Dáil Éireann debate -
Wednesday, 6 Jun 2012

Vol. 767 No. 1

Topical Issue Debate

Debt Renegotiation

Deputy Michael McGrath

I thank the Office of the Ceann Comhairle for selecting this important item for discussion today. My motivation for raising it is to seek an update from the Minister on the Government's efforts to renegotiate the arrangement associated with the IBRC promissory notes, which, as we know, account for approximately €30.6 billion, and, in light of the recent developments in the eurozone, particularly Spain, to negotiate an overall reduction in the burden of bank related debt this State is carrying.

During the recent referendum campaign, the Taoiseach and Ministers were at pains at every opportunity to emphasise there was no connection between passing the treaty and obtaining a deal on Ireland's bank debt. However, no sooner were the votes counted than the Taoiseach, Tánaiste and Ministers were lining up to say the passage of the referendum would strengthen our case for obtaining a deal on the bank debt. In the immediate aftermath of the vote, the Taoiseach said the carrying of the referendum sent a message to EU leaders seeking a just deal on Ireland's bank debt. We have been informed that the Taoiseach raised this issue directly with Chancellor Merkel by telephone last Friday. However, the overtures by the Government have been flatly rejected publicly today by Mr. Mario Draghi, governor of the European Central Bank, and in recent days by a spokesperson for the German Finance Minister, Mr. Wolfgang Schäuble.

It is important to return to the issue of the promissory note. As we know, in March of this year, payment of the €3.06 billion that was due was kicked to touch for 12 months using a convoluted arrangement that involved NAMA and Bank of Ireland, subject to the approval of that bank's shareholders later this month. However, the Irish Central Bank was repaid the €3.06 billion it was due in emergency liquidity assistance. However, there is still €28 billion at play in respect of promissory notes, including the €3 billion that was deferred from this year and the remaining €25 billion.

As far back as September 2011, the Minister for Finance, Deputy Michael Noonan, advised us that the Government was in talks with the European authorities about negotiating the promissory note. In November, reference was made to the preparation of a technical paper. It is now June 2012 but we have seen no such paper, and we have no timeline for the completion of any such paper. What is the position on Ireland's efforts to renegotiate the promissory note structure?

In the Dáil, on 1 February, the Minister, Deputy Noonan, in response to a question I put to him, confirmed that the core Government objective was essentially to come up with a new financial arrangement at a lower coupon and over a longer period of time. Is that the Government's objective? Is the Government objective to repay this over a longer period of time and at a reduced interest rate or is it to reduce the principal - the face value of the amount of money that is owing?

The second question is, are the Government's ambitions to renegotiate the banking debt merely limited to the promissory note or is the Government determined to address the remaining €30 billion or so which was invested in Bank of Ireland, AIB and Permanent TSB through the National Pensions Reserve Fund and the cash reserves of the State which were to hand?

Minister of State at the Department of Jobs, Enterprise and Innovation (Deputy John Perry)

I thank Deputy Michael McGrath for raising this important issue. I am taking this on behalf of the Minister for Finance, Deputy Noonan, who is on important Government business as we speak.

The Government is committed to reviewing the arrangements that were put in place to capitalise the Irish Bank Resolution Corporation, IBRC, by the previous Government. The purpose of this review is to determine whether there is a way to reduce the overall cost to the State. Part of the capitalisation of IBRC was provided using promissory notes as consideration. The troika has agreed to engage in this process to produce a common paper which will consider all options for restructuring the notes in terms of the source of funding, the duration of the notes, the interest rate, etc.

While the development in relation to the end-March promissory note payment, whereby the payment due was settled with a Government bond maturing in 2031, is a positive development, we must keep our eye on the greater benefits which would derive from the re-engineering of the promissory note and also the potential improvements for the banking sector which could also stem from the ongoing technical discussions. It should be borne in mind also that recent concerns in the eurozone underpin the fact our problems are part of a wider European dilemma and the need for solutions to address the Irish situation as part of an overall eurozone-global solution.

It is for these reasons we must look at the recent developments in relation to the promissory note repayment as an initial step to facilitate a project where, if we are successful, it will be in the medium term rather than immediately. These discussions will continue and the Government is focused on developing an alternative solution to the promissory note arrangement in IBRC. The ongoing discussions may also explore options to re-finance the long-term Government bond issued in settlement of the 31 March payment. We all want to arrive at a successful conclusion that is in the interests of Ireland and the EU.

We support proposals to allow European funds to directly recapitalise banks and will ensure any proposals advanced at EU level will be in the best interest of the Irish taxpayer. It is too early to make an assessment as to what mechanism will be arrived at ultimately in the potential recapitalisation of the Spanish banking sector or to speculate as to how such mechanisms could, if implemented, be utilised retrospectively to the benefit of the Irish position. It should be borne in mind that the recent concerns in the eurozone underpin the fact the solutions to address the Spanish situation, as with the Irish situation, should be seen as part of an overall eurozone-global solution. We will continue to review the proposals that emerge in relation to Spanish bank recapitalisation to ascertain whether any of the proposed measures would have favourable applicability if implemented in Ireland, including whether they could potentially alleviate a proportion of the €62.8 billion cost to the State of the recapitalisation of the Irish banks.

While our debt levels are sustainable and we are committed to repaying our debts, the development of an alternative funding arrangement, which would, for example, extend the term of the loan or reduce the costs, would aid our return to the markets in 2013. This Government has constantly sought to advance proposals that are in Ireland's interest, and our successes can be seen in the interest rate reduction that has saved the State almost €10 billion over the lifetime of the EU loans and the settlement of the 2012 promissory note payment by way of a long-term Government bond.

The positive result in last week's referendum has been recognised across Europe as good news for the European project, strengthening the eurozone's course to a more stable future. The referendum result also improves the Government's position in any negotiations that might occur in the further restructuring of the Irish banks, costs incurred to date in the recapitalisation of the institutions or the funding of the assets held by the banks.

The Government will continue to press Ireland's case for a better long-term solution to our debt problems. We will continue to monitor developments in the eurozone closely and to participate actively in discussions leading to a sustainable solution to problems facing individual countries and the eurozone. We recognise clearly that the eventual solution must have regard for Ireland's best interests and the interests of the eurozone. The House will appreciate it is too early in the process to predict what the eventual outcome might be and, as indicated, it is not envisaged the eventual solution will be arrived at in the short term. Given the decision-making process in the European Union, it is much more likely a sustainable solution will emerge in the medium term.

Deputy Michael McGrath

The issue is that something will need to be done in the short term with Spain, which has a matter of weeks at most before certainty must be brought to the recapitalisation of its banks. The problem for Ireland is the absence of clarity as to the negotiating strategy of the Irish Government. We simply do not know what the Government is seeking. Is the Government simply looking at tinkering around the edges of the promissory note or is it looking at securing a write-down or writing off of some of the bank related debt? Those of us in this House and the Irish people deserve to have clarity on the core Government objective in terms of the Irish bank debt. Certainly, if Spain is successful in securing approval for the ESM to directly recapitalise its banks, something in which I wish it well and which I hope it achieves, there is a compelling case for that to be applied to Ireland in order that equity would be applied across the European Union whereby what is given to one eurozone member is also given to another.

Perhaps the Minister of State could give Members a sense of the Government's objective because, during the referendum campaign, we were told it had nothing to do with bank debt and, immediately following the passing of the referendum, we were told the great result strengthened Ireland's case to get a better deal on the bank debt. What are we looking for? Are we looking for longer terms and cheaper interest rates or are we looking for a write-down in the amount owing?

Deputy John Perry

The Taoiseach gave a comprehensive reply this morning. As he stated, it is a eurozone problem.

I do not doubt the capabilities of the Minister, Deputy Noonan. What he has achieved to date has been quite considerable. Deputy Michael McGrath must remember this is a legacy of the previous Government and which the current Administration inherited. The Deputy can be assured the interests of the people will be well served by the Taoiseach and the Minister, Deputy Noonan, who will be negotiating the best deal possible for the taxpayer.

State Examinations

Deputy David Stanton

I thank the Office of the Ceann Comhairle for allowing me raise this matter and I thank also the Minister of State, Deputy Cannon, for being present. This matter impacts on a small number of students. Believe it or not, I first raised this on 11 March 1999 and I am back again today on it. I have been reminded of it because of a specific case, which I do not want to go into, of a young man who is doing the leaving certificate but who is quite ill and may not be able to sit two papers on the same day because he is so ill.

The debate is a little wider than that. Some 57,000 students are sitting the leaving certificate this year and I take the opportunity to wish them well. However, roughly less than 1% of those would be what I would call "crisis" students. These are students who, during the leaving certificate examination period, either suffer a bereavement or have a serious accident or get seriously ill which prevents them from sitting one subject or a number of subjects.

The suggestion is quite simple, that within four to six weeks of not being able to sit the examination for one of these reasons, these students would be facilitated to sit the examination. It would not be a re-sit because they would not have sat the exam. If they were to take part in the original examination process, they would not be able to go ahead.

I believe the number of students involved would be relatively small, perhaps a few hundred, but it could make all the difference for them.

It would mean they would not have to repeat the whole year, something they might have to do if they are not given this opportunity. The logistics are not too demanding. Students could go to a regional centre. There need not be too many regional centres throughout the country. I imagine four centres would be enough. Students would be willing to travel. Teachers and examiners are available. A back-up paper is available for each subject as well. All the logistical reasons against doing this can be countered. It would make a great difference to these students because they would not lose a full year. Many of these students would have worked remarkably hard but, through no fault of their own, they have been hit with this wall. I imagine the Minister of State will agree that if, during a leaving certificate examination, a close member of a student's family passes away, whether a parent of a sibling, it is difficult to expect that student to sit the examination. If that student has worked hard all year and is depending on the points attained in the examination to get a place in college, the choice is to repeat the whole year or settle for something a good deal less than what is merited. This issue should be considered from a humanitarian point of view. I realise it is too late for this year but something should be done for next year.

Another factor was brought to my attention in 1999 when I first raised this matter. If we give students no choice but to repeat the whole year and if the issue is a bereavement, then they would sit the examination on the anniversary of the death of a loved one, something we should try to avoid if possible. The solution I propose will help in many ways. No great additional cost is involved. It can be managed easily in an administrative sense. I call on the Minster to examine the possibility constructively and not to dismiss it out of hand, as occurred in 1999 when I raised the matter previously. I await the Minister of State's response.

Minister of State at the Department of Education and Skills (Deputy Ciarán Cannon)

I thank Deputy Stanton for raising this matter, which I am taking on behalf of my colleague, the Minister for Education and Skills, Deputy Ruairí Quinn. The State Examinations Commission was established as an independent agency in 2003 and has statutory responsibility for operational matters relating to the certificate examinations. Every possible effort is made by the commission, within the limitations of our examination system, to accommodate candidates who suffer illness, bereavement or other trauma immediately before or during the examinations. Each year, arrangements are made to cater for a wide range of personal emergencies. These include alterations to the standard examination timetable and special sittings in venues such as hospitals. The National Educational Psychological Service also assists schools and examination candidates in crisis during examinations.

The terminal nature of the Irish examinations system, however, imposes some constraints on the degree to which the life experiences of individual candidates can be accommodated. The issue of repeat examinations was considered prior to the State Examinations Commission's establishment by the Department of Education and Skills. It was concluded that the constraints inherent in a terminal and externally examined examination system result in significant difficulties in respect of the provision of repeat examinations. These constraints derive from the length of the school year, the timescale required for holding examinations, providing adequate time for the preparation of marking schemes for repeat examination papers and arranging for the comprehensive briefing and training of examiners, providing ample time for those examiners to conduct the marking to a high standard, the pressing requirement of having results available to feed into the college entry process conducted by the Central Applications Office and college admissions departments in August each year and the need for an appeals system for the review of repeat results.

The State examinations are run against the tightest of timescales and to maximum capacity in delivering a high quality product at both leaving and junior certificate levels. It is not possible to hold repeat examinations and have results available to the deadlines required. Repeat examinations would not accommodate all the life experiences of individual candidates because not all candidates would be able to take the repeat examinations for one reason or another. Over the years the SEC has dealt with a great variety of individual cases. In the final analysis, it is difficult to envisage a fair, proper and impartial system of repeat examinations without allowing all candidates to repeat their tests.

Deputy Stanton may be referring to a specific case. The Deputy should note that the Minister's office tried to make contact with him today to establish if there are any specific matters which need to be addressed or brought to the attention of the SEC. I would be pleased to bring to the SEC's attention any specific case which the Deputy wishes to raise.

Deputy David Stanton

I thank the Minister of State for his response. This issue relates to a small number of students, perhaps fewer than 400. They could be accommodated in four centres. The examiners have already been trained and briefed. I have been an examiner in years gone by. Most of the points made by the Minister of State can be refuted. When I brought up this issue in 1999 I received a response which was, almost word for word, the same. I congratulate whoever in the Department dug out that reply but it is neither here nor there.

This is an important humanitarian issue which we should make an effort to address and it is not beyond the bounds of possibility to do so. It would not make a great demand on the system. It would only cater for a small number of students. It would not be a repeat examination because those involved would not have sat the examination previously because of illness or bereavement. I call on the Minister of State to use his political good offices. He should approach the State Examinations Commission and call on it to re-examine this issue and determine whether any change is possible. If we can help even one student who has suffered a bereavement, who has had a serious illness or accident and who must put his whole life on hold for 12 months through no fault of his own, then we should do so.

Deputy Ciarán Cannon

The Deputy will be aware that the leaving certificate is a terminal examination, carried out by external examiners. This contrasts with examination systems in other countries where assessment is conducted on a continuous basis or takes place at regular intervals and where some of the assessment is conducted by the student's teachers.

It is an inevitable consequence of a terminal, point-in-time system, such as the system we have, that some candidates will take certain tests at a time which they believe to be less than optimum. Each year the leaving certificate and junior certificate examinations give rise to many situations where real human needs, such as those highlighted by the Deputy, must be balanced by the requirement of equity for the general body of candidates. This is one of the greatest hurdles to be overcome in putting in place any system along the lines suggested by the Deputy. However, I would be more than willing to engage further with the Deputy in the coming weeks and to engage directly with the SEC to establish whether we could reassess the decision taken some time ago not to include the opportunity for repeat examinations for children or young people who experience trauma during examination time and to establish if any further progress can be made.

Business Regulation

Deputy Brian Walsh

I thank the Ceann Comhairle's office for allowing me to raise this matter, which is of some importance to small businesses, ordinary workers and the Revenue Commissioners. Recent years have witnessed the proliferation of what could be described candidly as an underhand and damaging practice by which viable companies deliberately accumulate debt before winding up and starting again as a new entity, leaving a trail of unpaid creditors in their wake. The companies that engage in this practice, in which a debt-free business arises in a new guise from the ashes of a failed entity, are commonly referred to as phoenix companies.

Necessarily, business ventures entail an element of risk. It is inescapable that some businesses will fail. For those who try in business but fail, it is important that supports are in place in order that the risks associated with such ventures do not become so great as to constitute a deterrent against the entrepreneurial spirit which helps to drive and grow our economy. A clear distinction must be made, however, between companies with a genuine inability to pay their debts and those which deliberately contrive to avoid paying debts. I am aware of some cases in which companies have closed for business on one particular evening, owing significant amounts of money to the Revenue Commissioners and small businesses among others. However, the following morning the same directors have opened under the guise of a new company in the same premises debt-free, leaving small suppliers to suffer and leaving the taxpayer to pick up significant bills. The prevalence of this practice and the extent of its impact on the Exchequer should not be underestimated. Last year, the business monitoring agency, BusinessPro, calculated that as many as one in 20 new companies showed classic phoenix characteristics, such as common directorships with their failed predecessors. In many of these cases, pension contributions, wages and moneys owed to small suppliers are left unpaid while accumulated tax bills are left outstanding at considerable cost to the taxpayer. The problem has been identified to the Revenue and approximately 700 phoenix companies are currently the subject of risk focused monitoring to ensure enforcement measures can be taken expeditiously should issues of non-compliance arise again. However, monitoring a phoenix company after it has re-formed and jettisoned its debt is to close the stable door long after the horse has bolted. It is of little consolation to the Revenue Commissioners, unpaid employees who are out of pocket or small suppliers that the unscrupulous directors of a company will find it more difficult to get away with their actions a second time.

Other regulations that purport to safeguard against the activities of phoenix companies include the requirement under company law of a liquidator to report on the conduct of company directors. I am aware of cases of collusion between directors and amenable creditors whose debt is exaggerated to secure greater voting rights in the appointment of co-operative liquidators. In some cases, bogus creditors are created to give stronger voting rights to those who wish to appoint a friendly liquidator. Such practices could be prevented if, for example, an independent auditor were required to verify the authenticity of invoices pertaining to debts in certain instances.

What is certain is that strengthened regulation is required to prevent phoenix type activity by companies in the first instance in the interests of small businesses, employees, ordinary workers and the taxpayer. In these circumstances, I ask the Minister to consider what legislative options may be open to him to strengthen safeguards against this costly and inequitable practice.

Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton)

I thank Deputy Walsh for raising this matter. As the Deputy recognised, company failures while unwelcome are a normal part of business and entrepreneurship. I suspect he will be aware of some of the information I propose to impart in that I will set out what are the restrictions under company law.

Company law is based on the essential structure that a company is a separate legal entity from its members and the directors who manage it. This means a company's profits or losses are its own and are not transferable to the individuals within the company. This framework means that persons involved in an insolvent company which has been liquidated may lawfully establish another company without the debts of the previous company following them into the new corporate entity. The importance of this framework is that it encourages investment and entrepreneurship which can lead to the creation of jobs. Section 56 of the Company Law Enforcement Act 2001 provides that the liquidator of an insolvent company must submit a report to the Office of the Director of Corporate Enforcement, ODCE, on its demise, together with information on the conduct of any person who was a director of the company during the 12 months preceding its liquidation. The liquidator must also proceed to apply to the High Court for the restriction of each of the directors of the insolvent company, unless relieved of that obligation by the ODCE.

While there is no definition of the term "phoenix company" in Irish company law, in general it is considered to be a scenario in which directors of a company restart a business in disregard of their duties under company law and their financial and other obligations to one or more of the stakeholders in a previous failed company. This may occur, for example, by failing to liquidate the previous company and ensuring the payment of debts that can be paid by the previous company.

Phoenix practices are an abuse of separate legal personality and may result in competition in the applicable business market being distorted because the phoenix company enjoys lower than market costs and, therefore, has the potential to achieve an unfair competitive advantage in the marketplace; creditors suffering financial consequences, some of whom may themselves fail in consequence; and directors not bearing any personal liability or otherwise escaping accountability for the failure.

The Company Law Enforcement Act 2001 established the Office of the Director of Corporate Enforcement and strengthened the legislative provisions dealing with insolvent companies. The director has powers to initiate company investigations, prosecutions, restrictions and disqualifications with a view to curbing relevant abusive practices by directors. The ODCE has been also conferred with certain powers to address unliquidated insolvent companies, namely, those companies which are not in liquidation and have not yet been dissolved. The legal powers include applying to the High Court for the restriction of the company's directors. This power has been successfully used to sanction directors.

The effect of being disqualified is that when such a disqualification order is imposed the person concerned is disqualified from acting as a director, auditor, officer, receiver, liquidator or examiner or being involved in the promotion, formation or management of a company for a period of five years or such other period as the court may direct. A restriction declaration, if made, prohibits an individual from acting, either directly or indirectly, as an officer of a company or from being involved in its formation or promotion for five years, unless the company is adequately capitalised. In the case of a private company the capital requirement is €63,487 in allotted paid-up share capital, which must be paid for in cash. The equivalent figure for public companies is €317,435.

As the Director of Corporate Enforcement stated in his recently published annual report, insolvent companies abandoned by directors which come to be struck off the register of companies for a failure to file their annual returns continued to receive the attention of his office in 2011. This category refers to companies which are not in liquidation but which have been dissolved having been struck off by the Registrar of Companies for failing to file annual returns with the Companies Registration Office. The companies in question may be solvent or insolvent. In the case of insolvent struck off companies the directors are eligible to be disqualified from acting as company directors. It is open to the Office of the Director of Corporate Enforcement to apply to the High Court for the disqualification of the directors of these struck off companies. However, the law also provides that the court cannot disqualify a person who demonstrates to the court that the company had no liabilities at the time of strike off or that the liabilities in question were discharged before the initiation of the disqualification application. In considering the penalty to be imposed, the court may instead restrict the directors where it adjudges that disqualification is not warranted. In other cases, the former directors are able to satisfy the ODCE that all liabilities had been settled at the time of strike off or prior to the issue of the intended court proceedings.

The giving of credit by one business to another is an essential part of normal business life and facilitates entrepreneurship. However, creditors must also bear responsibility for protecting their own commercial position and for bringing to account the persons involved in phoenix activity. The Office of the Director of Corporate Enforcement complements these efforts by selecting those cases where particularly serious phoenix behaviour has taken place or substantial public interest may be at stake. The office welcomes any complaints from members of the public concerning the activities of phoenix companies.

In a nutshell, a wide range of powers is available to address the issue of phoenix companies. Deputy Walsh referred to indications of collusion between directors, creditors and perhaps liquidators and alluded to the possibility of having independent audits. As his proposal was not anticipated, I will seek a response from my officials to ascertain whether the carrying out of such independent audits in respect of the debts of companies would be practicable.

Deputy Brian Walsh

I thank the Minister for his comprehensive and helpful reply. The main loser in the circumstances I have described is not the small suppliers, although they also incur losses, but the Revenue Commissioners to whom VAT, PRSI and PAYE remain unpaid. It is galling to see the directors establish new companies immediately after closing phoenix companies. I am aware of several cases in my constituency of companies closing on one evening and re-opening under a different guise the following morning. The powers available are clearly not restrictive enough and the provisions of the Companies Acts clearly not sufficient to deter unscrupulous company directors from engaging in the types of behaviour I have described. The current provisions must be strengthened. In that regard, it may be necessary for the Minister for Finance to introduce legislation to strengthen the hand of the Revenue Commissioners in dealing with the individuals involved in such companies.

As I noted the main loser in the case of phoenix companies is the taxpayer who incurs losses as a result of the non-payment of taxes. Some of the examples referred to me indicate that the moneys not collected by the Revenue Commissioners could amount to tens of millions of euro, which is a significant amount of money. Steps should be taken to address this issue more comprehensively.

Deputy Richard Bruton

As Deputy Walsh noted, the Revenue Commissioners are monitoring approximately 700 cases. In 2011 around 70 cases involving more than 100 struck off companies were investigated by the ODCE. At least 50 were deemed not to be suitable for legal action and remain under investigation. In the remaining 20 cases disqualification proceedings were initiated or being actively contemplated at year end. The ODCE obtains a lot of co-operation from many bodies, not just from the Revenue Commissioners, but also from the Construction Industry Monitoring Agency which investigates complaints of non-compliance with registered employment agreements in the construction sector, from the Pensions Board and the Office of the Pensions Ombudsman in respect of unpaid pension contributions, and from the Department of Social Protection in respect of outstanding redundancy liabilities. Information is gathered by the ODCE in an attempt to identify unliquidated insolvent companies or cases of abuse. The liquidator has the obligation to report company directors within six months of his or her appointment.

The system is designed to catch these cases, but if the Deputy has specific information or proposals that will help to tighten this up, I will certainly have it or them examined. I will certainly examine whether a role for auditors would help. Obviously, we have to be conscious of regulatory burdens and obligations; therefore, we would have to assess whether the measure would confer more benefits in catching wrongdoing over the cost that might be imposed on those who are doing their business according to the books.

General Practitioner Services

Deputy Anthony Lawlor

I thank the Ceann Comhairle for giving me the opportunity to raise this issue and the Minister of State for being in attendance. The issue I wish to raise was brought to my attention in my clinics a few weeks ago by an elderly couple who explained to me that they were both in need of regular blood tests because one of them was on warfarin which required regular blood testing, while the other needed blood tests owing to a diagnosis. They told me that they both had medical cards and that they were being charged by different GPs for having the tests done. They were both visibly upset when they told me this because they believed they should not be charged for this facility as they both had medical cards.

When they left the office, we conducted some research. We rang a number of GPs in Kildare and found out that while a few doctors were not charging patients for this facility, a number were charging between €20 and €45, even though it should be provided free of charge. Doctors claimed they were charging for the service because it was taking time for them to carry out blood tests. The health correspondent of theIrish Independent, Eilish O’Regan, wrote than in some cases it could take up to 20 minutes to carry out a blood test. Was blood being taken from a stone? Other reasons for charging included the cost of transporting blood samples to laboratories. If a doctor takes five blood samples per day and is charging €40 per patient, for €200 I would pick up the blood samples on my bicycle and bring them to the laboratory. It seems ridiculous.

I wrote to the HSE to confirm if the practice of charging for these services was allowed. It sent me a letter on 17 May. It stated:

It is a general practitioner's contractual responsibility to provide proper and necessary treatment to eligible persons. If part of that proper and necessary treatment, as referred to above, includes routine phlebotomy, the GP must provide that service free of charge under the terms of his or her contract. The HSE has written to GP contract holders and clarified the position on this matter, and has also communicated the position to the Irish Medical Organisation.

I have also a letter the HSE sent on 20 June 2011 which clearly states GPs should not be charging medical card holders for these services. There is a response onMediLearning.ie from Dr. Mary Gray, the spokesperson for GPs on the IMO committee. She stated the following:

This position was notified to the Department of Health and Children in 2009 and 2010 in IMO submissions on the Financial Emergency Measures in the Public Interest Act. The matter was further clarified in correspondence with the Minister for Health and Children ... It was not a matter of dispute between the parties and we therefore strongly reject any suggestion that GPs are acting outside of the terms of the GMS contract.

Therefore, the IMO believes doctors should charge for the service, while the HSE believes they should not. People are at loggerheads and there seems to be no solution forthcoming either from the HSE or the IMO. This has been ongoing since 2009. At the end of the day, do we expect patients who have built a long-term relationship with their doctors to ring the HSE and make a complaint? I find it very difficult to believe. The direction should come from the HSE. Those who are suffering are the sick and the elderly, the people for whom we have to care.

Deputy Minister of State at the Department of Health ( Róisín Shortall)

I thank the Deputy for raising this issue because it has come up from time to time in the last year in the House. I am glad to have the opportunity to clarify the position on it.

The current general medical services GP capitation contract was introduced in 1989 and is based on a diagnosis and treatment model. Section 11 of the contract provides that the medical practitioner shall provide for eligible persons, on behalf of the Health Service Executive, all proper and necessary treatment of a kind usually undertaken by a general practitioner and not requiring special skill or experience of a degree or kind which general practitioners cannot reasonably be expected to possess. GPs who hold GMS contracts with the HSE must not seek or accept money from medical card or GP visit card holders for services covered under the GMS contract. In circumstances where the taking of blood is necessary either to assist in the process of diagnosing a patient, or monitor a diagnosed condition, the GP may not charge the patient if he or she is eligible for free GMS services. I am very disappointed that a minority of GPs have chosen to charge patients whom the State has deemed to be unable to meet the cost of medical services.

This issue was first raised last year. At my request, the HSE wrote to all GMS GPs on 21 June 2011, reminding them of their obligations under their contract in respect of services such as phlebotomy and advised them that charges should not be applied for such services. The HSE also pointed out that in many GP surgeries it was the practice nurse who took blood samples and that the HSE significantly subsidised the cost of employing such practice nurses. I will continue to monitor the situation closely to ensure this unacceptable practice is brought to an end.

The HSE is encouraging eligible patients who believe they have been inappropriately charged by a GP for routine phlebotomy services to seek a refund from the GP in question. Alternatively, they may wish to follow up with the HSE and the matter will be fully investigated. Formal complaints will be dealt with through the HSE's consumer affairs service. In a number of cases to date GPs have reimbursed their patients following receipt of correspondence from the HSE. It is appreciated that because of the nature of the GP-patient relationship, it may be difficult for patients to make such complaints. I fully appreciate this. Where public representatives are made aware of GPs charging GMS patients in error, they may wish to notify the HSE directly.

It is worth reiterating that the programme for Government provides for the introduction of a new GMS contract, with an increased emphasis on the management of chronic conditions such as diabetes and cardiovascular conditions. It is envisaged that the new contract, when finalised, will focus on prevention and include a requirement for GPs to provide care as part of integrated multidisciplinary primary care teams. Officials in my Department are in consultations with the HSE with a view to drawing up a new contract. The appropriate arrangements for phlebotomy services will be considered as part of the new contract. I again thank the Deputy for raising the matter.

Deputy Anthony Lawlor

I thank the Minister of State for her reply. I note that she has raised this matter on a number of occasions, but the sad fact is that the practice continues. The Minister of State said it is being continued by a minority of GPs. I can assure her that the majority of GPs are charging medical card holders for blood tests.

Should a test case be taken against a GP? I cite the vice-president of the Irish Medical Organisation, Dr. Ronan Boland and Dr. Mary Gray, who has said that the IMO received legal advice that routine blood testing was not part of their contract. She said if any action were taken against a GP the IMO believed it would be on solid legal ground to defend it. I believe we should take a test case against one of these doctors and establish whether they have a legal right to charge for this service.

Do we need to introduce legislation to ensure the HSE contract requires doctors not to charge for blood tests? Will the new contract referred to by the Minister of State ensure all loopholes such as this are closed? Patients who are scared and worried do not want to have a conflict with their GPs with whom they have built up long and trusting relationships. Public representatives such as myself do not want to report GPs on behalf of constituents because this can also lead to a breakdown in trust. We must ensure this does not happen in the future.

Deputy Róisín Shortall

I am disappointed to hear the problem is widespread in Deputy Lawlor's constituency, and I do not doubt him for a moment. I would encourage the Deputy to take action and to report the names of the GPs who are charging, when they should not be doing so, to the HSE. If he has a concern about doing that, I would be happy to act as a go-between and to accept reports from him on GPs who have been found to have engaged in this practice.

Following the action taken last year, a number of patients have been reimbursed. I will now give serious consideration to sending a reminder letter to GPs. I thought the problem had been stemmed. If that is not the case, I am happy to pursue the matter. If Deputy Lawlor will forward me the information he has, I will take action on it.