I move:
That Seanad Éireann approves the following regulations in draft—
Health Contributions (Yearly Reckonable Income) (Variation) Regulations, 1985
a copy of which regulations in draft was laid before the House on 6 March, 1985.
Health Contributions (Yearly Reckonable Income) (Variation) Regulations, 1985: Motion.
It is provided in subsection (3) of section 9 of the Health Contributions Act, 1979, that the Minister for Health may, by regulations, vary the income ceiling up to which health 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. 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 £12,000. It is proposed to raise this to £13,000 with effect from the beginning of the next contribution year, namely, 6 April 1985. In determining this, I have taken into account — as required by the Act — the latest information available regarding changes in the average earnings of workers in the transportable goods industries since the last income ceiling was adopted. The effect of the revised ceiling is to increase the maximum contribution payable from £120 to £130, an increase of £10 per annum. The increase will be collected from most contributors towards the end of the 1985-86 contribution year, that is, in the first quarter of 1986. 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 1985. The balance of £1.8 million will come in the first quarter of 1986.
I shall be reviewing shortly the income limit for free hospital consultants' services. I am not in a position as yet to say what this limit will be.
A total of £70 million was collected from health contributions in respect of the year ended 31 December 1984. This represents about 7 per cent of the total health budget for the year. The health contributions scheme is, therefore, an important source of revenue for the health services. The vast majority of this was, of course, contributed by the PRSI workers in whose case the health contribution system is integrated with the pay-related social insurance contributions which are collected through the PAYE system.
Obviously there is more difficulty in collecting contributions from farmers and other self-employed where the contribution due is based on income assessments. It will be agreed that — from the viewpoint of equity alone — every effort should be made to ensure that the self-employed pay their fair share.
Since 6 April 1984 the Revenue Commissioners have taken over responsibility for the collection of health contributions from farmers, in addition to their previous responsibility for collecting contributions from the PRSI workers and the self-employed. The only involvement of the health boards now in the collection arrangements relates to the collection of arrears due for periods up to 6 April last. The cumulative total of these arrears is now assessed at about £10.5 million.
I am extremely anxious that these arrears should be collected and used to relieve somewhat the extremely tight budgetary situation in which the health boards now find themselves. 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. I advised health boards to make full use of every enforcement procedure available to them in the collection of outstanding amounts.
I understand that final demands have issued in most cases and that some boards are now in the position of considering which cases will be selected for proceedings if the demands are not met. I shall be keeping a very close eye on the situation.
As an added means of ensuring that all persons liable for contributions do, in fact, discharge their liabilities fully and promptly, I introduced regulations, in operation since 1 June 1984, 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 is additional to any payments for private or semi-private accommodation.
When these regulations were introduced last year they received considerable publicity in the national and local newspapers and among the farming organisations. It would be difficult therefore to accept a plea from a person on whom the £100 charge was being imposed that "he did not know". It should be noted that there is no provision in the regulations for waiving the charge in a case where a person's liability for health contributions has been determined.
I am satisfied that these regulations were beneficial in inducing defaulters to meet their commitments, but it is not, of course, possible to quantify the results. Up to 31 January 1985, £6,600 had been collected under the admission charge scheme. This figure is not significant and, in fact, bears an inverse relationship to the fundamental objective of the scheme.
The purpose of this motion is simply to raise the ceiling level for health contributions from the current figure of £12,000 to a new figure of £13,000. I now ask the House to approve the regulations before it in draft form.
In giving approval to the draft it is only right that we should make some comment on these regulations. As the Minister said, we know the purpose of this draft is to raise the ceiling from £12,000 to £13,000 with effect from the beginning of the next contribution year of 6 April 1985.
The most important point that can be made is that whilst the ceiling is being increased the level of services in the health services generally has been drastically reduced. We have had a debate in this House on the cutbacks in the medical services generally. We are aware of the number of wards that have been shut down from Donegal to Cork. We know of the reduction in the level of meals in various hospitals. The cutbacks have eaten into the whole system with the result that we have a very much reduced medical service today. One has to ask is it appropriate and right that we should, as the Minister says, take an extra £2 million from the public at large as it were for what is, in fact, a reduced service? As the Minister pointed out, and as we know from 1984, the system of collection of this levy from the farming people and the self-employed will be by the Revenue Commissioners. There is much confusion among those people. On the one hand, they are getting demands from the health boards for arrears which include the youth levy and the other special levy and at the same time they are going to get a revenue demand for the up to date levy.
There is a great deal of confusion and the position should be spelt out as clearly as possible. One would have to support the case that the Revenue Commissioners should collect, and ask the question whether the health boards were ever the proper agency for the collection of this amount, bearing in mind that the Minister has informed us today of a staggering figure of £10.3 million outstanding. That is, as the Minister will agree, a staggering figure by any standards. In my own health board, the Midland Health Board, the figure outstanding is something like £3 million. We know that £3 million would go a long way towards improving the services and the facilities generally of the Midland Health Board, or indeed of any health board. I hope the money is paid but it is going to be difficult. Arrears are hard to get and people will be aware that this is the position.
I also wish to refer to an aspect which is somewhat unfair. A farmer approached me a month ago. He has 20 acres of land and is also working with a company in Athlone. He is paying PAYE and PRSI at that level. He gets two bills. I do not think this is fair. Perhaps a mean rate or something like that would be appropriate but it is unfair that he has to pay on the little income he gets from his farming activities and also as a PAYE worker in a semi-State organisation. I would say there should be the one rate but obviously if a mean rate or something slightly above the existing rate were applied in circumstances like that it might be fair.
In the farming sector in particular there is confusion and it is going to continue. We know that from next year we are going to have a land tax and that payment of tax will be on the basis of the adjusted acre. Am I now to assume that for this health contribution in order to tell the Revenue Commissioners how much a farmer has actually earned he will have to have accounts? Surely this would be defeating the whole purpose or one of the purposes of the land tax? This is something that the Minister may wish to reply to.
The Minister has referred to the high cost of hospitalisation. Again, this is part of what is got out of the health contribution. We must remember that the costs for private hospitals and semi-private wards have increased remarkably since Christmas last. The Minister is taking in an extra £2 million per year, the services are reduced and this is a situation that people will consider as being most unfair.
The purpose of this motion is to vary the income ceiling up to which health contributions are payable under the 1979 Act from £12,000 to £13,000. I do not think anyone can quibble with that increase. It is realistic in view of all the circumstances. I disagree with the point made by Senator Fallon that this is unfair in view of the fact that there are severe cuts in the health services. The word "cut" is unfair in relation to the services being provided by the health boards and I am glad to see that the health boards are assessing the type of services which they are providing. I also welcome the fact that the Government are making so much money available by way of capital expenditure in relation to provision of hospitals such as the new county hospital in my own county of Mayo. But I do agree with the point that Senator Fallon makes that the regulations and operations might not be effective in some respects. The situation exists whereby people who are subject to these regulations do not understand them.
Certainly the self-employed and particulary the farmers, do not understand these regulations and how they operate. They cannot comprehend or understand the method of assessment used. A public relations exercise is required to make these regulations effective and to make them understandable. I am disappointed that the Minister in his speech should use words like "defaulters", "proceedings", "obligations" and "penalties". That kind of language is typical of the bureaucracy we have in this country now that is motivated by the computer and has no understanding whatsoever of how people on the ground live. The Minister should direct his officials and the health boards to get in touch with the people who are assessed. He should direct them to make the people understand what these regulations are about. He should make them advise people as to the methods of assessment being used and rather than having computerised print-outs issuing to every small farmer in rural Ireland it would be much better if there could be a personal call and a personal contact indicating firstly, what these regulations are about, secondly, what the contribution is payable for and, thirdly, the manner of assessment.
If somebody disagrees with the assessment there should be some effort made to reach agreement with that person on a particular figure because my understanding of the operation of these regulations, in west Mayo at least, is that people are receiving these computerised print-outs and they are not making any response whatsoever. People are prepared and willing to pay for a service but the PR exercise, the attempt to sell what is being done, is absolutely minimal and I blame that on the convoluted bureaucracy that is behind this computerisation which people do not understand.
I support what the Minister is doing in this motion but if what the Minister is doing is to be effective the people, certainly the self-employed and the farmers, who are affected by these provisions must be made to understand what it is all about and that can only be done if a proper PR exercise is embarked upon.
I welcome the raising of the ceiling to £13,000. I proposed at a health board meeting some time last year that an approach should be made to the Minister to raise the ceiling from £12,000 to £13,000. I am glad that he has acceded to our request.
I am amazed at Senator Durcan standing up in this House to tell us that all is well with the health boards when we know it is not. The big question at the moment is how much longer the nursing staff employed by the health boards will be able to stand the strain or when will they break under the strain. I would ask the Minister to have a look at the health services and to do something about removing the embargo on recruitment to the service. There are areas in the health boards where improvement was necessary and the Minister will agree with me that improvements have been carried out. I am glad there is more emphasis being put on community care. However, there are areas in our service which needs specialised care. I refer specifically to the areas of geriatric care and psychiatric treatment. The embargo is having a terrible effect in those areas. This scheme when it started was a very welcome scheme. It catered for sections of the community who could not avail of hospital services without paying through the nose — members of the farming community who had not got a medical card, the commercial sector and the working sector whose income limits were such that they could not avail of free hospital services. I would like the Minister to take particular note of this. This scheme began in 1971 when farmers whose rateable valuation was £60 or less were asked to pay an across-the-board fee of £7 per annum. That £7 remained static until 1975. What has happened since then? In 1975-76 the fee was increased to £12 which we would agree would take inflation into account and would be a fair increase. In 1976-77 the fee was increased to £15; in 1977-78, to £18; in 1978-79, to £21. In 1979-80 the fee was changed to the rateable valuation by the multiplier or notional system, with a ceiling limit of £55. In 1980-81 the fee jumped to £70; in 1981-82, to £85; in 1982-83 to £95; in 1983-84 to £110; in 1984-85 to £120 and now it has gone up to £130.
My main quibble is that we are here talking about the health contributions yearly reckonable income regulations. At the same time there is a youth employment levy of 1 per cent and the latest Government levy of 1 per cent. I think the Minister would agree that the big quibble is with the 3 per cent levy in 1983-84 and 1984-85. The farming community did not pay their contributions for two years because there is a pending court case. I believe, and I said it at that time, that the farming community were so advised. However, the fact that they did not pay in those years means that the farmers, at a time when they have other financial commitments are saddled with a bill for three years. I would ask the Minister to direct the health boards to make an arrangement with people who have extensive arrears whereby the arrears can be cleared over a period of, say, six months.
There is tremendous goodwill towards this scheme but the problem is that the average farmer's net income is usually 30 per cent less than his gross income, allowing for all his commitments and for depreciation. An example would be a farmer with £10,000 income who is now being asked to pay £800 in one year which would be approximately 12 per cent to 15 per cent of his net income. This is in addition to paying his taxes. I am totally opposed to a system whereby a youth employment levy of 1 per cent has been foisted on the people and a Government 1 per cent levy for God knows what. The people have not a clue as to where this money is being spent. It is equivalent to putting your hand in somebody's pocket and taking money out of it.
The bills issued in November 1984 are based on gross income. I would ask the Minister to consult with the health boards. I agree with Senator Durcan that there should be a better approach to the people involved. They should be invited into the health boards and where there are arrears arrangements should be made whereby they could be cleared over a six-month period. The imposition of £100 admission charge reminds me of the system that operates whereby county councils are cutting off water supplies, bringing in bulldozers and cutting the pipes into somebody's house and charging them £100 reconnection fee. It does not make sense. It is not the proper approach.
The content of the regulations before us is inevitable because with the changing rate of inflation the ceiling had to be raised from £12,000 to £13,000 income per annum. I am amazed that neither the Government nor the Department have seen fit, despite the fact that glaring inequities were shown to exist and have been highlighted on many occasions over the last two to three years, even at this stage, to try to remove those inequities. As Senator Lynch has said, with the change from the notional scheme to the assessment scheme, the sluice gates were opened for abuse, particularly where sections of the community had the opportunity of assessing themselves. People in the PAYE system and other areas where the taxation applies have no say, they are caught; they have no choice; they pay their contributions. The farming community in particular had the opportunity of self-assessment. The option was to assess themselves on either gross income or disposable income. They opted for the easier assessment, the assessment on disposable income, which was nothing short of being notional again. A procedure was compounded that had shown itself to be useless for the purpose for which it was intended.
On various occasions health boards sent out assessment forms on which farmers could declare their income. A broad guideline was given as to what income could be included and should be excluded. The recipients duly assessed their incomes so as to produce contributions far less than their previous contributions. It was unfair to burden health boards with the situation where they were to be revenue collectors for the Government in collecting health contributions and the youth employment and special employment levies.
The Minister of State mentioned that there is in the region of £10.5 million still outstanding. I would question that figure because the haphazard method in which the procedure was carried out leaves itself open, not so much to abuse as to inaccuracy in that the assessments and demands were sent out on old rate demand books that were available. When one looks at the rate books it is obvious that they are out of date. Many people I have met as a public representative received demand notes. Those demand notes still exist. Many people long since gone to their reward are still being sent final notices. That shows lack of communication. I do not believe that it is the duty of the health boards to bring this to the notice of the Department of Social Welfare or the Department of Finance or whoever else the revenue is collected for. The basis on which these assessments were originally carried out and the list of people who were to receive the assessments were inaccurate. Once there is inaccuracy or a flow at the beginning people will tend to abuse the situation.
People may lambast farmers who are not paying their contributions. There are cases where non-payment is due to neglect and there are people who will abuse any system. It is wrong to generalise and promote the idea that contributions are not coming from the farming community, especially having regard to the fact that the original assessment was wrong and in many cases assessments were sent to the wrong people. It is regrettable that even at this stage the parties concerned have not seen fit to change the whole system even though there has been direct demand from April 1984. That has changed the position somewhat. An opportunity has been lost to make amends for neglect on the official side.
I agree with some of the suggestions that were made with regard to the £100 on demand charge imposed at entry if you have not paid a contribution fee. Many people are willing to chance the £100 charge because if they are admitted to hospital all the £100 does is maintain them for one day in a hospital. A £100 charge would be reasonable for one day's maintenance and medicine requirements.
I believe with other Senators that health boards should not have been asked to collect levies. The inequities that exist will not be rectified by this regulation. Examination of cases and deciding on court action or otherwise is a very tedious and costly process and I am not too sure if it is as effective as the consultation suggested by Senator Durcan and Senator Fallon. The responsibility for collection of health contributions should be left to the local body. We talk about decentralisation. The ideal opportunity exists to leave the health boards in contact with the community which they serve and to let them collect the health contribution. Let the Department of Finance or the relevant Department make assessments as they seem to have the intention of doing. I would like the Minister to take note of this point in particular because I hope to make a contribution on the Social Welfare Bill later — if the Department of Social Welfare officers assess self-employed persons as keenly as they assess social welfare cases, the Department of Social Welfare will be compensated very adequately by the contributions they will get under this regulation. It will be very foolish and will look ridiculous if the health boards institute proceedings against a few people chosen at random to be made scapegoats for those guilty of not paying their contributions. I am not trying to condone non-payment. I do not think it is the proper way to deal with a situation that has existed for years. If the health boards were to collect the health contributions and the other relevant Departments were to collect their contributions, the process would be simpler, there would be less hassle involved and in the long run it would be less expensive to the State.
Senator Fallon talked about increases. This applies only to people with incomes in excess of £12,000. The incomes of the vast majority of contributors are under £12,000. If you have £12,000 or £13,000 you pay accordingly but if your income is over £13,000 or between £12,000 and £13,000 it is only an extra £10 anyway. A farmer who is also employed must pay on both sources of income. The maximum, regardless of the two sources, is £120. The health boards have to collect all arrears up to 5 April 1984 and the contributions will go to the Revenue Commissioners after that. Senator Fallon mentioned the amount outstanding in the Midland Health Board. There is a total of £3 million outstanding but it would appear that some of this is youth employment levy and income levy——
I know that——
——and £1.2 million approximately is the contribution by farmers. I am a farmer. I cannot understand why it is that when one tries to get a few pounds taxation or health contributions from farmers there is a furore that all other sections of the community should pay and they should not.
I did not say that.
I know the Senator did not but the point has been made by other Senators and indeed it was raised in this discussion earlier today.
Generally, for the benefit of Senators here, I will give the figures in relation to the amounts paid, not alone by farmers but by other people as well. The average contribution in 1983 from insured workers and pensioners was £63.94. The average contribution of the self-employed was £24.74. The average contribution of farmers was £6.92. That improved a little, if one could call it an improvement from the farmers' point of view, in 1984. It went from £6.92 to £21.86 and the other figures stayed pretty much the same with the exception of the figure for the self-employed, whose average contribution fell from £24.04 to £17.66. Taking the total receipts into consideration, in 1983 £62,000,537 was collected from insured workers and people of that nature, £2,597,330 from the self-employed and £726,423 from farmers. In 1984, £65,845,000 was collected from insured workers, £1,854,781 from the self-employed and £2,295,768 from farmers.
There was an open invitation by health boards to farmers to come in and talk about the situation and agree on the figure that they could pay. This was largely done by people who came in relation to the £100 charge. The main reason for the charge was to place a threat over people. Some 66 people paid it. This cannot be waived. A person on whom this charge is imposed would have to pay it and would also have to pay the arrears. How is it that we are always talking about farmers contributions to things like that? I am aware of the plight of the agricultural community just as much as anybody else. For the charge you are getting free hospitalisation, a massive cover. The services, regardless of how they are criticised, are very good. Rather than be providing some kind of hope for people who have not paid their health contributions, I think if Members of the Oireachtas got together and said: "You are required to pay your contributions; it is necessary for the running of the system", they would be doing a good job. When the final figure of the Department of Health is taken into consideration, it is approximately £1,100 million per year. If that were to be broken down further it means a cost of £337 for every man, woman and child in the country. By any standard that is a great deal of money to be spending on the health services.
Senator Durcan spoke about development. There is £177 million to be spent on capital development for the three years 1985, 1986 and 1987.
I will finish by saying that I would like to thank all Senators for their contributions. If I failed to answer any of the points that have been made, then I am sorry. It was not done on purpose.
Question put and agreed to.