Welcome to my President’s Report for April 2022,
This will be my 36th and final newsletter as my extended term as President comes to an end. I would like to take this opportunity to thank you all for your support throughout my presidency, it has been a long three years in office. I remember setting out my manifesto and delivering a speech at my inauguration at the Europe Hotel in Fossa on the 8th of April 2019. The agenda was very consistent to previous manifestos such as retention of the 9% VAT rate, skills shortages, insurance reform and the cost of doing business. Little did we realise the storm that was on the horizon. It was December 2019 when we started hearing about a virus that had emerged in Wuhan that would spread across the globe taking 6 million lives. 6,786 lives lost in Ireland, the human and economic cost would be enormous and the challenge that we were facing as an industry was immense.
My term as President was overshadowed by the pandemic as all other business was paused. Our focus switched towards getting financial supports that would keep hospitality businesses afloat and finding ways of getting our doors open in some way shape or form. Our operational guidelines changed over 40 times, we did not know whether we were coming or going, it was undoubtedly the most challenging time in any of our working lives and the concern now is that unfortunately there are many financial hurdles for us to overcome. We are not out of the woods yet!
As one crisis draws to a close another one arises. The Russian invasion on Ukraine is truly devastating and scenes over the past days and hours are utterly heart wrenching. The devastation in the town of “Bucha” gives a real picture of Putins ambitions, his attack on the sovereign state of Ukraine has killed thousands and displaced millions of people from their homes. The response from Ireland as expected has been fantastic. The Restaurants Association of Ireland has chosen the Irish Red Cross as charity partner for the Ukraine crisis appeal and I have no doubt that the Irish people will continue to stand with the people of Ukraine and help in any way they can. The economic impact of the war in Ukraine has escalated the rise in energy costs. They have already gone up by approx 32% since December. Putin has this week threatened to cut gas supply unless some Russian sanctions are relaxed. Russia & Ukraine produce about 20% of the worlds grain, Ireland and Europe heavily relies on this source of grain which affects every core element of our food supply chain. The grain is used for flour, cereals, brewing but it is also used for feeding our livestock and so the domino effect directly impacts the Agri sector. The price of poultry will start to rise significantly in the coming weeks as large exporters around Europe have not got feed and so supply will dwindle.
The cost of doing business has never reached such high levels and this cannot be ignored by government. An Tánaiste has stated that “At a time of inflation, it would be wrong to allow the reduced VAT rate to lapse”. However, he also stated that “the higher tax take was built into economic assumptions & this would have to be considered by Minister Donohoe”. We will be working hard to ensure that the VAT rate remains at 9%. Revenue have started issuing letters with information on tax warehousing. Repayments are due to begin in January of next year and if the cost of doing business continues to rise at its current rate of inflation it will be impossible for businesses to repay without going into severe debt and ultimately having to liquidate. Small to medium size businesses survived the pandemic with this liquidity support in place and in my view an amnesty is now warranted to keep these businesses afloat. That money is gone, the waiver of VAT kept heads above water until the restrictions imposed on our businesses were fully lifted. We will be keeping a very close eye on how the situation evolves, but I urge you to engage with Revenue individually on this matter as every business is different.
On Wednesday 6th April I will be attending, along with our CEO Adrian Cummins, the Joint Oireachtas Committee on Tourism, Culture, Arts, Sport and Media to discuss working conditions and skills shortages in the tourism and hospitality sector. This is a great opportunity for us to brief government on current conditions within the industry and we will be focused on informing the Oireachtas Committee members which include TDs and Senators, of our current status and most especially the skills crisis and the cost of doing business and our future concerns for the industry.
Finally, just a note to say how extremely proud I am of the work that has been done by the Restaurants Association of Ireland over the last three years, the lobbying effort was enormous, and I would like to thank our CEO Adrian Cummins and his team in RAI HQ for their efforts during this time. I would also like to thank our National Council for their endless support and guidance over the past 3 years. I want to wish the very best of luck to the new President of the Restaurants Association of Ireland whom you will be hearing from in the President’s Report next month.
Mark McGowan -President