Dáil Debates Official Report

Minister for Tourism, Sport and Recreation (Dr. McDaid): The latest tender procedure for the development of a National Conference Centre in Dublin, with EU assistance of up to 33 million ecu under the Operational Programme for Tourism 1994-1999, was organised by Bord Fáilte under the direction of the Independent Management Board for Product Development, and advertised in 1997.

The procedure was conducted under the terms of EU Council Directive 93/37/EEC and Bord Fáilte-led evaluation teams undertook detailed assessments of full tender submissions which were received from five consortia. The management board concluded that the tenders submitted were not such as to enable it to make a recommendation and the process then proceeded in April 1998 to the 'negotiated procedure' stage provided for in Article 7 of the EU directive. This was conducted by an independent team of technical experts, specially appointed for the purpose by Bord Fáilte. On consideration of its findings, and following a positive recommendation by the board of Bord Fáilte, the management board decided on the proposal submitted by Spencer Dock International Convention Centre Limited to develop the project at a site in Dublin docklands.

Under the terms of the operational programme, decisions on grant applications in respect of amounts at or above 15 million ecu - productive investments - must be made with the agreement of the Government and the EU Commission on foot of a cost benefit analysis conducted in accordance with Community law. This cost benefit analysis, which was favourable towards the project, was undertaken by independent consultants and on 16 September 1998 the Government agreed to the making of a submission to the EU Commission recommending formal approval for a 33 million ecu grant towards the cost of developing the project. The final decision of the Commission, which is also concluding its examination of a complaint lodged with it on the tender procedures under the public procurement process, is awaited. All queries subsequently raised by the Commission have been responded to through correspondence and meetings between Bord Fáilte, the management board and Commission officials.

The developers are still working towards completion within the timeframe of the current operational programme, should an early and favourable outcome from the Commission's deliberations on the project be forthcoming.

Mr. Allen: Will the Minister confirm whether the Commission is refusing to sanction tax reliefs and rates remission breaks for the project at the IFSC? If these concessions are not made available this project will be at risk. Will he confirm whether discussions have taken place with the Department of Finance on the implications of the Commission's stance vis-à-vis the concessions for the overall development? Has planning permission been sought and, if so, what is the up-to-date position?

Dr. McDaid: My job was to ensure the grant application for the £25 million of EU funding, 33 million ecu, was in order. I am determined to ensure the project gets the go ahead. I am awaiting information from the EU regarding the availability of that grant. Any matter relating to tax relief is for my colleague, the Minister for Finance. In regard to the planning application, I understand the developers have had meetings with Dublin Corporation and with the Dublin docklands on this matter.

Mr. Allen: It is incredible that the Minister would wash his hands Pontius Pilate like and say he is not responsible for the tax breaks for this project. Is he aware of an article in the Sunday Tribune in January that stated the conference centre is threatened if tax reliefs are abolished? If so, surely his curiosity would have aroused him to make inquiries and get information on the impact of this threat to the project. As Minister with responsibility for tourism and sport he would have his own opinion on the future of this project. He cannot bury his head in the sand and ignore the risks confronting the project. Has he had discussions with the Minister for Finance on the implications of the Commission's stance?

Dr. McDaid: Yes, I have made it clear to my colleague, the Minister for Finance, that I have genuine concerns regarding this project. I met with the developers, Treasury Holdings, in my office on that issue and I explained to the Minister their fears about tax concessions. From day one I have backed this project. The matter was off the rails when I came to office 18 months ago. We are further down the tracks now than in the past eight years. This is the third attempt to get a conference centre. The Deputy and my predecessor support the conference centre. We learned from the mistakes of previous Governments and were able to overcome some of those mistakes. I am totally committed to this project and will do everything possible to ensure Ireland has a conference centre. Dublin is the only city in Europe which does not have such a centre. While I have raised my concerns and listened to all involved, the matter of tax relief and the newspaper article cause concern.

Mr. Allen: I accept the history lesson offered by the Minister. In the event of the Commission refusing to give the concessions outlined, is there a doomsday plan in place? Is the Government considering other ways of supporting this project in the event of the Commission rejecting the application submitted?

Dr. McDaid: I do not envisage doomsday. The eventual decision is one for the EU. It is the bank that is providing the £25 million funding for the project.

Mr. Allen: Is there a fall-back position in the event of the Commission refusing to give these concessions?

Dr. McDaid: We will negotiate to the end on this matter. There is no plan B. We either get the funding and proceed with the conference centre on this third attempt, or the conference centre will not go ahead. We are determined to ensure it proceeds. It is the jewel in the crown in the city of Dublin and we all want it to proceed. The benefits to the economy are inestimable. I have the full backing of the Taoiseach for this project. He is fully behind the setting up of the conference centre and developing the Dublin docklands area.

Tourist Access Tax.

2. Mr. Allen asked the Minister for Tourism, Sport and Recreation the position regarding his proposal to introduce a tourist access tax; and the discussions, if any, he has had with tourism interests. [7535/99]

Dr. McDaid: The various options for the future funding of tourism destination marketing were set out in detail in my Department's discussion paper, "Strategy for Tourism in the Context of EU Structural Funding 2000-2006". In that paper it was proposed that a tourism marketing fund would be established and it was suggested this could be financed through a combination of financing from the EU, the industry and the State, with an enhanced level of partnership between the key players.

Since the preparation of this document last year, my Department has been engaged in a consultation process with the industry, through the Irish Tourist Industry Confederation (ITIC) who examined funding and institutional options in their planning document entitled "Strategy for Growth beyond 2000".

I share the industry's objective of ensuring that a substantial marketing fund for Irish tourism will be in place for the new millennium. Ireland's performance in a growing but hugely competitive international marketplace has been excellent over the past decade with ambitious targets for foreign earnings and for visitor numbers consistently being achieved.

Under two EU co-funded operational programmes for tourism, covering the period 1989-99, the State, in partnership with the industry, has made excellent use of Structural Funds in marketing Ireland as a tourism destination abroad. My Department is making a strong and persuasive case for continued EU funding under the next round. However, the outcome of negotiations on future structural funding for Ireland and the subsequent allocation of that funding between individual economic sectors, will not be known for some time yet.

Given the uncertainty over, and timing of, decisions on future EU funding, the introduction of a modest visitor levy is one of the options being considered by my Department in consultation with ITIC, as a possible mechanism to contribute to the future financing of tourism marketing.

Mr. Allen: The Minister seems to be approaching the negotiations regarding EU funding in a very defeatist way. He is looking at a doomsday situation of introducing a tourist access tax to fund the marketing programme. If we assume he is introducing a £3 per tourist access tax, what will be the take on that? Will the take from that tax be ringfenced as suggested by tourism interests? Is the Minister aware of the strong reservations of Ryanair, Aer Lingus and the representative bodies of tourism interests in this country about the tourist tax?

Dr. McDaid: I am not taking a defeatist attitude in this matter. Like every other sector we are pursuing our case for EU funding. However, as the Deputy will be aware, we are also realists. We understand there will be a drop in EU funding and we might as well accept that. We are, however, at the top of the European league with regard to marketing and tourism figures. We have 5.3 million people coming in and I am determined to ensure this country remains at the top of the European league.

Huge competition is developing on our doorstep. Scotland is now talking about devolution which means that the Scottish will be focusing on themselves. They are a problem next door to us, in tourism terms. Scotland is a huge sleeping giant. In addition, the Far East is beckoning for many other countries, so there is huge competition. Two weeks ago I was in Milan where I spoke to some major hotel groups. For example, the Shangri-La group told me it has 39 hotels worldwide, 15 of which are in China. Therefore, one can see the competition that will develop there.

Both the Government and the tourism industry realise we will have to have a tourism marketing fund, which we have agreed upon, to keep this country to the fore. We have also agreed that the figure for the fund should be in the region of £20 million over a period of five years. That would be an ideal figure to keep us at the top of the league. How we will raise that funding is a matter that is currently under discussion. I suggested a small, modest visitor levy should be the way forward. It is all a matter of supply and demand. Through our marketing achievements we can create the demand for people to visit here. The modest fee I am talking about would yield approximately £17 or £18 million in the initial years, and would probably increase to more than £23 or £24 million in years to come, thus averaging out at £20 million per year over five years.

As regards the Deputy's second question, one cannot ringfence anything. We should create a fund of £20 million a year over the next five years, as the industry has suggested. That is what I am trying to do and this would be a way of contributing to it.

We must confront the reality that we are facing huge competition. In the year 2006 we expect 8 million people to visit the country, which will be worth £4.5 billion to the economy. If we achieve those targets it will make tourism the number one industry. It is well worth looking after this industry and we must do so. I assure the Deputy and the House that I will not make any decisions without the backing and co-operation of the industry.

Mr. Allen: Would the Minister agree there is a serious contradiction in his statement? He said we have to be competitive and are facing major competition from areas such as Scotland and the Far East, yet in the next breath he said we must introduce a tourist tax to market Ireland effectively. Does he agree that any tourist tax will make this country less competitive? The Minister quoted figures concerning the take from tourism, which are trotted out on a monthly basis. Since there is a £1.1 billion tax take from tourism, which shortly will be our largest industry, surely the Government should provide £20 million for the marketing drive without killing the goose that lays the golden egg by making the industry less competitive vis-à-vis our competitors. Will the Minister agree that he will not get agreement from tourism interests unless there is guaranteed ringfencing of the revenue take?

Dr. McDaid: Those matters are the subject of constant discussion between me and the industry. I will only come to Cabinet if the proposals are acceptable to the industry and when I have its backing. With regard to the £1.1 billion figure, there is a huge input to the Exchequer from tourism which is a net contributor. We need all that revenue to aid other Departments. We must pay for health, the environment and education. That is why we garner revenue. All those within the industry - including hoteliers, publicans and tour operators - benefit from spending on education, health, the environment, sewerage and water services. They benefit across the board as a result of being net contributors to the Exchequer and, from that point of view, they are beneficiaries in any event. We are the only country in Europe that does not have such a levy. In Austria they charge £8, in Belgium £10, in Denmark £7.80, in Finland £7.30, in France £7.70, in Germany £3, in Greece £14, in Italy £3.20, in Norway £12.20, in Portugal £7.80, in Spain £4, in Sweden £10 and last year they introduced a £10 sterling charge on anyone who moves anywhere in the UK. We, a small nation on a small island in the middle of the Atlantic, are the only country in Europe without such a levy. I do not believe a modest levy of this nature would cause a problem to incoming tourists, particularly in the way it will be brought about. It will have the opposite effect. I want to ensure the industry has a say in the matter I do not want to be heavy handed. I would like the industry, in accordance with the Little report, to take an active role in the matter. I do not see the necessity for the State to be deeply involved in this area. Those in the industry know their business and we need only set up the fund and ensure there are adequate funds.

If we set up such a fund it will put this country's industry on a firm basis to face all competition in the next five years.

Mr. Allen: The Minister trotted out the departmental propaganda on tourist tax rates in Europe but conveniently ignored the fact that Ireland has one of the highest VAT rates in Europe and is the only island member state without a land link to Europe, since Britain has rail access to Europe. Is it not ironic at a time when we are trying to support agriculture in every way - at the recent agriculture Ministers' negotiations - that we are attempting to kill by taxation our second largest industry, soon to be our largest if we treat it properly? Would the Minister agree that is a major contradiction?

Dr. McDaid: The Deputy has given me a golden opportunity to remind him why the people voted in this Government at the last election. They voted us into Government because of our policy to reduce taxation-----

Mr. Allen: The Government is increasing taxation.