I want to thank the Deputies on both sides who contributed most constructively to the debate. First of all, I had better deal with the questions that were raised in relation to the cost of health services. Deputy Barry and some other Deputies suggested that the Exchequer should assume full liability. To do what has been suggested would in the coming financial year involve the transfer of about £25 million from local to central taxation. This would have to be considered by the Government as a matter of major financial policy. I myself believe that whatever the arguments may be for the division of health expenditure as between the rating authorities and the Central Government, the rating authorities should always have some responsibility for raising money because, if the whole of the amount were subscribed by the State, they would lose all the independence they have in establishing health policy and establishing priorities in health policy.
To raise this additional amount from taxation would require an extra 2½ per cent on turnover tax or an extra 6p in the £ in income tax or crippling increases in the duties on such items as drink and petrol. The whole of this matter is coming up for consideration by the Minister for Local Government. There have been many reports on ways and means of changing the rating structure. The Minister for Local Government can speak far more ably on this subject than I can. There is the question of the possible need for a re-valuation.
I want now to repeat what I said in the course of my speech on the Estimate that about 75 per cent of the total health services are paid for from central taxation. The £9 million a year coming from agricultural rating relief is quite rightly included because the agricultural rate relief, which is a subvention from the State to relieve rates on agricultural land, is applied in proportion to the total expenditure of local authorities. It is applied in proportion to the health expenditure in each county area and it is, therefore, perfectly fair to include the agricultural rate relief. That being the case, the State is paying for 75 per cent of the health services.
I admit that in the urban areas that rate relief does not apply and health rates bear very heavily on ratepayers. Although the paper I issued to Deputies and to health board members, analysing the breakdown of the increased expenditure by health authorities this year, does not apply to the 1971-72 accounts, as Deputies freely went beyond the 1971-72 period in their speeches and referred to current health policy and even to such items as choice of doctor, which only begins on April 1st, no one will, I think, object if I repeat what I wrote to Deputies: of the increased expenditure for health in the coming year £9.55 million represents increases entirely related to remuneration, the increased cost of commodities, the increased cost of drugs, food and maintenance, the effect of reducing the hours of working to 40 with a consequent introduction of new staff, and a very tiny element, which it was impossible to separate from the accounts, for increased numbers of patients. For new services and for extensions to and improvements in existing services the total increase this year is £3 million. That means that there will be in the coming year a volume increase of 4 per cent on the cost of the health services as compared with last year.
I understand that in even wealthier countries than ours a volume increase of anything between 3 and 5 per cent is considered acceptable. On the basis of compound interest this means, of course, that the volume of health services in constant money terms doubles in 15 years. In fact, vis-à-vis the volume of health services at constant money terms, disregarding increases in remuneration, not only in the last decade but for a longer period, the total value of production went up by about 50 to 60 per cent which means that, in order to improve the health services, after disallowing the heavy costs of remuneration increases, the people have willed a very great increase in expenditure. Now this is absolutely essential if the services provided are to keep us in the group with the ten top countries in the world in which, according to the WHO statistics, we belong at this moment; the statistical tables provided by that organisation indicate in general the state of the health services and the state of the health of the nation. I do not think I need say any more on that subject.
I was very glad to be able to keep the increase in the rates at an average of 30p for this year. We are constantly examining this question of the rating structure. There are many problems in connection with it. We have passed a law which enables an additional rate to be levied to relieve rates on necessitous persons. That law has been applied in different measure in different counties by the different rating authorities. It serves a very useful purpose. Again, people can now pay rates by instalments if the respective authorities provide the necessary machinery. I agree that rates bear very heavily on the community but I notice that the increase in rates in relation to the growth in production shows that production has grown to the extent where it measures up against the growth in rates.
We are, admittedly, a fairly heavily taxed country; 30 per cent of the total value of production and of all services is taken in taxes and rates. Again, that places us amongst the respectable top ten countries in all of which there is a common feature of high taxation. While rates may bear very heavily on people with fixed incomes, part of the unpopularity of rates lies in the payment of two moieties. Now, if a person has to pay £60 in rates in two moieties over 12 months, that is about the same as he would pay by way of tax on petrol for a car of medium size over a distance of 10,000 miles or about the same as smoking 20 cigarettes every day. I am not now trying to excuse the heavy impact of the rates. I am merely indicating that the unpopularity lies in the money payment as distinct from the subtraction of tax by PAYE or as distinct from the excise tax automatically paid when one purchases a pint of stout, a packet of cigarettes or a gallon of petrol. I merely mention that in passing. That is all I can say on the subject of the difficulty of transferring the whole burden of rates to central taxation. I believe an additional 2½ per cent on turnover tax would not be very popular.
Deputy Tully raised the question of supplementary grants to limit rate increases. He said there was an apparent inequality of treatment in their application to different areas. Some areas get more supplementary grants than others in order to confine the health rate increase within the specified limits. I could not explain this without going into very great detail, but I can assure the Deputy and those others who raised the point that the differences which exist are not caused by either extravagant spending or bad estimation.
An example may illustrate the point. For instance, because of the big difference in valuation it would take almost as much special grant to give County Meath the equivalent of 14 pence in the £ relief as it would to give County Monaghan the equivalent of nearly 30 pence in the £ relief. Furthermore, it should be borne in mind that areas which utilise the services of the voluntary hospitals to any appreciable extent are already getting considerable relief through the medium of the grant-in-aid of the Hospitals Trust Fund as compared with those areas which provide the necessary services in their own hospitals. Therefore, there is nothing we can do about the matter which he raised.
A number of Deputies raised the question of the health contributions under the Health Contributions Act. I have given a very clear description to Deputies of the circumstances in which the Health Contributions Act was started. Some Deputies suggested that we could extend the family doctor service to persons in the limited eligibility class and finance it by an increase in the health contributions. The health contribution brings us in £5 million gross, £4.3 million net. The cost of extending the family doctor service to the limited eligibility class cannot be easily calculated accurately, but I would say it would be between £20 million and £25 million. It will immediately be seen that a very heavy contribution would have to be levied for this purpose. The question of what the level of the health contribution in future would be depends on the total Exchequer position in relation to health policy, but the Government have decided that if one was to levy more than £7 a year and to do it because people are demanding better and better health services and they are going to become more expensive as the years go by it would only be fair to do it if you could have a payrelated form of contribution. I understand that the Minister for Finance is preparing a computerised system enabling pay related social welfare benefits to be introduced as indicated as a long-term promise by the Minister for Social Welfare. When we can have pay related social welfare benefits we will also be able to have pay related health contributions.