Seanad Éireann díospóireacht -
Tuesday, 31 May 2005

Vol. 180 No. 17

Hospitals Building Programme.

Mr. Kitt

I thank the Chair for allowing me to raise the issue of the health campus for Tuam, County Galway. For many years the Bon Secours order had a hospital in Tuam, known locally as the Grove hospital. It was very disappointing that it was sold some years ago. I was thankful that the former Western Health Board bought not only the hospital but also the surrounding property from the Bon Secours sisters. I pay tribute to them for their work in Tuam over many years.

The former Western Health Board acted quickly not only in calling for the purchase of the property by the health board and for funding from the Government, but also in sending a design brief to the Department in October 2002. The brief envisaged not only a community hospital to replace the existing hospital but also an Alzheimer's unit, a child care training centre, a primary care unit and an ambulance base. The community in north Galway and I are very anxious for approval to be given by the Department to proceed to the design stage. With such a large number of projects involved, it would be very useful if even one part of the project could be expedited.

There is no ambulance base in north Galway at present, which is quite appalling. This, combined with many complaints regarding the out-of-hours doctor service, means people feel very isolated if they are ill, particularly in the evening or at night. I hope progress is made on the ambulance unit.

The issue of the primary care unit was very much in the news a year ago. We were in competition with Erris in County Mayo regarding the location of such a unit. It was finally located in Erris and north Galway lost out. Therefore, it is very important that the primary care unit be very much at the centre of the submission on the design brief.

The health campus, particularly the hospital, not only proposes to include north Galway but also south Mayo and part of west Roscommon. It is vital that a response be made on this matter. I know the Minister for Health and Children, Deputy Harney, has met many community groups, the town council in Tuam and other deputations in respect of the hospital. Since there are such a large number of issues associated with the health campus, I hope the Minister of State will at least ensure that progress is made in respect of some of them.

An ambulance service is very important for Tuam and the north Galway area. Most of the GPs who work in the area know this to be true and I have discussed it with them. I thank the Minister of State for taking this matter. The submission regarding the design brief has been with the Department since October 2002, which is over two and a half years. I hope I can report progress to the people of north Galway who have been advocating the development in question for some years.

Minister of State at the Department of Health and Children (Mr. T. O’Malley)

I thank Senator Kitt for raising this matter on the Adjournment. I am responding to it on behalf of my colleague, the Tánaiste and Minister for Health and Children, Deputy Harney.

Following the closure by the Bon Secours order of the Grove hospital in Tuam, the former Western Health Board, now the HSE, western area, which is responsible, in the first instance, for the provision of health services in the Tuam area, took a decision to build a new 50-bed community hospital on the grounds and adjoining lands to replace the existing facility. This new hospital will comprise a mix of up to 30 beds for continuing care and the remaining beds will consist of direct access beds, rehabilitation or convalescent beds, respite beds and palliative care beds.

In line with what is generally provided in HSE district hospitals, the service will have a very significant mix of multidisciplinary staff, including medical, nursing, nursing support and paramedical staff, as well as other complementary therapists. Coupled with this, the HSE, western area, envisages the Tuam hospital functioning as the hub of a comprehensive outreach service providing home care programmes, including physiotherapy, occupational therapy, chiropody, home nursing, home help and other flexible packages of care. These specialist care facilities will be supported by social support services such as community welfare and home advisory programmes. This project does not, therefore, envisage the re-opening of the old hospital for nursing care purposes.

The Government has made services for older people a priority and is fully committed to the development of a comprehensive health service capable of responding quickly, fully and effectively to the health service needs of older people. In recent years, health and social services for older people have improved, both in hospitals and in the community. Since coming into office, the Government has substantially increased the level of funding, both capital and revenue, in respect of services for older people. Between 1997 and 2004, total additional funding allocated was approximately €287 million and additional revenue funding of €15.228 million was announced for this year. This serves to demonstrate the Government's ongoing commitment to improving services for our older population.

Significant capital funding for the health sector has been provided since the commencement of the national development plan in 2000. Total expenditure for 2000 to 2004 was approximately €2.1 billion.

Considerable progress has been made in addressing the historical deficits in health infrastructure and improving the standards of facilities required for quality modern patient care. The national development plan is providing considerable capital funding for services for older people. On a national basis, this will enable a comprehensive infrastructure of community nursing units and day-care facilities to be put in place as well as the refurbishment of existing extended-care facilities and the replacement of old workhouse-type accommodation. Older people deserve first-class facilities and we intend to provide these in appropriate locations.

As the House will be aware, the Health Act 2004 provided for the Health Service Executive, which was established on 1 January 2005. Under the Act, the HSE has the responsibility to manage and deliver, or arrange to be delivered on its behalf, health and personal social services. This includes responsibility for the proposed developments at Tuam hospital.

The HSE, western area, has prepared a project planning brief for the Tuam health campus incorporating a community hospital, Alzheimer's unit, child-care training centre, primary care unit and an ambulance base. As responsibility for the development of services now rests with the HSE, any decisions relating to this project, including its phasing, will be a matter for that body, having regard to the western area's overall capital funding priorities in the context of the HSE's service plan for 2005 and beyond. The Tánaiste and Minister for Health and Children believes that there is scope for innovative partnership working in the development and delivery of projects such as those proposed for Tuam and this is something that has been suggested for consideration by the HSE in respect of this particular project.

The House might wish to note that the Minister met with a cross-party delegation from Tuam Town Council at the end of January and was briefed on the proposal to develop a health campus on the grounds of the hospital. During the meeting the Tánaiste acknowledged the importance of utilising facilities which were purchased by the State for health care use, but this would have to be done in the context of the HSE's service plan for the western area. Members of the delegation put forward a number of suggestions on the options concerning the possible use of the Grove hospital building. The Tánaiste undertook to examine these options and to revert back to Tuam Town Council. I can assure the House that the Department will continue to liaise with the HSE to progress this project in the context of the HSE's service plan.

Mr. Kitt

I thank the Minister of State. Is he in a position to say whether the partnership to which he refers is a PPP?

Mr. T. O’Malley

It was something akin to a PPP. The Tánaiste asked them to be innovative. It would be something like that, but I do not want to circumscribe it.

Pension Provisions.

Ms Terry

I thank the Minister of State for staying to take my Adjournment motion. I put the question to the Minister for Social and Family Affairs, but it was referred to the Minister for Finance. That is somewhat of a problem for the two Departments in terms of which of them deals with pensions. Will the Minister of State provide me with a breakdown of the €2.5 billion tax breaks enjoyed by the pensions industry? This figure was given to me by the Minister for Social and Family Affairs during the debate on pensions last year.

However, there was some confusion when the Minister came to debate the ESRI report on pensions, when he said the tax breaks amounted to €1.5 billion. I had to remind him he had told me earlier the tax breaks were to the value of €2.5 billion. It is important that we should know where these tax breaks are going. It is not the ordinary man or woman in the street who is benefiting from them. They are benefiting the better off in our society.

When we are discussing pensions and planning to make them compulsory, with no guarantee of a return on that money, it is critical that we look at who is benefiting from the tax breaks. I remind the Minister of State that at a time when many PAYE workers are being told by employers that their defined benefits schemes are being wound up or are under-funded and they are being encouraged to take out defined contributions schemes, those same employers are making enormous contributions to their own pension funds and gaining very significant tax breaks. Some of these directors are adding €1 million a year to their pension schemes, while telling employees that their pension funds are being wound up. Therefore, tax breaks as regards pensions are grossly inequitable in the way they are dealt with by the Government.

For some people tax avoidance schemes involving pensions are probably the most beneficial mechanism ever devised for reducing tax liability. This needs to be looked at and made more equitable, so everyone benefits from these tax breaks which should not be just accessible to the wealthy. Such people are well off. Many company directors are on very good salaries to start with. I am more interested in ensuring PAYE workers have decent pensions when they retire. I hope the Minister of State can tell the House who is benefiting from these tax breaks. I doubt whether he will name the people who benefit, but I would like him to. At any rate, I want to know which schemes are benefiting and to what extent. Can he put a figure on the amount involved?

As I told the Minister for Social and Family Affairs, if all those tax breaks were to be cancelled and the same money put into old age pensions, they could be doubled overnight for every worker in the country. That might not be in the best interests of everybody but the tax breaks as set up at present are not fair and I would like this to be addressed. I want the Government to be open and transparent as regards who is benefiting from these tax breaks.

Mr. T. O’Malley

I thank Senator Terry for raising this matter. I am replying to her motion on behalf of the Minister for Finance, Deputy Cowen.

The ESRI report referred to is entitled Pensions Incomes and Replacement Rates in 2000, published in May 2005. Page 38 of that report states, "The Revenue Commissioners estimate that the net cost of the tax reliefs for private pension saving by employees, employers and the self-employed in the year 2000/01 amounted to €1.5 billion." This ESRI figure is €1 billion less than that mentioned in the Adjournment motion.

The following estimates of the cost for 2000-01 of certain pension reliefs are contained in table IT6 dealing with the cost of allowances and reliefs in the Revenue Commissioners' statistical report for 2002: employees' contributions to approved superannuation schemes —€471.9 million; employers' contributions to approved superannuation schemes —€646.2 million; exemption of net income of approved superannuation funds (contributions plus investment income less outgoings) —€1,292.3 million; and retirement annuity premiums —€205 million. The first three of these four figures are stated in the Revenue report to be particularly tentative. The total of the four figures comes to €2,615 million, which is broadly in line with the €2.5 billion mentioned by Senator Terry. There is no breakdown available of the first three figures as these are tentative estimates.

The €205 million figure relating to retirement annuity premiums is the Exchequer cost of the contributions to retirement annuity schemes, which schemes can be taken out by self-employed persons and by employees who are not members of an occupational pension scheme of their employers. There were 101,703 contributions made to retirement annuity contracts for 2000-01 relating to this €205 million Exchequer cost. There is no breakdown available to hand of the amounts claimed in respect of the ten highest contributions made. In any event Revenue confidentiality would rule out the identification of the individuals concerned.

With regard to the issue of obtaining further information on the Exchequer cost of pension reliefs, the Department of Finance and the Revenue Commissioners have been working closely recently to investigate data capture issues with a view to improving data quality and transparency without overburdening compliant taxpayers. Arising from this work, provisions were included in the Finance Act 2004 requiring employers to give information regarding the total employer and employee pension contributions in the annual P35 form detailing PAYE paid and so on. The preliminary data should become available from early 2006 after the relevant income tax returns are filed.

It should be stated that the purpose of these various tax reliefs is to encourage employers to provide pensions for their employees and to encourage employees and the self-employed to contribute to or to provide for their own pensions. This has been long-standing Government policy. It is also Government policy to increase pension coverage and these tax reliefs play a key role in this regard. It should be borne in mind that when pensions are eventually drawn down in retirement they are taxable subject to the usual income tax rules. Thus, a significant part of the Exchequer cost of the reliefs is eventually recouped.

It should be noted that these tax reliefs for private pension provision reduce the burden on the State to provide a larger amount of direct pension provision. In contrast, a number of other EU member states such as Germany, France and Austria whose pension provision is largely or almost entirely State funded have had to take major corrective action in the pensions area over the past five years because of the pressure on the public finances caused by demographic and other factors affecting pension provision.

The Seanad adjourned at 8.15 p.m. until10.30 a.m. on Wednesday, 1 June 2005.