best of my knowledge the aircraft will fly between Cork Airport and John F. Kennedy Airport in New York, the busiest airport on the eastern US seaboard. This will be good for business as well as tourism and I hope that it will help to build further trade links between the Cork region and the US.
When the House debated the break-up of Aer Rianta and the establishment of independent airport authorities at Cork and Shannon some people said it was a bad idea. These two examples of the increase in routes from both Shannon and Cork prove that allowing these two airports to grow and develop their own business without having to report to a Dublin board will be positive.
Kieran Phelan (Fianna Fail)
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On another topic I wish to compliment some of our State agencies. Great credit must be given to the Office of Public Works for the manner in which it maintains many of the tourism attractions in the country. There are many aspects to tourism here in Ireland and much of it relates to internal tourism. I am pleased with the initiatives on which many of the regions throughout the country have embarked to attract Irish visitors for weekend breaks or for their summer holidays. We have all seen the advertisement in the newspapers, on television and radio, in magazines and even on billboards, inviting us to spend a hard earned break in various parts of the country. I am pleased to see this type of marketing and advertising, because as someone who was involved in the East Coast and Midlands Tourism, I know only to well the benefit of Irish visitors can bring to a region.
We can be proud of many of the initiatives the Government introduced around the country to give incentives to build holiday-homes, cottages and other tourist facilities. The previous Minister for Finance, Mr. McCreevy, was very forward thinking in some of the schemes he introduced. Senators will also be aware of the benefit of these tax incentives in ensuring the building of high quality accommodation across the country.
The announcement of the establishment of a new consumer agency to take action on prices is most welcome. This new watchdog must use its powers to the fullest possible extent to clamp down on soaring costs across the country. When fully operational, the agency will benefit both consumers here in Ireland and tourists. I am pleased this State agency will be handed statutory powers including the authority to close down businesses and impose on-the-spot fines on those who rip off consumers, including tourists.
Various studies have shown the areas of most concern to tourists coming to Ireland. It goes without saying that the main complaint is about the weather, about which we cannot do anything. However, we can be proactive and promote activities abroad that are not dependent on beautiful sunshine or calm clear days. I am encouraged that the Minister for Arts, Sports and Tourism, Deputy O'Donoghue, has allocated an indicative grant fund of €12 million to be divided between the Border midlands and western, and southern and eastern regions. This will see an increased investment in outdoor pursuits such as equestrian, cycling, walking, specialist outdoor activities, water-based tourism and health tourism.
It would be foolish for me to try to defend some of the costs that our tourists are faced with in Ireland. The American Express report is, and should be a huge wake-up call for all those involved in the tourism sector. The Government listened carefully to the concerns of many within the sector and ensured no increases in VAT or in excise duty on alcohol. Unfortunately, this freeze on the part of the Government was not matched by many in the industry.
Cost factors are undoubtedly a significant influence on Ireland's competitive position as a tourism destination. This has been identified as a key issue that needs to be addressed if we are to increase overseas tourism numbers. Fáilte Ireland is rolling out programmes to help individual tourism enterprises to better manage costs and also to benchmark performance against competition, both national and international. Initiatives such as this are most welcome and this work should continue. The focus is not so much on price as on value and my message is not so much about high prices as value for money for tourists.
We have to be real in our criticism of the tourism industry in Ireland. However, for many years Ireland has not been a cheap holiday destination. It has never been, nor does it intend to be, on a par with the cheap mass-market destinations such as the south of Spain, Greece or Turkey. However, Ireland was competitive in the 1990s. It has always been my view that if Ireland's tourism industry is to restore the competitiveness it enjoyed in the boom years, a multifaceted approach by both the private and public sectors is required. It is also worth pointing out that the strength of the euro and related weakness of the US dollar and sterling present additional challenges for domestic tourism in Ireland in terms of the perception of value for money. Unfortunately these exchange rate changes are out of our control.
People who take advantage of a special occasion or function to increase their prices undermine the efforts of State agencies to sell the country. These greedy individuals give our country and our fine tourism industry a very bad name and, in the words of my colleague Senator Leyden, they should be named and shamed.
Frank Feighan (Fine Gael)
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I welcome the Minister of State to the House. I support the motion that notes with alarm the publication of a notable American Express holiday cost of living index, which revealed that Ireland now ranks second only to Norway as the most expensive holiday destination in Europe. How times have changed. Only 15 or 20 years ago in the west of Ireland from where I come beside Lough Kee Forest Park, we were very used to Germans holidaying on the river Shannon and we took them for granted. We thought they had endless amounts of money. We also saw the American bus tours passing through the town. They used to stop off at the abbey and gave small tips. I had a newsagent shop selling Belleek pottery and small gifts. As a town with a Cistercian abbey and much history we had a booming tourism industry at the time.
However, in the past 15 years there has been a lack of investment in the Lough Kee Forest Park and Americans no longer seem to pass through the town. While people may say the country has a booming tourism industry, in those pockets, which used to have such an industry, nothing is now happening. This may be because we have become affluent and the Americans and Germans do not seem to have the money we apparently have or it may be because they are finding better value, which is what I believe. They are finding better value because we have failed to keep an eye on our costs.
Let us consider what is termed "Rip-off Ireland". Perhaps Senator Leyden highlighted it in his name and shame campaign. Fine Gael launched a website, www.ripoff.ie. While I take no pleasure in introducing a website in which people highlight being ripped off, the rip-off is evident. The Minister for Arts, Sport and Tourism, Deputy O'Donoghue, took issue with this campaign and said we should not be saying such things. It is not unpatriotic to point out areas where there is not good value. It does the country a service. A few weeks ago a delegation from North West Tourism appeared before the Oireachtas Joint Committee on Arts, Sport and Tourism, Community, Rural and Gaeltacht Affairs. The CEO dared to suggest we should not be highlighting this matter as it sends out the wrong message. However, the fact is that Ireland has become too expensive.
I agree that there are some positive aspects. Years ago we only had a few quality hotels and we now have many good hotels, which provide good value. However, the people being caught out are the bars, restaurants and small bed and breakfasts, which cannot compete on economies of scale. They have not increased their prices simply because they are out to make money, rather, they have increased them because rates and the cost of insurance and electricity have increased.
As Senator O'Toole pointed out, regulation has driven many out of business. There is one aspect I very much welcome that is also a major factor in smaller businesses, namely, the minimum wage. Smaller hotels that had a low cost base have now seen those costs go up and are passing them on to the consumer.
Those who cannot compete will suffer. However, if one looks around the country, one sees that most towns, restaurants and pubs are now run not by Irish people but by Indians, Chinese or other foreign workers, who frequently put no value on their time. I came from that business and did not put value on my time either. I remember doing a course with the Bank of Ireland many years ago and thought that we were making money. The man said that I worked approximately 70 hours a week, my mother 75 and my father 70. He said that, if I received the then minimum wage, I would be making more working for McDonalds, and he was right. Many Irish people involved in tourism are moving out of it because there is no money to be made.
The alternative is to hike up the prices. That has been brought on by affluence, but also by the Government, which, while it has done a little, has not done enough regarding regulations and the increase in rates.
The Minister has claimed that we are bringing more tourists into the country. I accept that many initiatives have helped. I see that over €6 million of European funding is coming into Lough Key Forest Park, which is excellent. However, we must thank Michael O'Leary of Ryanair, who has brought in tens of thousands of tourists.
Rory Kiely (Fianna Fail)
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I am loath to interrupt, but it might be dangerous to mention names. The Senator might praise the gentleman, but others might do otherwise.
Frank Feighan (Fine Gael)
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I am praising the CEO of Ryanair and the company itself as they have done more to bring tourists to this country than any other agency.
Rory Kiely (Fianna Fail)
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Senator Feighan without interruption, please.
Frank Feighan (Fine Gael)
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I wish that fact to be recorded. Those tourists are not flying into the west of Ireland. They are now beginning to fly into Shannon, but most tourists are staying in Dublin. That is good, but it is creating a bigger divide. Research carried out by the Irish Tourist Industry Federation showed that the number of nights spent by tourists outside the capital in 2003 was 2.007 million fewer than in 1999. We are not merely down regarding tourists entering the country; we now have an imbalance whereby tourists are no longer leaving Dublin city. I pay tribute to the Dublin tourism industry, which has provided a better service. I get on the Dublin tourist bus, and it is great. The drivers are very friendly, and the product provided here is much improved in the last five years. However, there is an imbalance in the country. Bed and breakfast establishments and other areas in which Ireland was unique will not survive unless they get some kind of assistance. We saw how tax breaks assisted many of the major hotels and helped create a vibrant hotel industry. It is now time to consider some imaginative assistance for bed and breakfast establishments so that a fundamental part of the Irish tourism industry might survive.
We appear to be losing sight of a few issues. Where is the Irish welcome now?
Frank Feighan (Fine Gael)
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I have had many girls and boys working in my businesses. They all had university degrees, but it seems we are losing the ability to say "please", "thank you" and "hello" and our friendly smile, which costs nothing.
Frank Feighan (Fine Gael)
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That is the one issue we need to address. It is a matter of education, common sense and common decency.
We talk a great deal about the weather but I believe we can have a year-round product in this country. We undersell ourselves; one can carry out nearly any sport or pastime, including walking, fishing and golf all year around. I did not realise that the Gulf Stream made such a difference to the climate. We have a moderate climate in Ireland. When one goes to central and eastern Europe and such places as northern Germany, Russia and Poland, the tourism season is restricted because it is so cold. I do not believe the weather is a great factor in the tourist industry here.
There is something seriously wrong if the number of people indulging in activity holidays such as fishing, walking, golf and cruiser hire is decreasing. Why is the number falling when we are getting much more fitness-oriented and into activity holidays?
Brendan Daly (Fianna Fail)
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We are getting other visitors instead.
Frank Feighan (Fine Gael)
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We are not getting visitors to those areas, and it is quite difficult.
I support the motion. We are all wearing the same jersey; we all want to ensure that more tourists come to Ireland.
Brendan Daly (Fianna Fail)
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The Cathaoirleach has caught me by surprise, since I had thought that the Minister would speak at this stage.
I support the amendment. While we have some concerns about the survey that has been published — I have not seen the figures — we should not be unduly alarmed. Nevertheless, we must take account of it. There are positive indications. I have just looked through the quarterly report of the Central Bank that shows inflation has eased substantially. There is also the prospect of a fall in oil prices and a possibility that the lower inflation rate will lower wage demands. A combination of the two could lower expectations generally, and lower wage demands could be reflected in later figures.
We saw a very serious increase in inflation from 2002 to 2004. That is now easing off, and the Central Bank's quarterly report shows that. It is very positive about the prospects for the economy. Nevertheless, in the tourism industry it is time for a further review. The policy review body established by the Minister has been examining this to see how we might counteract the adverse effects of changing trends in the marketplace over recent years.
Senator Feighan mentioned the weather, but the research in that regard came from studies conducted with visitors, who complained about it. Half of those surveyed said the reason they were dissatisfied was that they felt that Ireland was far more expensive for food and drink than they had expected. For that reason, many said they would not return. It is important to bear in mind that the figures regarding the weather came from visitors.
We have activities here that have to some extent been put on the back burner for the past few years. One relates to the availability of excellent fishing in Ireland, something we still have, despite all the adverse comments about it. We have a national treasure in our inland fisheries although they have been neglected and to some extent ignored by those involved in the business. I do not want to reopen past controversies about investment in inland fisheries, but they are our most neglected national resource. The very people who should be investing in them, the fishermen and anglers themselves, were the first to object to a small investment to put that resource on a firmer footing by dealing with pollution, poaching and other matters that are devastating the fisheries. We have the conditions for excellent salmon and trout fishing, white trout fishing, as well as coast and deep sea angling which has never been fully promoted by the tourism bodies.
We have a coast and inland fishery resource which has been relatively under-exploited, especially in our main markets. Up to 80% of our market is in the UK, France and Germany, yet we have failed to exploit that for some inexplicable reason. The first job I got when I was elected was as spokesperson for Fianna Fáil on the tourism business. We put forward proposals such as the opening of the Ballyconnell canal, which has now been completed.
At that time, because of the declining state of the tourism industry, the Government decided to establish a Department of Tourism and also decided to double tourist numbers. It is now time to review that. We must identify where we can double numbers in the next four or five years and make strategic investments to ensure that we get more people in here.
I am fully aware that the tourism industry has been going through a bad patch in the last few years. Numbers in hotels and restaurants have declined by about 6%, representing approximately 7,000 tourists. That is a very serious issue and is due to the fact that we have not been developing fully the potential of our tourism industry, even in bad weather conditions. There is nothing to stop people from fishing in bad weather as they are used to it and they often like it. British anglers were the best spenders that came to Ireland. They went to guesthouses and bed and breakfasts, whose owners are now suffering a serious decline in their incomes. I appeal to the Minister of State to draw the attention of the Department and the tourism bodies to this problem.
I compliment the Minister for the increased investment this year in tourism. The social partners are putting up €40 million as well, so there is a recognition of the need for investment, especially investment in marketing. It is important that assistance be provided for the small family businesses and guesthouses that find it difficult to continue.
Senator Feighan indicated that this survey was a wake-up call to the industry, but it is also a wake-up call to the Minister. While we should not be alarmed, we must find ways and means to change a situation whereby we take the tourism industry for granted. When I was first elected 32 years ago, tourism was largely a seasonal business, with little economic impact, especially in the regions. It has been transformed since the Department of Tourism was established and since then, investment has improved the business. Investment in marketing will pay dividends in the numbers coming in here. We must put the Irish tourism industry, especially the Irish fishing industry, back in the dominant position that it once held. The sooner that is done, the better.
Brendan Ryan (Labour)
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It is normally the role of the Opposition to denounce the Government about inflation and so on. I welcome the Minister of State to the House. I think it is the first time he has been here in his new role.
Brendan Ryan (Labour)
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It is the first time I have met him. We are old friends.
Batt O'Keeffe (Cork South Central, Fianna Fail)
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We grace the Chamber together for the first time.
Brendan Ryan (Labour)
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We served here when he was in a far less significant role. He is very welcome and we worked together in many places.
The Irish Government and Margaret Thatcher's government persisted for years in protecting a cartel between Dublin and London. I want to emphasise the two governments involved. Ryanair is the beneficiary of deregulation and not the cause of it. It is the beneficiary of the decision by two governments — one of which is paraded as the model of pro-businees in Europe — to delay deliberately the ending of a cartel to fatten up British Airways before it was privatised. We knew then that controlled pricing in the airline industry was insane. It is a matter of regret that Ryanair was the beneficiary rather than a more civilised airline, but that is a separate issue.
We have stood back and allowed public demand for access to reasonable, sensible, licensed premises to be left out of line with the supply of such premises. Even as the two vintners' organisations cry yet again that the wolf is at their door, we see pubs changing hands in Dublin for enormous sums of money. Those pubs are opened following enormous payments for rural licences. The figure quoted in one instance is €170,000. If one is running a small family business for a small income, then €170,000 is not to be sniffed at. There is a fear that the rampant demand for licenses for the greater Dublin area and for most of our big urban areas is the biggest single cause of the decline in the licensed trade and the closure of licensed premises in rural areas. When one is offered the security of €170,000 for one's license and that is contrasted with the uncertainty of a rural licensed trade, many older people will choose the security. That has very little to do with smoking bans or anything else.
The report published today makes it clear that restaurants and pubs have contributed spectacularly disproportionately to our price increases. I am not entirely sure why that is and I am always reluctant to claim that people are ripping us all off. However, I have not heard a convincing explanation of the situation where a half litre of beer in an off-licence costs around half of what it costs in a pub. We were told that the fundamental problem was the breweries, yet the licensed trade and the off-licensed trade pay the same amount. Then we were told it was Government duties, yet they are the same for both trades.
We are now expected to believe that the 50% price difference between an off-licence and a pub is a consequence of labour costs. This is untenable because labour costs are directly related to the volume of sales and there is a good case that the volume of sales in an off-licence may well demand a greater outlay in labour costs. One can accept a marginal difference to pay for the comfort and ambience one expects in a pub but the significant gap is entirely questionable.
This price difference arises because pub owners in most of our towns and cities do not live in a world of real competition but rather in a world of pretend competition. Irish people have decided they want to spend a large proportion of their newly found affluence on alcohol and publicans have been satisfied to accommodate them in this. They are also satisfied to take advantage of the fact that for a long time, we were profoundly indifferent to the price of alcohol in licensed premises. The solution to this problem is to ensure the existence of real competition. This was not done, however, and it is difficult to know why.
Some years ago, in a restaurant in a tourist area, I overheard the owner lament the difficulty of making a living in the restaurant business. This particular restaurant closed in October and opened in May every year during which time the owner lived in the Canaries. He also mentioned that one child of his was attending the most expensive boarding school in the State. He complained, however, that he could not make a living. The expectation of many people in the food and drinks industry of what constitutes a living seems to be entirely unrelated to that of ordinary people. A significant part of the problem may be these excessive expectations on the part of many of those involved in businesses critical for tourism.
6:00 pm
Batt O'Keeffe (Cork South Central, Fianna Fail)
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It is always a pleasure to come to the Seanad. As the saying goes, I lost my feet and found my feet in this House. I welcome the opportunity to address Members on the important issues of competitiveness and tourism.
I will begin by discussing tourism with particular reference to the latest American Express holiday cost of living index. This document is essentially a table of the reported prices of 13 shopping basket items in 12 countries which might be purchased by a UK tourist in those countries. On the basis of a survey of only 12 countries, one cannot possibly say that one country is either the cheapest or the most expensive to holiday or live in, either in Europe or worldwide.
Despite its title, this table is not an index of the holiday cost of living. No information is provided on the cost of access or accommodation, for instance, and no rationale is provided for the choice of the particular 13 items in the table. The cost of sunblock figures prominently. God speed the day when the cost of sunblock becomes a major preoccupation of tourists in Ireland whether from at home or abroad. The index is compiled simply by totting up the cost of the 13 items without any weighting whatsoever. No economist or statistician would call this a scientific exercise and its conclusions should be treated accordingly.
It is important to look at the competitiveness issue from a tourism perspective. We all know Ireland is not a cheap destination, nor is it marketed as such. Nevertheless, there is no doubt the high cost of living here poses a competitiveness challenge. The report of the tourism policy review group was published in September 2003. That report set out an action plan to respond to the various challenges facing Irish tourism, and the Minister for Arts, Sport and Tourism, Deputy O'Donoghue, appointed a group to oversee its implementation.
The report identified competitiveness and value for money as key challenges facing Irish tourism. In 2002, visitor attitude surveys carried out by Fáilte Ireland showed that some 55% of overseas visitors were not satisfied with the value for money they obtained. Unfortunately, this increased to 62% in 2003. Poor customer perceptions are not helped by opportunistic price increases by certain elements of the tourism and hospitality industry during special sporting and other entertainment events that attract high visitor numbers.
Competitiveness relates not only to prices but is concerned also with value for money. People are prepared to pay high prices if they get commensurate value in terms of quality of product and service. In its first progress report, the implementation group outlined the nature of the challenge facing the industry. The group acknowledged there are many factors involved in creating the competitiveness challenge which are outside the control of the industry. However, the industry itself can do much to address that challenge.
The report of the tourism policy review group set out a range of actions in this regard. It is the view of the tourism action plan implementation group that the industry generally has genuinely sought to address many of the issues within its remit in order to improve the perception among visitors in regard to the value for money they receive in Ireland. In this context, it is worth noting that the 2004 visitor attitudes survey, in contrast with recent trends, found there was no deterioration over the previous year in the level of satisfaction among visitors about the cost of access, accommodation or tourism-specific services such as car hire.
Stopping the deterioration is one issue but it is another matter to reduce the level of dissatisfaction. The second progress report of the tourism action plan implementation group, which was published some weeks ago, highlighted a number of developments which are designed to address the ongoing competitiveness challenge. For instance, there were no increases in excise duties or VAT rates in budget 2005 and the annualised rate of inflation dropped to 2.1 % in March 2005. Some reductions have taken place in insurance premia due to more competition in the market and a new legal claims environment.
Furthermore, the industry continues to provide hundreds of special travel offers to overseas visitors on the Tourism Ireland website, www.tourismireland.com. Fáilte Ireland has launched a new website, www.ireland.ie, where special offers from the industry are packaged and offered to domestic and Northern Ireland customers. At present, more than 1,100 value breaks are listed on that website and I strongly urge Senators and the general public to examine it.
Some 500 members are actively participating in the "special offers" section of the Irish Hotels Federation website, www.irelandhotels.com. In addition, the Irish Tour Operators Association, through its winter value breaks programme, offers a "go as you please" programme featuring more than 100 hotels and four car rental companies. This programme was extended to bed and breakfast accommodation in the 2004-05 season. The packages include up to 40% reductions on normal prices.
The Restaurants Association of Ireland and the IHF with the support of Fáilte Ireland re-launched their value menu initiative in August 2004. The pricing levels for 2004 and 2005 are more flexible and include a new value menu for wines which is supported by the wine trade. Over 500,000 copies of a brochure setting out the value on offer have been printed.
Increasing productivity is one of the keys to improving competitiveness in any enterprise. Recently, Fáilte Ireland launched three new initiatives specifically designed to focus on helping enterprises address the competitiveness challenge. Performance plus is an online extranet benchmarking device for tourism enterprises to compare their performance in a range of areas to industry norms. A business solutions toolkit consists of an interactive CD-ROM guide to addressing cost management and business development issues within the tourism industry. A legal and financial advice platform provides a facility for tourism businesses to access top line advice from a range of blue chip professional companies. Fáilte Ireland has also introduced two new training initiatives for the sector on cost management, a diploma in financial management and cost control workshops. Ireland's best awards for high standards in service excellence were won by 50 businesses and Fáilte Ireland launched a programme which focuses on building business excellence and quality within tourism enterprises called the optimus programme. Finally, Fáilte Ireland has recently developed and launched a comprehensive human resource development strategy for the industry.
Last year, Ireland returned to strong economic growth with GNP increasing by 5.5%, total employment increasing by an average of 3% and domestic demand growing by a substantial 4.4%. Ireland's rate of inflation is now very close to the euro area average. It is likely that our economy will continue its robust performance with growth rates of 5% to 6% forecast for 2005 and 2006. It is also likely that unemployment will remain close to the historically low level of about 4% in both 2005 and 2006.
United Nations figures show that we attract considerably more global and EU foreign direct investment than the size of our country would naturally suggest. From just under 4% of the total in 2000, Ireland accounted for more than 8% of total inflows to the EU 15 in 2003. On a global basis, we won almost 5% of total world inflows. Hard nosed investment decisions are not made in favour of uncompetitive and lowly rated economies.
According to Forfás's recently published International Trade and Investment Report 2004, the US overtook the UK to become Ireland's largest single export market. From a position of accounting for less than one tenth of exports as recently as 1996, the US breached the 20% threshold in 2003, when exports to that country were worth almost €17 billion. This report also found that exports of services continue to gain importance. Ireland recorded growth of 11% in service exports to €3.6 billion in 2003, when $1 in every $50 spent on traded services globally accrued in Ireland. Computer services accounted for almost half of the growth in service exports in 2003 and were the largest single category of services sold abroad. Business services, which are the second largest single category of Irish exports, saw growth of almost 9% in 2003, while the spectacular increase in exports of insurance services of recent years continued apace in 2003.
Each year, the National Competitiveness Council undertakes a comprehensive analysis of Ireland's competitive performance. The NCC's competitiveness challenge 2004 states there is a need to make wage setting, government spending and taxation more responsive to changing competitive developments. Addressing these issues is and will continue to be a high priority for the Government.
The Government has already taken several steps to address the issue of prices and costs in Ireland. By not increasing indirect taxes, the Government in its 2005 budget demonstrated its commitment to ensuring that the progress on reducing consumer price inflation last year continued into this year. The most recent consumer price index figures from the CSO show that inflation stands at 2.2% in April. This rate of inflation is now very close to the European average. Government action has also reduced some insurance costs.
The key to reducing prices is to ensure that vibrant competition is a feature across all sectors of the economy. That is why the Government has strengthened the powers and resources of the Competition Authority, which is charged with combating anti-competitive practices in the economy. Today, the Minister for Enterprise Trade and Employment launched the report of the consumer strategy group, entitled Make Consumers Count. The report stresses the needs for the balance of power to be shifted towards consumers and to awaken consumers to the potential economic and social power that they can wield. In this regard, I wish to inform the House that the Government has agreed to the establishment of a new national consumer agency as recommended by the CSG. Work will commence immediately on the necessary legislative and organisational work to ensure that the national consumer agency is established as soon as possible. A board for the new agency will act in an interim capacity until such time as legislation to formally establish the agency can be enacted.
In conjunction with setting up the interim board and preparing the legislative and other work to establish the national consumer agency, consumer policy continues to develop. In addition to developments in European consumer law, it is vital that domestic legislation in this area is attuned to the needs of the modern consumer as acknowledged by the CSG in its report. In this regard, the Department of Enterprise Trade and Employment is currently engaged in a comprehensive review of all existing consumer protection legislation. The extent to which consumer interests are entwined with practically every facet of economic, political and social life can only be appreciated by reading the full report of the CSG, which covers such diverse areas and sectors as health, planning, utilities, transport, food and drink.
The Government accepts that competitiveness is a key challenge. Addressing that challenge is one of its priorities. I believe that the actions I have described represent clear evidence of the Government's success and its intent and I would welcome this House's endorsement of its approach.
Mary Henry (Independent)
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I wish to share my time with Senator Norris, by agreement. He says that he requires only one minute but I will allow him two.
Mary Henry (Independent)
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I welcome the Minister of State to the House. I am alarmed that we appear to take a complacent attitude to this debate. I am anxious because mention has not yet been made of the problem of Irish people being unable to take holidays in this country because it is too expensive. More money is spent by Irish tourists abroad than is spent by foreign tourists here. A friend of mine was given a holiday by her three daughters. I asked her where she planned to go, knowing that she likes to holiday in Ireland. She replied that, as her daughters would not be up to the cost of a holiday here, she would go to Lanzarote. Perhaps Senator Ryan's restaurateur friend was better off trying to live in the Canaries for the winter because it was probably much cheaper.
We totally lose the perspective that Irish people might like to holiday in Ireland. However, it is much cheaper to go abroad. I was glad Senator Feighan, Senator Daly and others stressed the positive side to holidays in Ireland. There have been improvements in restaurants, in particular. I salute Myrtle Allen who has been recognised nationally and internationally for doing so much to promote food in this country. We have come a long way. However, prices are very high and I do not believe the rather complacent speech by the Minister of State is enough to describe what is happening.
I went to Copenhagen recently and there were some Finnish people on the aeroplane. I asked them if they enjoyed their holiday. They said they did and asked me if I had been to Finland. I said I had and they responded by saying that they hoped I did not find it as expensive as they found Ireland. We have a big problem because with the euro, it is much easier to compare prices. With the US dollar being in dire straits, the Americans are finding it very difficult. British people, who are very careful about looking at what value they get, are the only ones who are not having problems with money here.
I was in France recently and the prices there are about half what they are here and I am not talking about family run restaurants or anything like that. Main courses like fillet de canard cost €8.50 and fillet de sanglier cost €8. One would pay that for starters here. Someone from England took me to lunch in a restaurant here. I had not been there for some years and the prices were shocking. I felt I had to apologise for the prices charged. We cannot blame it all on wine which can be quite expensive abroad. Bottle for bottle, it is much the same as prices are here, although some places have high mark ups. I think people have tried to get some control over the mark ups here.
In small and not only family-run hotels in France and Germany, one can have dinner, bed and breakfast, as I have just had and I can show the receipts, for €120 to €130 per night with wine included. I know the Ibis hotel in the centre of Amsterdam is not a smart sort of hotel but bed and breakfast costs €135 per night for two people.
I did not think car rental was that much dearer than in some other countries until I had a horrific experience with some French people last summer. They landed in Rosslare and hired a car there from an international firm. They drove around the country, which is what we are encouraged to ask them to do, and were returning home from Dublin. This international firm charged them €80 for returning the car to another destination. I did the same in Italy some time ago and was charged €10. These firms have fleets of cars in each location and one is charged €10 for the paperwork. One is not charged the money for someone to drive the car back to its original destination. These French people were absolutely furious. They had inquired ahead of time whether there would be a charge and those in Rosslare told them they were not quite sure what it would be. They thought at worst it would be perhaps €20 or €30 but it cost €80, about half what it cost to hire the car for three days. They contemplated driving back down to Wexford with the car and returning to Dublin by train which is good value, as Senator O'Toole pointed out. However, the train is very slow and takes three hours to travel the 90 miles from Wexford to Dublin. It would really need to speed up.
The regulations restaurants must put in place seem excessive whereby there must be separate lavatories from men, women, disabled people and staff. I saw the way the Italians solved this problem recently. My husband and I went in separate doors but we met on the inside.
David Norris (Independent)
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I am grateful to my colleague for sharing her time and I welcome the Minister of State back to the House with which he was once so familiar. The last section of Senator Quinn's motion deals with capital movement and investment. The news there is not bad. I have material which suggests we experienced a 35% increase in venture capital investment in the first quarter of 2005 compared with 2004. That is good. We are now the fourth most significant destination for US manufacturing and investment overseas. That worries me a little politically because I think it means we lickspittle the Americans frightfully because we are terrified they will pull their investment out of Ireland, not that they would.
I very much agree with Senator Henry. I listened to young people on the radio who all said they would not dream of staying in Ireland because it was far too expensive and inconvenient. Senator Henry is also right about restaurants. Last weekend I attended the most magnificent dinner in Cathal Brugha Street. The food produced by the final year students there was superb as was the service. We have certain things going for us but the expense, particularly of hotels, is terrible as is the way they treat their guests. That they insist on guests staying two nights has been highlighted regularly on radio recently. If one wants to stay only on Saturday night, the hotel will say one must stay on Friday and Saturday nights. If there are rooms available, they should be available to clients. They should not be able to say "No" and to gamble because it would be better to have people stay Friday and Saturday nights.
I heard of somebody who had been given a voucher for €600 or so. She was hit with this requirement to stay two nights, to which she agreed. However, there was an extra €50 surcharge if she did not have dinner in the hotel. It is absurd to try to penalise somebody because they do not want to stay for dinner. The hotels are terrified people might go elsewhere for dinner.
It sounds very much as if there is a cartel of some kind operating in Kilkenny and the Minister of State should look into that. The radio shows telephoned hotels and got the same prices each time. It is quite an extraordinary coincidence. The Competition Authority should look into that issue.
The defence the hotel industry makes is that it is under pressure because it has significantly higher rates of VAT compared with other countries. There may be an element of truth in that but it also employs a significant number of young eastern Europeans. I have a very strong suspicion that it is not quite paying them the same rates it might pay other people. It is getting cheap labour, bullying its customers and giving significantly bad value.
I have been travelling but a little bit more modestly than my colleague, Senator Henry. I was in Galway, a beautiful destination. I dropped into Morans of the Weir in Clarinbridge where I met a former Member of the other House. He was there with his sister and brother-in-law from America who could not wait to get back because of the prices here. They were also hit by the requirement to stay two nights. That is wrong. As Senator Quinn usually says, the customer should be king.
David Norris (Independent)
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I always get extremely good value from your generous self, a Chathaoirligh.
Tom Morrissey (Progressive Democrats)
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I thank the Independent group for tabling this motion and the Minister of State for attending. The issue of competitiveness is paramount to this economy and is of crucial national importance. Continuing to compete not only in selling our goods and services but also in attracting foreign direct investment and creating high quality jobs are the key to our future growth. Economic competitiveness is central to the prosperity and well-being of our society. Despite the tenor of the motion, the prospects for the economy remain positive. Let us not lose sight of that during this debate.
There are two essential elements at which we must look. One, which is outside our control, is the nature of international events and the other is whether we can do the right things at home in terms of our economic policy. I am adamant that the right decisions are taken for Ireland into the future. The policies to date have delivered unparalleled growth and prosperity for the people. We must work to ensure this continues during the lifetime of the Government. The context of our policies is of course the international climate. Movement in international exchange rates, interest rate policy and oil prices can and do play a significant part in our economic fortunes. The Government has been obliged to steer through some significant obstacles on the international economic front. However, to date, the sound basis for our prosperity has been maintained, especially over the last seven years. The Independent group's motion rightly remarks on the current state of competitiveness in the Irish economy and what a remarkable state we are in.
The Irish economy has achieved remarkable rates of economic growth and has recorded one of the best economic performances in the world over the past decade. It grew by an average of more than 7.5% from 1997 to 2004, while in the EU, the average growth was just over 2%. I am reminded of the speech of the chairman of the National Competitiveness Council when he warned that the competitiveness of the economy is seriously impaired by the lack of competition in many sectors. He reports that markets in which competition is weak or absent are characterised by high prices, lower output, less innovation and lower levels of buyer satisfaction. The Independent group's motion mirrors some of these concerns.
We have a duty to protect Ireland's economy and a duty to promote its competitiveness. Therefore, we must examine all markets that have restricted competition. The Competition Authority believes that in many markets in Ireland, competition has been severely restricted and in some cases, totally prevented. Restrictions are said to be widespread in existing retailing, transport, banking, communications, energy and many other private and public service sectors.
I share the concerns of the Independent group and the Competition Authority also concurs. The erosion of national competitiveness can also damage our attractiveness as a destination for visitors and investment. Where market restrictions lead to high prices, action must be taken by the Government. In markets which the Competition Authority has studied in detail, it has found that restrictions imposed high prices and are disproportionate to any clear public policy objective. It is worth restating that notwithstanding the economic progress I outlined earlier, the Government is not complacent about Ireland's future economic well-being. It is in the business of promoting economic growth, not as an end in itself, but as a mechanism to provide social progress. National competitiveness and social progress go hand in hand.
It may seem untimely to focus on emerging threats to our future prosperity. However, the 2004 competitiveness report shows that considerable pressures remain on our competitive position. The motion from the Independent group echoes the specific areas of concern highlighted by the National Competitiveness Council's annual report. These include the continued growth in domestic prices and wages. However, we cannot have it both ways. This country now has a minimum wage which thankfully has been increased recently. It is turning into a high-value economy. When we go abroad on business or on holidays and pay what we call lower prices, those lower prices are a reflection of the fact that we are unlikely to work for the wages on offer. We do not want to work for such wages in this country any longer. This is the situation we must address.
The tourism industry is fortunate that people are willing to come to this country so that prices can remain low. We are fortunate in having such a sizeable immigrant workforce in this country to take up those jobs which Irish people no longer want. As I stated earlier, the minimum wage might have increased our prices, but we do not have to apologise for that.
In the tourism sector, the issue of travel is vital. If we want to create jobs, we must ensure that we have a competitive travel industry. Only last year, we successfully unbundled Aer Rianta. We can now see the benefits that will flow to Cork and Shannon and the regions to which people will be able to fly on new routes. Had this measure not been taken, I suspect that those regions would be less well-off than they are today. I thank the Independent group for the motion it has tabled but I remain secure in the knowledge that the Government is committed to ensuring we remain competitive in the years to come.
Brian Hayes (Fine Gael)
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I echo the remarks of Senator Morrissey in congratulating the Independent group for tabling this motion and stimulating a debate on the important issue of competitiveness within the tourism industry, particularly as summer approaches. All Members are aware that tourism is vital to our economy and I understand that more than 140,000 jobs are dependent on tourism. We must focus and recognise the enormous contribution tourism makes in this to the overall number of jobs in the economy. I remember that in the early 1990s, Deputy Richard Bruton, who was then Fine Gael's spokesperson on employment published a document which I believe was called Towards the Jobs Economy. That economic analysis document pointed out that in the 1980s and early 1990s, our problem was an inability to concentrate on doing things at which we excelled. Traditionally, one activity at which we excel has been the production of an excellent quality tourism product in which people from north America, Europe and the UK enjoy coming here to participate.
However, in reality, perception is everything. The perception is that over the past number of years, Ireland has ceased to become the kind of destination people wish to visit because of the price hikes people see all around them. Senator Quinn makes a valid point when he highlights the fact that the American Express holiday cost of living index puts us in the invidious position of being second last only to Norway. This is a serious indicator for a country that depends so much on tourism as a revenue source. The Government must take note of this in the weeks and months ahead.
As Senator Daly might be aware, I visit County Clare every year with my family, usually for the month of August. He will be glad to hear that I enjoy it and only go to County Clare for my summer holidays. I do not spend an enormous amount of money there, but do my bit to contribute to the local north Clare economy.
Brendan Daly (Fianna Fail)
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One gets good value for money in County Clare.
Brian Hayes (Fine Gael)
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I am always stung for money there. However, last year while on holiday, I met another Dubliner who also takes his family there every year. He made the point to me that while he did not mind paying for things, he hated being screwed. Many people who holiday in Ireland feel they are screwed on a regular basis, whether it is eating out, the cost of accommodation or the jacked-up prices during the summer months for tourist attractions. This is the perception and while one might argue whether it is reality, it is as far as the product consumer is concerned. We must concentrate on this.
Senator Norris also made a valid point. The vast majority of people who work in the hotel industry do not come from Ireland but are from the new EU accession states or are here because they have work visas and are paid very small sums of money. Guests pay enormous sums of money for this product on a nightly basis, but as far as the people who actually make the beds and prepare the food are concerned, historically the catering and tourist industries are one of the worst payers in the country. Someone is making a substantial killing from this and it is certainly not the people who work in the hotel industry.
I take this opportunity to thank people from other countries who have made the Irish tourist industry such a success in recent years. In years gone by, many students or younger people used to take up those jobs. However, they no longer do this because, as Senator Morrissey has noted, such jobs do not pay massive sums of money. We should thank people who have come to this country for all kinds of reasons — Latvians, Estonians or people from the other accession states — and work in our tourism and catering industries doing so much to promote Irish tourism. This point must be made.
It is essential that we do much more to stimulate interest in the UK market if we are serious about delivering this product and getting more people to visit Ireland. I understand that the UK market cumulatively amounts to €2 billion worth of investment in terms of the Irish tourism industry every year, yet I understand that the amount we spend on marketing in the UK is pathetic compared with the amount of trade we receive from there. There is an enormous untapped market in the UK in terms of weekend products, golfing products and week-long holidays and we need to market these. A key aspect is the increase in low fares airlines flying to Ireland, particularly to destinations outside Dublin.
I wish to do everything in my power to support the Irish tourism industry. I enjoy taking holidays in Ireland every year but we must drive down prices acriss the board so that the perception of Ireland as an expensive country is challenged and met by a range of strategies to drive down prices in the tourism industry. The reason why many people from North America are not coming to Ireland is primarily due to the change in the relationship between the dollar and the euro. However, we were too reliant on the North American market for many years. Tourists from North America were big spenders who stayed in the top hotels and we made enormous sums of money from that aspect of the industry. We may well have to venture abroad and look to new markets. One market that we must focus is the UK and I would ask the Minister to take that on board.
Labhrás Ó Murchú (Fianna Fail)
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The Minister's statement to the House this evening gave us an indication of the affluent base that we are now looking at. This has its own impact on tourism. If one looks back at the tourism industry in the 1950s, 1960s and even into the 1970s, it was totally different. It was more folksy and much of the tourism trade that Ireland received at that time was largely from Irish-Americans. They felt an affinity with and loyalty to Ireland. To some extent, they regarded visiting Ireland as returning home and making a contribution to the Irish economy rather than as just a holiday.
In the years since then, we have become a very sophisticated country in many ways. Our infrastructure has changed and developed at a cost to both the State and private investors. The standards that have been achieved in our tourism industry are in many ways the envy of other countries. How many countries have sent delegations to Ireland over the years to study our tourism industry?
On many occasions, the tourism industry was regarded as the jewel in the crown of the Irish economy. The industry was met with many challenges during that time, whether they were international affairs, a US presidential election, the foot and mouth crisis or the Troubles. When one travelled abroad and talked to local people, one realised that attracting tourists to Ireland on a loyalty basis was not as easy as it had once been. One had to attract them for other reasons. However, if one looks at the status of Ireland internationally from sports, arts and other perspectives, it is now ranked among the largest countries in the world in terms of recognition even though it is a very small nation. This can be a marketing tool as borne out by the amount of exposure Ireland gained from hosting the Eurovision Song Contest.
Nevertheless, all of these achievements cost money and someone has to foot the bill. Very often, it is the private investor, as well as the State, who has to pay. It is a matter of finding out whether we are getting value for money and comparing like with like. It makes no sense to compare different things. I have heard cases of people having a meal in a five-star hotel and stating that the meal would be much cheaper in the United States. However, they may be comparing the meal with a meal at a fast food outlet or a meal in a bar. I would ask them to compare it with the meals they can get in Irish pubs and the value of that. A high quality single course meal in many Irish pubs will only set a person back €8 or €9. This is the type of comparison that must be made.
The days of family-run hotels are virtually gone. Like the religious orders running schools, running a hotel for these people was a vocation. They enjoyed the work and did not mind working long hours. It now has to be worth people's time to work in the tourism industry because unemployment levels are so low, at approximately4%. People have a selection of jobs they can enter, which must be paid for.
We must ask whether we are prepared to lower standards in order to lower prices. We all know there will be a certain amount of people who will exploit situations but I think they are in a minority. I could be generalising slightly but most people I have met in the tourism industry are very committed, particularly if they are the owners of product. They are anxious to make the best presentation. How many times have Irish people apologised to tourists for our bad weather to be met with the reply that they did not come here for the weather, rather they came for the people.
If one looks back at one of the major surveys that examined the preference of tourists, 67% said that the top attraction for them was national monuments. A survey was conducted recently on national monuments, many of which are saturated with tourists. A recent report recommended that there should be a cut-off point with regard to the number of visitors to the Rock of Cashel, which receives approximately 250,000 visitors per year, because the rock is being damaged. The same applies to Muckross House and possibly to Kilkenny Castle. It appears that there are at least four national monuments where tourist numbers are at saturation point. This finding does not indicate that the product is not being used. However, there are many other national monument attractions, many of which can be visited for free or for €3 or €4.
I accept that food and accommodation are important considerations for tourists but there are many competitively priced attractions in Ireland. I do not wish to disregard the index or the survey that we were discussing but I accept the Minister's point. I do not believe the survey is very scientific because of the number of countries surveyed and the survey method, which involved the use of shopping baskets. If that is a fair indicator, why are tourist figures rising? Why do we see figures of 5% or 6% even in the most challenging times for tourism?
We need to be careful that we do not shoot ourselves in the foot. There is always the danger that we will overemphasise one of our negative aspects. This is acceptable if it is done within a controlled situation like a board meeting, a committee or tourism agencies, but if it is done outside, it can generate negative publicity about the country and deter possible visitors. No business in a competitive world would begin by undermining itself. This does not mean that we should not examine faults and difficulties; we should do so. I agree with Senator Daly that there are areas that need support.
Bed and breakfast establishments need support, an issue that is commonly ignored. Over the years, some of the best value could be found in bed and breakfasts. These establishments were located throughout the country. Many people invested both time and service in them. I do not think huge profits were ever made out of bed and breakfasts but a way needs to be found to help them.
When the Convention Bureau of Ireland and Dublin Tourism — two organisations I would praise — came before the Oireachtas Joint Committee on Arts, Sport, Tourism, Community, Rural and Gaeltacht Affairs, I made the point that Dublin is saturated with tourists. I do not think it is good for people living in Dublin and tourists. Dublin Tourism and the Convention Bureau of Ireland should not be blamed for this state of affairs, rather we should look at the tour operators. Why have they changed their practice and begun to ignore the rest of Ireland? We need to examine the reasons behind this change of mind on the part of tour operators. There are people who do not regard the capital city as "Ireland". It is an important experience but should not be the totality of people's experiences. We must get back to basics and examine why these changes have taken place.
John Paul Phelan (Fine Gael)
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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.
Mary O'Rourke (Fianna Fail)
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May I submit a point of information? I apologise for cutting across Senator Mansergh.
Mary O'Rourke (Fianna Fail)
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Senator Quinn was keen to merge the proposal and the amendment but I could not contact the Minister for Arts, Sport and Tourism, Deputy O'Donoghue, as he is out of the country. The Cabinet is currently sitting and I cannot legitimately change an amendment that came from it.
Martin Mansergh (Fianna Fail)
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We must treat surveys with some caution. The Minister of State made the point that this American Express survey is very unscientific. The World Economic Forum global competitiveness report must also be taken with a pinch of salt. We have low unemployment, an excellent financial situation and great strengths in our economy. If one goes back less than 20 years, we had fewer than 2 million visitors to this country annually. We now have well over 6 million and, despite a dip in 2001 and 2002 due to events beyond our control such as those of 11 September 2001 and the foot and mouth disease scare, we are back on a growth path of 6%.
A problem concerning the balance between Dublin and the other regions of the country must be addressed. I will play devil's advocate. For example, an article in today's The Irish Times makes a point that was also raised on the Order of Business. For 1,000 litres of automotive oil the cost is €992 here but in Britain or the North, which is one of our main markets for tourism, the cost is €1,320.60. This is a big difference.
John Paul Phelan (Fine Gael)
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Is the Senator accepting the Opposition's motion?
Paddy Burke (Fine Gael)
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Senator Mansergh without interruption.
7:00 pm
Martin Mansergh (Fianna Fail)
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Our hotels have improved their competitiveness vis-À-vis bed and breakfast accommodation. Ten or 15 years ago, hotel accommodation cost much more in real terms than it does today. Unfortunately, that has tended to squeeze out bed and breakfasts. As Senator O'Toole pointed out, a 100 mile or 200 mile journey by rail is much cheaper in Ireland than it is in Britain. We should not paint a completely negative picture. However, there are some negative aspects. Car hire in this country is quite expensive. I recently had direct experience of this in Killarney.
I have spent a holiday here for at least one week for 40 or 50 years and I urge everyone to spend at least part of their holidays at home. There are fantastic places throughout the country, which could renew one in all sorts of ways. We have the cleanest waters in western Europe. They may not be as warm as the Mediterranean but they are cleaner. A good swim in July, August or September is a grand experience. It might even help to alleviate the obesity problem a little.
Ivor Callely (Dublin North Central, Fianna Fail)
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Why did the Senator pick July to September?
Martin Mansergh (Fianna Fail)
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It is because I am not a businessman.
Feargal Quinn (Independent)
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I heard the Leader explain why she believes there is a difficulty. If the motion is acceptable to the Government side, from my point of view the amendment is acceptable. I thank Members for contributing to this positive debate and I wonder whether there should be a vote.
I tabled the motion because of the complacency that exists. Senators Mansergh and Ó Murchú referred to the fact that these surveys are not very scientific. I am aware from my experience in the grocery business that one always criticises surveys one does not like and one is thrilled when one is satisfied with the results of a survey. The problem is the headline in the newspaper, "Ireland is the world's second most expensive place to visit". When one comes out badly in the grocery business, one keeps quiet but those who come out well shout from the rooftops. Spain and other countries will shout from the rooftops about how expensive Ireland is. They will say that people should visit them rather than going to Ireland.
I was pleased to hear the Minister, Senator Morrissey and others say that the answer is not necessarily in the Government's hands. However, it can do something about national competitiveness. It announced today that there will be a new national consumer agency and that it will strengthen the Competition Authority. To a large extent, customers rule.
Senator O'Toole referred to the fact that the Government can do something about the whole question of red tape and regulatory analysis. He told a story about the toilets in a sandwich bar. Senator Henry referred to her experience of male and female toilets. When her husband went in the male door and she went in the female door, they met inside in one toilet. The Government should carry out an impact analysis on the effect of regulations coming before it. This also applies to the minimum wage, to which Senator John Paul Phelan referred. Some jobs exist at a certain level that do not exist at another level. If we have the highest minimum wage in the world, there is a danger that some services cannot be offered. Some years ago, when one pulled up for petrol, someone served it, but once the minimum wage came in, it was no longer possible to have someone serve petrol. It is not a great loss but it means that jobs for people who used to do this work no longer exist.
The debate will have been useful if it removes some of the complacency. The Minister of State gave figures on national competitiveness from 2003. I am not concerned about what happened in 2003. I am concerned about what is happening now. The Government should not be looking back by saying the figures were good two years ago. We must ensure we are competitive and do not become complacent. We must recognise that this challenge is in our own hands and is not necessarily in the hands of the Government.
An English visitor who came here recently went to a restaurant in Dublin and was surprised that the bill was quite expensive. When he got back home and examined his Visa bill, he was surprised the Dublin restaurant had charged him in sterling. I was not aware one could do this, but it happened. Because it was a London-based visa card, they were able to charge sterling or euro. This Dublin restaurant charged in sterling on the visa card. This person will not go back to that restaurant. He ate in a different restaurant the following night.
I welcome the debate tonight and thank the Senators who contributed. I hope we can remove the complacency that exists, not as a result of the survey, but as a result of the publicity it is likely to receive worldwide. I would like to see the tourism business in Ireland thrive in the future. Senator Henry said more Irish are now travelling abroad than there are tourists coming here. We spend more abroad than they spend with us, which is a serious reflection on this country. In other words, this is a tourism industry in which we are losing rather than gaining. This is a challenge about which we must do something and tonight's debate might help in some small way.