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Seanad Éireann díospóireacht -
Wednesday, 21 Mar 1984

Vol. 103 No. 6

Health Contributions (Yearly Reckonable Income) (Variation) Regulations, 1984: Motion.

I move:

That Seanad Éireann approves the following regulations in draft—

Health Contributions (Yearly Reckonable Income) (Variation) Regulations, 1984.

a copy of which regulations in draft was laid before the House on 14th March, 1984.

It is provided in subsection (3) of section 9 of the Health Contribution Act, 1979, that the Minister for Health may by regulations vary the rate at which health contributions are payable and also the income ceiling up to which contributions are payable. Subsection (5) of section 9 of that Act provides that a draft of any such proposed regulations shall be laid before each House of the Oireachtas and that the regulations shall not be made until a resolution approving of the draft has been passed by each House. The draft regulations now before the House deal with the income ceiling. It is not proposed to vary the rate figure which has remained at 1 per cent since 6 April 1979.

The income ceiling is at present £11,000. It is proposed to raise this to £12,000 with effect from the beginning of the next contribution year, namely, 6 April 1984. The effect of the increased ceiling is to increase the maximum contribution payable from £110 to £120, an increase of £10 per annum. The increase will be collected from most contributors towards the end of the 1984-85 contribution year, that is, in the first quarter of 1985. While the total estimated annual additional yield is £2 million approximately only about £200,000 extra will be realised in the current financial year ending 31 December 1984. The balance of £1.8 million will come in the first quarter of 1985.

The Health Contributions Act, 1979, provides that when setting a new ceiling figure the Minister shall take into account any changes in the average earnings of workers in the transportable goods industries as recorded by the Central Statistics Office since the date by reference to which the ceiling figure was last determined. The latest recorded information on average weekly earnings in those industries relates to June 1983. The average weekly earnings figure increased from £129.33 per week in June 1982 to £141.39 by June 1983. This represents an increase of 9.3 per cent. When this is applied to the current ceiling of £11,000, a new ceiling of £12,023 or, say, £12,000 per annum emerges.

I should mention the new arrangements applying to the collection of health contributions from farmers. At present, health boards are responsible for the collection of these contributions from approximately 100,000 farmers and it had been the practice to use a notional system, RV and a multiplier, to determine farm income for this purpose. In July 1982, the High Court ruled that the use of farm RV and a multiplier to determine farm income was contrary to the Constitution. To deal with this situation and with the consent of the Minister for Finance, I made regulations which provide for the assessment of farmers' income on a factual basis as in the case of other self-employed persons. In effect this means that farm income is assessed on the basis of the profits or gains from farming activities less any expenses incurred in earning these profits and less any superannuation contributions which may have been paid. Demands based upon factual assessment, including any arrears outstanding, have recently been issued by the health boards to all farmers liable for health contributions.

With regard to collection arrangements in the case of farmers' health contributions, the general opinion held was that health boards were not an appropriate agency to collect health contributions, the youth employment levy and the 1 per cent income levy from the farming sector. The situation has been corrected by the transfer of responsibility for collecting health contributions and levies from farmers to the Revenue Commissioners with effect from 6 April next. Regulations giving effect to this decision have been made.

I have been concerned about the large scale evasion of liability for health contributions by the farming community and other self-employed persons. These contributions form a very important element of the finances available to fund health services expenditure. Any failure to achieve targets for health contribution receipts in those times of financial stringency could only result in a reduction in the extent or quality of the services provided. It is manifestly unfair that a situation should exist whereby persons who have reneged on their obligations in this regard should be able to obtain health services without penalty. Accordingly, I have advised health boards to make full use of every enforcement procedure available to them in the collection of outstanding amounts.

As an added means of ensuring that all persons liable for contributions do in fact discharge their liabilities fully and promptly, I propose to introduce regulations in the near future providing for a hospital admission charge of £100 in the case of persons seeking in-patient services in public hospitals who have not discharged their liabilities for health contributions. This charge will be additional to any payments for private or semi-private accommodation. These regulations will come into effect from 1 June 1984 and will apply in respect of arrears as at the end of the previous contribution year, in effect 5 April 1984.

The purpose of the motion today is simply to raise the ceiling level for health contributions from the current figure of £11,000 to a new figure of £12,000. I now ask the House to approve the regulations before it in draft form.

I would like to give some support to this motion, of which we were aware for some time. I can recall when the health contribution was as low as £7 per annum. Now the ceiling has been raised to £12,000 and the new figure will be £120 per annum under the Health Contributions Act. People would gladly pay that kind of money if they were sure that the services they would receive were increasing but we all know that that is not the case. Financial contributions from the Exchequer to health boards all over the country are being cut back drastically. We must assume, despite what the Minister says, that these cutbacks will bring about a reduction in services and that the whole area of hospitalisation and services generally will be reduced. I never cease to wonder why, at a time of economic recession, all our people are being asked to pay more and more in levies, not just in the area of health but local government and so on.

I wonder if the Minister could spell out if there is any kind of a waiver scheme. At some stage we will have to cry halt because the people are feeling the pinch. Under this regulation we are being asked to pay more. Obviously we welcome the increase in the ceiling to £12,000 because this will bring more people into the net but we have to make the point that there will be a reduction in services and this will not be to the benefit of the people. Was there a waiver scheme? Could there be a waiver scheme as there is in other areas of Government? This would be welcome. The question of farmers paying these contributions has been raised. The health boards do not provide the best way for the collection of funds of this kind, and maybe this procedure would be the best way to do that because farmers and the self-employed are feeling the pinch. I hope that leniency will prevail in matters of this kind. With regard to admissions to hospitals, I hope this is not waving the big stick. It seems a bit unfair and could result in a person who would genuinely need hospitalisation feeling that he cannot avail of it. This could have a detrimental effect on his health.

While we would welcome the increase in the ceiling there are obvious disadvantages. The big question is, will we be getting value for money? I will leave it to the Minister to ensure that when people are paying £120 under the Health Contributions Act full value for money will be given.

This is an enabling motion with which I do not have many problems. The only people who will lose under this motion will be the consultants because the level of income at which they can appropriately charge their private patients will be raised from £11,000 to £12,000. On the positive side, people will not need to take out VHI cover before they have an annual income of £12,000. The 1 per cent health contribution is probably the best value for health services in any country. For £120 a person can have a total health service — consultants, hospital accommodation, full nursing, outpatient treatment and so on. I would like to see the day when we would not have differentiation between classes when it comes to the provision of health services but we can only do that if our economic situation improves and the State will be in a position genuinely to look after people's health from birth to death. We are far removed from that situation at the moment and anybody who thinks that day is near has not looked seriously at our present economic circumstances.

The Minister mentioned farmers' contributions. This matter has been raised at many health board, county health committee, county council and trade union meetings and at different fora and there are three different aspects I would like to put on the record of the House. There are farmers who got bills for health contributions going back to the initiation of the health boards, before the PLV system was in contention or was being put through the legal process to find out if it was constitutional. Many of them did not contribute until they became ill. Then they were prepared to pay all the contributions that had been outstanding over a number of years. I hold no brief for those people because they were entitled to a service and had not paid for it but they were prepared to do so only when they required it. In that situation I recognise that possibly a penalty should be applied from June this year.

People with valuations under £40 were brought into the tax net for the first time last year. They were not obliged, legally or otherwise, to keep accounts and were not in a position to surrender audited accounts to the health boards to confirm their income. The health boards, at the request of the Minister, sent them a self-assessment profile. Some farmers returned them but, to my dismay, I heard recently that the health board of which I am a member did not even send bills to those people until last week and the week before. It is unfair to penalise people if they have genuinely complied with the regulations but were not sent bills. There is a responsibility on the management of the health boards to ensure that that does not happen. We have computer facilities available and we have reasonably good office staffing levels in health boards.

There is another category, those who did not answer the profile but were sent bills after Christmas based on an assessment of what their contributions might be. This proves what the Minister said, that the health boards are not a suitable agency for collecting money from farmers because to collect money from farmers in the present economic situation one has to visit them, like rate collectors.

There is another group of farmers, those with valuations over £40. The Revenue Commissioners advised the health boards what the farmer's income was last year, and that information has been forthcoming to the health boards only in the last number of weeks. I would like the Minister to be assured that in spite of all the comments that have been made about the non-payment of health contributions, youth employment levies and income levies by the farming sector, there is a great deal of misinformation abroad about this. The true facts should be known. I do not hold a brief for anybody who does not pay his fair share because it is only right he should, but it should be recognised that the boards have not been able to meet the requirements put on them by the Minister to act as collecting agencies. This is a pity because a lot of money is genuinely due and there are many farmers who want to pay but have not been sent bills.

Some organisations adopted a different attitude last year and even advocated that the documents should not be completed. I publicly condemned that stand. In fairness, other organisations publicly said that if farmers were in doubt, they should make a payment on account. We had to get the chief executive officers formally to accept payments on account in the absence of full figures being available. In other words, the whole area of health contributions to the health boards has been a sorry mess and the sooner it is taken up by the proper collecting agency, the Revenue Commissioners, the sooner people will pay their contributions as they become due, based on figures that have been agreed by the taxman and by accountants. This anomaly about the amount of money due to health boards under this heading will then be eliminated. There is a sizeable amount of money involved and all our health boards are trying to live within restrictive budgets. If this kind of money were available to the Department of Health, I am quite sure our jobs as members of health boards would be very much easier.

I commend the motion because it is a step in the right direction. It increases the number of people eligible for free health services, and it asks them to pay 1 per cent of their income towards the service. I have no doubt that the service being delivered is worthy of favourable comment from all involved. We cannot speak too highly of those involved in the health service — consultants, nurses or staff at any other level of the health service. I commend the motion to the House.

I would like to add my support to the motion to raise the ceiling from £11,000 to £12,000. This is one scheme I have always supported because it admitted a section of the farming community and the self-employed to the hospital services scheme. These people were previously debarred because they did not make PRSI payments or insurance contributions. Many people have been very glad of this service down through the years but the limit needed to be raised to £12,000. In welcoming the scheme, I would also like to impress on the Minister certain aspects of it at which he should have a serious look. One is the refund in the drugs scheme where the lower limit has been raised dramatically over the last number of years — the last rise was approximately 28 per cent. This may have been a saving of £2 million to the health boards but the amount of hardship that saving has created is very considerable. I ask the Minister to try to freeze the drugs scheme refund.

A scheme like this should be supported by everyone because if it was fully supported it would, to a large degree, be self-financing. Hospitals services have been reduced and staff levels will continue to decline until the embargo on recruitment is lifted. There has been an increasing demand on services in hospital casualty departments. I ask the Minister to have a look at the areas where health boards have been making strong recommendations for improvements. When the health contributions forms have been assessed and the money due by the farming community and the business and commercial sectors is received, much of this money could be used in what I would term emergency services that need to be provided in many health board areas.

Senator Ferris spelt out the few points I wanted to raise. In common with the rest of the Senators, I want to welcome the raising of the ceiling from £11,000 to £12,000 I also accept the point the Minister is making in relation to the £100 penalty he intends to introduce for failure to pay. I suppose something has to be done.

Senator Ferris pointed out the many problems and confusions on the part of the farming community and I have found this as well. A number of people were very confused at the amount of money they had to pay this year. Farmers at an IFA meeting which I attended recently had an axe to grind because they were not given any allowance for depreciation on machinery. That is a very big item in the farming world. I hope I am correct in saying that and if so perhaps the Minister would take note of it.

Many people were not clear as to the amounts they had to pay and were very anxious to pay something. Naturally nobody wants to pay too much but they always feel they should pay some amount of money at least to keep themselves right. It is not the same as non-payment of the ESB bill where the supply will be cut off and if people feel that their health is good and that they will not have to darken the door of a hosptial they will keep the money as long as they can. For that reason there must be every incentive to these people to pay.

Some Senators pointed out that the health boards are in dire straits for money at present. We read from time to time about the millions that the farmers owe to health boards but I think these are rather inflated figures. I encourage people to pay health contributions because it is only right and proper that they should do this.

Farmers contend that they are not being treated fairly regarding an allowance for depreciation of farm machinery and I would ask the Minister to look at this point. I am not saying that this is a fact but it is something that has been raised at a meeting. In common with others I welcome the raising of the ceiling from £11,000 to £12,000.

This is one of the usual measures which we have to support in this House and the other House. Nobody likes to see costs escalating or to see charges being increased. We know that the cost of the health service has increased substantially over the last few years, particularly for drugs and treatment in hospitals and so on. It is important that people who are not entitled to a medical card should have some kind of cover and should be encouraged to pay their health contributions. There has been an unfortunate failure because of the inability of health boards to collect those charges. When people think they can get away without paying charges, naturally enough they will try to do so. They cannot see the dangers involved until such time as they have to enter hospital and look for treatment and then they find that the bills they have to pay are huge.

Health services are costing a lot of money and we know that the Minister requires money to pay for those services. We have seen a very severe cutback particularly in the Western Health Board area. Many of the services provided over the years have been discontinued due to lack of finance and this will cause great hardship to many people who have become used to those services. I hope when the Minister is dividing up the money he will collect from this imposition that he is asking us to support today that he will think particularly of those people in the Western Health Board area who are no longer being provided with those services they previously enjoyed, thus creating hardship in many cases.

Department officials recently took offence because the Western Health Board were demanding money for the continuation of those services. I do not think that is right. The Western Health Board have a right to demand money for the services they have been providing over the years and which they think the people in the west are entitled to. They know what the people need, not the Department officials in Dublin who have responsibility for the whole country and who naturally will be trying to save money on certain schemes. I hope that the Minister will take a more sympathetic view and that he will heed the demands of the health boards. I am sure they are reasonable in their submissions and he should certainly give them their fair share of the money that will be coming into his Department as a result of this measure we are supporting here today.

I thank Senators for their contributions and their welcome for these draft regulations. I should like to make four points by way of response.

The first point is that there are in the country about 150,000 farmers. It is important to realise that about one in every three farmers has a medical card — about 50,000 farmers — and as such they have no liability for the payment of health contributions. If I may pick a particular health board area, the Donegal-Sligo area, about seven out of ten farmers will not be paying any health contributions because the percentage of population there who are covered by medical cards is in the region of 62 or 63 per cent.

It is the same in the Western Health Board area. There is a lot of special pleading made with respect to the Western Health Board because in that area about six out of every ten farmers will not be paying health contributions at all because they have medical cards. That is the situation.

The 100,000 farmers who are liable are spread for the most part along the east coast and down the midlands into Munster. That is where the bulk of farmer health contributions are paid. Even where they are paid — and this is my second point — the actual contributions so far have been quite small. The contrast is striking. The average contribution last year on the health contribution basis by an insured worker and a pensioner was about £64 for the year. That was the average paid by nearly a million people who have liability under PAYE. There are about 100,000 self-employed people in the country other than farmers and the average contribution by a self-employed person was about £25. The insured worker paid about £64 last year, the self-employed about £25, while the average contribution by 100,000 farmers was £7. That is the disparity. In terms of income liability there is a very big disparity between a £64 contribution and a £7 contribution. Many industrial workers are aware of this and they resent the fact that by and large up to now contributions have not been paid.

The system has militated to quite an extent against an effective contribution liability being established. Health boards have no incentive to collect health contributions because they do not see the money since it goes straight to the Exchequer. That is why for the past 15 months I have been seeking to convince my colleague in Government, the Minister for Finance, that it is the job of the Revenue Commissioners to collect this money direct, in the same way that income tax is collected. That has now been accepted by the Government and by the Minister for Finance. In fairness to my colleague, Deputy Alan Dukes, he did not require much convincing on it. The system had just got out of gear.

Unusual.

Not unusual.

He is now bringing in that new regulation from 5 April 1984. It is still extremely good value for money. I do not know of any country in Europe where for a 1 per cent contribution of one's income, or for £7 a year from a farmer — assuming that he is not in the VHI, and many of them are not — one has free maintenance and treatment in a public ward of a hospital, free specialist out-patient services at public clinics and a subsidy towards the cost of maintenance at certain approved private hospitals and homes. Admittedly the latter are becoming a declining commodity in some respects but the subsidy is still there. There is still assistance towards the cost of prescribed medicines and any family spending more than £28 per month has a subsidy. For certain long-term illness there is a free drug scheme. The general practitioner, maternity and infant care services are all free for category 2 persons up to a ceiling of £12,000 per annum.

Health contributions cover only a fraction of the total cost of the health services. The estimated yield for the year 1984 is £73 million, if I recall the figure correctly, and, to use a colloquial term, it is "peanuts" in terms of total Exchequer spending. Out of £1,000 million we get £73 million in health contributions. The bulk of the ordinary taxpayers' contributions in income tax, VAT, excise duty and so on goes in very substantial measure towards the cost of the health services.

A question has been raised in relation to capital allowances and we have had a lot of difficulty in that regard. On the new factual assessment basis farm income is determined on the same basis as that of other self-employed persons. I know there has been a lot of controversy about this but farm income, subject to health contributions, will be profits from farming activities after deducting expenses such as rent, rates, wages paid out, repairs to machinery and equipment, purchase of seeds and fertilisers, business interest and stock relief. They are all allowable against profits. Any sum paid towards a superannuation fund will also be allowable. After a lot of discussion at Government level — and successive Governments have discussed this matter — we have not allowed depreciation. The depreciation capital allowances are not offset against income for any other sector of the population for contribution purposes and we cannot make an exception in the case of farmers. Therefore, depreciation on expenditure for construction of fences, roadways, holding yards, drainage, land reclamation, expenditure on construction of farm houses and farm buildings may not be offset against profits when determining income for health contribution purposes. This expenditure is allowed against income tax but not against the health contribution assessment. I have had to explain that in detail to, for example, the ICMSA and the IFA, many of whose members have understandably invested heavily in capital projects in recent years.

I thank Members of the Seanad for their support of this measure. It will ensure the continued delivery of an excellent health service.

Question put and agreed to.
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