Dáil Éireann díospóireacht -
Tuesday, 20 Oct 2009

Vol. 692 No. 2

Adjournment Debate.

Tax Code.

Deputy David Stanton

I thank the Office of the Ceann Comhairle for giving me permission to raise this matter. We speak much in the House about active citizenship. St. Patrick's Hospital Fundraising Association in Fermoy is an example of active citizenship in practice. It recently purchased 12 new safe patient mobilisation beds at a cost of €53,000. These beds have made a huge difference to the patients in the hospital and assist the staff in further enhancing the already high quality of care. It is without doubt that all of the hard work that goes into fundraising for local hospitals such as Fermoy greatly benefits the patients, most of whom are elderly.

All of this money was donated by the local community for the association, which is a registered charity. It is estimated that the association in Fermoy has raised over €100,000 between 2006 and 2009 in order to purchase appliances and equipment. Recently, a 30-bed unit was built at the community hospital in Fermoy and the association contributed €460,000. There is no doubting the very valuable and hard fundraising work that is carried out by people like those in Fermoy. Other groups in my constituency, such as those in Youghal, Midleton, Cobh and Mallow also have worked and continue to work very hard fundraising on a voluntary capacity to raise funds to purchase much needed equipment for their local community hospitals in order to support front line services. I am sure it is the same all over the country. Not one cent is wasted, unlike money in the charge of many State agencies, examples of which are well known.

To come back to the purchase of the safe patient mobilisation beds, costing €53,000, the Minister for Finance showed his gratitude to the people of Fermoy by charging VAT to the tune of 21.5% on the purchase. The Minister has set a threshold of €25,390 on each individual item in order to qualify for relief under the VAT refund order, SI 58/92. Even though the beds were one order, the purchase does not qualify for the relief because the refund only applies to medical equipment costing in excess of €25,390. The Minister charged a VAT bill on the purchase of €11,000. Imagine all the cake sales and raffles that had to be held in order to raise €11,000 simply to hand it over to the Minister. Imagine what could have been done in the hospital with that money, which was raised on a voluntary basis.

I call on the Minister to consider doing two things. First, he should reduce the threshold, and there is an opportunity to do this in the Finance Bill. Second, he should consider the purchase of items such as these beds as one item so that the VAT relief can be allowed to the voluntary association. This would encourage groups to continue to raise more money. It will save the State in the long run and do much good for those in real need in our communities. If the Government is really serious about active citizenship, it should encourage this kind of active citizenship on the ground, which is happening as we speak. I await the Minister of State's reply. I hope this will not end here but will go further. Perhaps we can do something constructive on this matter.

Minister of State at the Department of Finance (Deputy Martin Mansergh)

I pay tribute to those who engage in active citizenship and those who fundraise for vital medical equipment. Nothing I say will detract from that.

Deputy David Stanton

We will see.

Deputy Martin Mansergh

I would first like to set out the context of this relief. Non-profit making organisations and voluntary groups that are engaged in the supply of goods and services closely related to welfare and social security, such as hospitals, are exempt from VAT by virtue of paragraph (vii) of the First Schedule to the Value-Added Tax Act 1972. This exemption from VAT, which applies across all EU member states, means that such organisations or groups do not register for VAT; they do not charge VAT on their supplies of goods and services; and they are not entitled to credit for VAT incurred on goods or services acquired by them. In this regard, where a hospital purchases a good or engages a service, any VAT liable in the charge for that good or service must be borne by the hospital.

However, there is provision within the Irish VAT code for the refund of VAT incurred on the purchase of a new medical instrument or appliance by a person who donates the medical equipment or appliance to a hospital. The Value Added Tax (Refund of Tax) (No. 23) Order 1992 provides that certain conditions must be met in order for a VAT refund to apply: in the first instance, the appliance or instrument must be donated to a hospital; the order applies to any new instrument or appliance, excluding means of transport, which has been designed and manufactured for use solely in medical research or diagnosis, prevention or treatment of an illness; the Minister for Health and Children must recommend that a refund of tax under the order is appropriate, having regard to the requirements of the health services in the State; it is a condition of the order that no part of the funds used to purchase the goods be provided directly or indirectly by the State, a State body or any public or local authority, or indeed by the hospital to which the equipment is donated; and, finally, the amount on which VAT is chargeable must exceed €25,390 in order to qualify. Therefore, individual medical instruments or appliances costing less than €25,390 do not qualify for a VAT refund under the scheme.

The effect of the order is to allow a refund of VAT paid on qualifying medical equipment purchased through voluntary donations. When the refund order was originally introduced in 1987, only partial relief was granted. However, since the order was amended in 1992, the relief applies a full repayment of VAT. In recent years, the number of repayments claimed under the medical donations refund order was 21 in 2007; 13 in 2008; and 22 to date in 2009. The cost of these repayments amounted to €483,000 in 2007; €196,000 in 2008; and €903,000 to date in 2009.

A similar VAT refund order was introduced in 1995 for the repayment of VAT incurred in the donation of any new instrument or appliance to a research institution or a university, school or similar educational body engaged in medical research in a laboratory. Similar conditions are attached to this order, including the minimum value threshold of €25,390. The VAT refund order was introduced to help defray the cost of more expensive items purchased by voluntary donations. Items costing less than the threshold of €25,390 are excluded from the relief in order to limit the relief to more expensive medical equipment.

The current threshold level has not changed in the 22 years since the refund was introduced in 1987 at £20,000, which was translated to €25,390 to coincide with the introduction of the euro in 2002. Given increasing inflation since the introduction of the current threshold, the value of the threshold has reduced significantly in real terms. Taking inflation into account, the 1987 threshold would equate to approximately €46,500 in 2009 values. In this context, a greater level of lower priced medical appliances now qualify under the order than when the relief was originally introduced. In the circumstances, therefore, there are no plans to change the current threshold.

Health Services.

Deputy Michael McGrath

I welcome the opportunity to raise this important issue. There was a great welcome in 2001 when the new primary care strategy was unveiled. It set very ambitious targets in regard to the roll-out of primary care teams throughout the country. Indeed, the target set at the time was for over 500 primary care teams to be implemented and established throughout the length and breadth of the country. According to the HSE website today, there are 120 primary care teams up and running.

It is important to go back to the reason that the primary care strategy was introduced, namely, because it is estimated that 90% to 95% of the interaction that people need with their health service can be delivered at a local level, in the local community, in an environment that is more appropriate to their needs, more convenient and more accessible. We need to move away from the traditional system in Ireland of having a greater reliance than is necessary on the acute hospital system.

It is important that we implement the 2001 strategy with a greater degree of urgency. Progress thus far has been slow. While a certain number of primary care teams have been established, with excellent outcomes for the communities concerned and the patients they serve, there is potential for much greater progress throughout the State. In particular, I propose to highlight the situation in Cork county and city.

There is no doubt that our traditional system of patients accessing the acute system via GP referral is overly cumbersome and bureaucratic. People who do not need to enter an acute hospital environment are forced to go through the system, which can be slow and expensive. In many cases, patients' needs could be met at a local level if an appropriate primary care facility were available in their community. Primary care teams can provide a range of services, including GPs, practice nurses, community nursing services, occupational therapists, physiotherapists, social workers, home care and support staff and so on. In addition, primary care team members can link in with other community-based disciplines to ensure all the health and social needs of the community are provided for, including speech and language therapy, dieticians, mental health services, counsellors, psychologists, chiropodists, dentists and so on.

Last June I spoke in an Adjournment debate about the situation in my home town of Carrigaline where the Health Service Executive has acquired a suitable site to develop a primary care centre. Planning permission has been granted for a state-of-the-art facility and a budget of more than €4 million was allocated for this purpose in the executive's capital plan. However, the project continues to await sanction because of the review of that plan. This is symptomatic of what is happening with other projects throughout the State which have unfortunately been stalled because of budgetary issues.

The simple economic reality is that we will save money in the long term by investing now in primary care centres. An effective primary care network keeps people out of the bureaucratic and expensive acute hospital environment where the vast majority of them do not need to be. More people are likely to interface with the health service if services are available at a local level. That is far preferable to having to travel, once an appointment is eventually secured, to a busy acute hospital environment. It is a question of better outcomes for patients and better value for money for the taxpayer. It makes sense to provide the vast majority of health and social services at a local level where people can access them in a convenient manner and where they can hope to achieve the best possible outcome. I look forward to hearing the Minister of State's update on the roll-out of primary care centres in Cork city and county. Some progress has been made in this area but there is potential for much more if the political will is there.

Minister of State at the Department of Health and Children (Deputy Trevor Sargent)

I am taking this Adjournment matter on behalf of my colleague, the Minister for Health and Children, Deputy Harney. I thank the Deputy for raising this issue as it affords me an opportunity to reaffirm the Government's commitment to developing community-based services at local level.

The Health Act 2004 provides the Health Service Executive with responsibility for the management and delivery of health and personal social services. In line with the Government strategy, Primary Care — A New Direction, the executive is refocusing its services in order to provide people with direct access in the community to multidisciplinary teams including general practitioners, nurses, health care assistants, home helps, physiotherapists and occupational therapists. This is designed to maintain people in their own homes and communities for as long as possible, decrease hospital attendances and facilitate early hospital discharge and supported care at home.

The HSE plans to have 530 primary care teams in place by 2011. Of that number, almost 130 are already in place and it is intended to have 210 in place by the end of 2009. Of the planned overall total of 530, 138 of the teams will be in the HSE southern area, including 66 teams within Cork city and county. The HSE southern area's target is to have 63 primary care teams in operation, that is, holding clinical team meetings on individual client cases and involving GPs and HSE staff, by the end of 2009. As at 30 September, there were 39 teams in operation in the area. Of these, 13 are in operation in Cork city and county, serving a population of more than 90,000 persons. Another 20 primary care teams in Cork city and county are at various stages of development, with at least ten due to become operational by the end of this year.

The HSE is reassigning staff working in primary, community and continuing care services to work in primary care teams. The executive also intends to redeploy into community services a significant number of staff from acute hospitals and corporate functions. Where possible, primary care teams are based in a single facility to provide easy accessibility for patients and to enhance multidisciplinary teamwork. However, teams are working very effectively where they are not co-located. Although they are not in a single building, they still come together for clinical team meetings. Information technology usage facilitates team working among members who may be based in separate locations.

As part of budget 2009, the Government announced its strong support for the Health Service Executive's innovative proposal to fast-track the roll-out of new primary care centres in collaboration with the private sector through leasing arrangements. The HSE has indicated that, to date, its board has approved a total of 19 locations in Cork city and county to proceed with negotiations with interested parties to secure leasing arrangements. One agreement for lease has been signed and 14 letters of intent have issued.

Grant Payments.

Deputy Timmy Dooley

I thank the Office of the Ceann Comhairle for selecting this important matter for discussion. Recognising the serious financial situation in which farmers find themselves, will the Minister of State consider arranging a payment schedule over a number of years to accommodate those farmers who have been asked to make a repayment as a result of inadvertent over-claiming in respect of various agricultural schemes? In the middle of this year, the farmers in questions became aware through various communications from the Department of Agriculture, Fisheries and Food that they had inadvertently over-claimed in respect of, in some cases, very small parcels of land where farm buildings had been built, roads developed or scrub had grown. These errors were identified through the Department's sophisticated mapping system.

Farmers who had claimed such land as forage or as available for grazing were found to have over-claimed, a completely inadvertent error in the majority of cases. In some cases, it was found on appeal that the mistake was on the Department's side. Nevertheless, the obligation to repay the moneys in question has placed a significant burden on the farming community. As I understand it, the sums are accounted back to 2005. In many cases of which I am aware, the sum owing amounts to in excess of €1,000. Moreover, written communications from the Department have been somewhat confusing, with requests for repayment coming in dribs and drabs and an apparent lack of co-ordination. For example, a farmer may receive a bill today seeking repayment in the sum of €70, and another letter tomorrow requesting repayment of a further sum of €250. I have spoken to farmers who have received six or seven such letters.

Will the Minister of State undertake to ensure that every farmer receives a clear communication as to the total over-claim amount? Many farmers may encounter difficulties in discharging the amount due given the difficulties they currently face. As well as an especially poor summer, they are coping with low prices for global commodities such as milk and beef. In addition, decisions the Government has had to implement because of the constrained financial circumstances in which we find ourselves have had an impact. For example, entry to REPS 4 is being discontinued for those farmers leaving REPS 3, and there has been a reduction in the disadvantaged area payment. All these factors have combined to create a difficult and dreadful year for most farmers. For that reason I would ask that special circumstances be put in place and an opportunity be given to farmers to pay back the moneys owed over a period of time. Some farmers still have to go through the appeals process and based on what I have seen already, some will be found not to owe that money. Notwithstanding that, we need to look at the issue.

I ask that the individual farmers be paid in full this year and when the appeals process is over, a deduction of a quarter of the total overpayment be taken back and so on for the following three years until 2013. That would be fair and equitable. It would give farmers an opportunity to make recompense, recognising that it was not a deliberate attempt by them to claim extra money. It was inadvertent due to buildings being placed on the land, or due to roads being constructed, or due to the growth of scrub. An approach like this would be seen as fair. In many cases where the farmer submitted the claim, it was done on the advice of Teagasc, or even prepared by people within Teagasc. I am sure there was no intention on their behalf to overclaim, but it was just a mistake that was detected by the sophisticated mapping system based on satellite photography that the Department has in place.

I ask that leniency be given, allowing for the difficult circumstances in which farmers find themselves, and that a payment schedule be made. Given that the single farm payment runs out in 2013, the payment can be scheduled to fall into line with payments that are forthcoming to farmers, removing the burden on them to pay it this year. While farmers are going through the appeals process at the moment on these overclaims, the payments due to them this year should be made, rather than holding up the entire claim awaiting the appeal.

Deputy Trevor Sargent

Ba mhaith liom mo bhuíochas a ghabháil leis an Teachta Timmy Dooley as an gceist thábhachtach seo a ardú i mo Roinn.

The single farm payment, under which €1.25 billion is paid annually to Irish farmers, is an extremely important scheme not just to the agricultural industry, but to the rural economy as a whole. I am very pleased to confirm that almost €820 million was paid out to over 116,000 farmers in the two days since the issuing of the 70% advance payments commenced.

Under the provisions of the governing EU regulations, payments under the single payment scheme may be made only in respect of eligible land and applicants under the scheme are obliged annually to declare the land parcels that are available to them. Details of the eligible area of the land parcels are recorded on my Department's land parcel identification system. Details of the use and area claimed for each of around one million parcels on the LPIS system are registered and continually monitored by my Department.

In advance of the closing date for the single payment scheme on 15 May each year, my Department sends pre-printed application forms to each applicant and these include a list of parcels declared by the applicant in question the previous year. It is the responsibility of all applicants to ensure that the details in each year's application are accurate. Therefore, applicants are advised of the need to confirm their right to declare such parcels and to make the appropriate deductions to the area of eligible parcels as necessary, such as where a house or other building has been constructed, and to submit maps with their applications to allow accurate deductions to be made. It is also necessary for applicants to exclude ineligible features such as scrub, roadways and so on. Therefore, the LPIS database has to be amended on an ongoing basis to reflect any permanent changes such as parcel boundary changes, addition of new parcels and so on.

The European Commission has recently imposed very significant adjustments — known as corrections — on many member states for not carrying out sufficient checks to ensure that applicants adhere to the regulatory requirements governing the SPS and rural development area-based schemes. Ireland is one of those member states in respect of which the commission services are continuing their audit process. My Department initiated a process whereby the ortho-photos of land parcels declared by applicants were reviewed. If it was deemed that some of the area of the parcels reviewed was ineligible arising from house-sites, farmyards, ponds, trees and scrub, the ineligible areas were deducted from the claimed area and payments in respect of the period 2005 to 2008 were re-calculated.

In the vast majority of cases, the applicants were making sufficient deductions for the ineligible features that my Department digitised from the original parcels, as required under the EU regulations. Therefore, there were no over-payments in these cases. However, cases have been identified where it initially appears that the claimant in question has not made sufficient allowance for ineligible areas, thereby raising the possibility of incorrect payments having been made.

Mindful of the potential financial implications for those farmers facing re-calculations following the identification of apparently ineligible areas, I have put in place a robust appeal system. Individual farmers are advised in writing of the level of overpayment identified and advised of their right of appeal. Receipt of all appeals are initially acknowledged, each individual appeal is thoroughly re-examined and the appellant then advised in writing of the outcome of the appeal. Should the farmer not be satisfied with the outcome of the appeal, there is the option to have the case further reviewed by a more senior official. Ultimately, the appellant has the further option to appeal to the Agriculture Appeals Office.

If the farmer so wishes, my Department will arrange to have the parcel subject to the reduction inspected by an official to confirm that the Department's decision is valid, or to make any change to that decision deemed necessary. In addition, if the Department's original decision is altered, any moneys paid by the farmers involved or offset against subsequent payments will be refunded immediately to them.

These schemes are fully and partially funded by the European Union. The relevant competent authorities in each member state are obliged to ensure that the requirements of the governing EU regulations are observed and that only valid applications that fully comply with the requirements are paid. The administration of these schemes in each member state is subjected to close scrutiny by officials of the European Commission and the EU Court of Auditors to ensure that the regulatory requirements are met, and that the schemes are applied in a uniform manner across the European Union.

School Transport.

Deputy Tom Sheahan

This is a very simple case. Annascaul is in the catchment area of Pobalscoil Chorca Dhuibne. Unfortunately, the child in this matter and four others in the area have learning difficulties and are exempt from Irish. Having learning difficulties is tough enough, but to try to do it as Gaeilge is even more difficult. As they are exempt from Irish, these children are now being taught at the secondary school in Milltown, and they are doing very well there. The parents drop off and pick up their children at Inch every morning and evening and they are taken from there to Milltown by bus. The round trip to and from Milltown is 85 miles. If a bigger bus was bought, it would make a big difference to the families involved.

They are exempt from Irish due to their learning difficulties. I have spoken to the bus inspector in Kerry and he told me that his hands were tied. I suggested that I would have to bring it to the Dáil to find out if the Minister could do something for these people. If these children continue in the education system, it is not sustainable for their parents to be expected to afford, or to have the wherewithal, to drive 85 miles a day over a five-year period to bring them to and from school. As it involves children with learning difficulties who are exempt from having to learn Irish, this is a special needs case. Although they are in the catchment area of Pobalscoil Chorca Dhuibhne in Dingle, they are exempt from the Irish language requirement. The only alternative they have is the secondary school in Milltown. I ask the Minister to provide for a bus with an additional three or five seats to collect the children in Inch and thereby alleviate much of the hardship of the family I have mentioned.

Deputy Trevor Sargent

Gabhaim buíochas leis an Teachta as an ábhar seo a ardú. I am responding on behalf of my colleague, the Minister of State with responsibility for lifelong learning, Deputy Haughey. I am pleased to have an opportunity to clarify the general position regarding the provision of school transport under the Department of Education and Science's post-primary school transport scheme. Under the terms of the scheme, a pupil is eligible for transport if he or she resides 4.8 km or more from his or her local post-primary education centre — the centre serving the catchment area in which he or she lives. The scheme is not designed to facilitate parents who choose to send their children to a post-primary centre outside of the catchment area in which they reside. However, children who are fully eligible for transport to the post-primary centre in the catchment area in which they reside may apply for transport on a concessionary basis to a post-primary centre outside their own catchment area. This is also known as catchment boundary transport. I emphasise that these children can be facilitated only if spare seats are available on the bus after all other eligible children travelling to the post-primary centre in which they live have been catered for. Such children have to make their own way to the nearest pick-up point in that catchment area. The Deputy will be aware that the provision of school transport is a massive logistical operation that involves the transportation by Bus Éireann of approximately 135,000 children, including over 8,000 children with special educational needs, to primary and post-primary schools each day. While individual cases involving a pupil's eligibility for school transport are brought to the Department's attention from time to time, such cases are generally dealt with under the terms of the school transport scheme. Those who are not satisfied with decisions made by Bus Éireann or the Department may appeal to the school transport appeals board.

The Department of Education and Science made preliminary inquiries today about the provision of school transport from Annascaul to Milltown secondary school, which is the issue that has been raised by the Deputy this evening. Two separate catchment areas are involved. The Department understands from Bus Éireann, which operates the school transport scheme, that a small number of children from the Annascaul area who applied for catchment boundary transport to the secondary school in Milltown could not be accommodated this year. As Bus Éireann is responsible for the planning of school bus routes and the allocation of appropriately sized buses for eligible pupils, the parents of these children should continue to liaise with the company's local office regarding the future availability of seats. However, I emphasise that catchment boundary transport is not guaranteed.

The Deputy is probably aware that the Department has commenced a value for money review of the school transport scheme, including catchment boundaries. It is expected that the review will be completed before the end of this year. The steering committee is examining the original objectives of the scheme, whether these objectives remain valid today, the extent to which they are being achieved and whether there are possibilities for economies or efficiencies that would improve the value for money of the scheme. The review will also examine fundamental issues such as catchment boundaries. When it has been completed, the review will be published and sent to the Select Committee on Education and Science. I suggest that Deputy Sheahan should attempt to influence the findings of the review as he sees appropriate. I will ask the Minister, Deputy Batt O'Keeffe, to do likewise.

Deputy Tom Sheahan

I would appreciate that. The provision of a 21-seat bus would bring an end to this problem.

The Dáil adjourned at 9.05 p.m. until 10.30 a.m. on Wednesday, 21 October 2009.