Léim ar aghaidh chuig an bpríomhábhar

Seanad Éireann díospóireacht -
Thursday, 22 Jan 2015

Vol. 237 No. 3

Commencement Matters

Western Development Commission

I welcome the Minister of State, Deputy English.

Cuirim fáilte roimh an Aire Stáit. I am raising this matter in light of the recently published and very good report of the Western Development Commission, WDC, on trends in agency-assisted employment in the western region. The employment created by businesses that receive support from one of the main enterprise agencies - which are usually export-oriented in outlook - is termed "agency-assisted employment". The report of the WDC presents data on these businesses in the western region for the period 2004 to 2013 in the interests of providing useful insights regarding enterprise, job creation and regional development policy. The report indicates that in 2013 there were 49,217 permanent, full-time jobs and 7,405 temporary or part-time jobs in agency-assisted companies in the western region, approximately 16% of all such jobs in Ireland. The report also indicates that in 2012 growth in the region was measured at only 0.13%. This compares with a figure of 3.2% in the remainder of the State in the same period. The rate relating to assisted jobs, as a percentage of the region’s total employment, stands at 18.2%, which is below the figure of 19.1% which obtains in the remainder of the State. Of the five sectors of employment, modern manufacturing is the region’s largest, followed by traditional manufacturing, information and communications, and agrifood. Business, financial and other services is the smallest sector. In the western region, 62.1% of permanent assisted jobs are concentrated in the top two sectors, compared with just 49.2% in the remainder of the State. This highlights the reliance on these key sectors and the need for increased diversity in the region’s assisted sector.

Of the seven western counties, Sligo, Leitrim and Clare experienced declines in total assisted employment in 2013 whereas the other four all experienced growth. County Roscommon enjoyed the best level of performance, followed, in descending order, by Mayo, Donegal and Galway. At 38.1%, Donegal has the lowest foreign ownership share in the region. In the national context, western counties tend to have relatively high shares of foreign ownership, which is the legacy of foreign direct investment, FDI, across the region over a period. Agrifood is the second largest sector, accounting for just over a quarter of assisted employment in the large rural counties of Mayo, Donegal and Roscommon. In a national context, however, the sector does not play a particularly big role in western counties as the region's agriculture sector is not as strong as those which obtain in the south west and the south east. Roscommon and Leitrim have not benefited as much from recent jobs growth as other counties. One of the clearest patterns identified in the report is the extent to which assisted employment plays a larger role in cities.

Of the seven western counties, Sligo and Clare incurred greater job losses than gains between 2012 and 2013, leading to a net decline in both in assisted permanent full-time employment.

In Sligo's case, job losses were 162% of job gains in 2013. For total assisted employment, permanent full-time and temporary part-time, the western region experienced a 6% decline between 2004 and 2013. In contrast, the rest of the State had 4% growth in the same period.

Among the western counties, Galway and Mayo were the only counties with higher total assisted employment in 2013 than ten years earlier, Galway growing by 5.3% and Mayo by 1%, Leitrim suffered the largest decline of 43.5% followed by Roscommon, Donegal, Clare and Sligo having similar performances to each other declining by 10%. Overall, the region had 2.8% growth, which is below the 3.9% in the rest of the State. One of the common patterns is a high concentration of employment in the two largest sectors. Modern manufacturing is the largest assisted employment sector in the western region. However, in a national context the agrifood sector does not play a particularly large role in western counties. We also have figures for Galway and other areas. It is quite obvious that any upturn in the economy, apart from Galway city, is not being felt by western and rural regions. What strategy has the Government in place to reverse these trends?

I welcome the opportunity to discuss this report and what is being done in the overall area. We must bear in mind that the report covers some of the growth and boom years from 2004 to 2013, thus highlighting many issues in the regions, but it stops short of including this year when we are seeing much growth throughout the country.

Significant progress has been made since 2011 in restructuring and transforming Ireland's economy and in reforming the way we support business and job creation in Ireland. I am pleased to report that this growth in employment is now in evidence across all sectors of the economy and across all regions. It is clear from the data for the past two or three quarters that there is a regional spread. There would have been a concern a year ago or even less that much of the new growth was in Leinster and certainly in Dublin. It is clear from the past two or three quarterly reports that it is now pushing out to all regions and we must ensure we build on that. The analysis by the Western Development Commission on Trends in Agency Assisted Employment in the Western Region for the period 2004 to 2013 highlights some of the progress achieved in this regard across the western region.

I am also pleased to record that the enterprise development agencies, Enterprise Ireland and IDA Ireland, in their end-of-year statements for 2014 have highlighted the continuing trend of growth in employment across all regions. The full results by regions will be published by my Department in the coming weeks and hopefully that will provide us with more data on which we can work. We are working hard to sustain that level of jobs growth and recovery in the coming year, in particular to sustain the growth in modem manufacturing and internationally traded services recorded in the western region in recent years, which as the Senator said is an issue in the western region and we need to build on that.

The Action Plan for Jobs is at the heart of the Government's approach to growing jobs in the economy through creating the best environment for enterprises to start, grow, scale and create employment. The annual action plans are developed on a co-ordinated basis across Government by my Department, and we have established a process of quarterly monitoring and reporting in detail on the implementation of measures in the Action Plan for Jobs to support the transformation of the economy, with a success rate of over 90%.

Now in its fourth year, the Action Plan for Jobs process continues to have an impact. Almost 80,000 have been created in the private sector during the past three action plans for jobs. The next action plan, which is due in the next couple of weeks, will set more targets covering all regions and involve all the agencies. This year's plan comes in the context of improving economic and employment data. The rate of unemployment has declined from a peak of 15.1% at the start of 2012 to 10.6% at the end of 2014. Data for the regions mentioned show that the unemployment rates are coming down but we want to get the rate down much more quickly. We also recognise that it is a work in progress.

One of the factors that has made the Action Plan for Jobs process such a success has been the input, support and partnership with business and others in developing and progressing the plans for all the regions. We have consulted extensively in recent months with all Departments and with other stakeholders and organisations. The next action plan should help the spread of job creation into the regions.

In terms of regional economic development and ensuring every region can fulfil its potential, we will build on the progress made in 2014 in establishing a process to design and implement regional enterprise strategies. These regional enterprise strategies are akin to action plans for jobs for every region. The formulation of regional enterprise strategies will enable us to identify the sustainable competitive strengths of each region, which have also been highlighted in the report, and to better integrate the efforts of the enterprise development agencies and other regional stakeholders in supporting enterprise growth and jobs in areas of potential. We hope to publish these strategies by mid-year.

I believe that for every region to achieve its potential, a partnership approach is essential among all the key stakeholders, public and private. Each of the regional enterprise strategies will set out the investment and job creation targets being set for the enterprise development agencies for the regions for the coming five years. In addition to setting out the regional commitments by the development agencies and the local enterprise offices, we will also seek to encompass the supporting actions of the full range of stakeholders, including local authorities, education and training providers and representative bodies, to the common goal of enterprise, growth and jobs in the regions to get to the target of full employment by 2018.

I think the Action Plan for Jobs concept has worked because it has focused people's minds across all agencies and Departments. If we can mirror that plan at a regional level to bring all the various agencies together, including the chambers of commerce and organisations, to focus their minds with a list of actions, that will benefit each region and will concentrate on the strengths and weaknesses of each region. I am conscious that the regions covered by this report will not necessarily match up with the regions which we are trying to cover as an enterprise. There will be three or four regional strategies. It is important that we try, as locally as possible, to target certain areas. This has worked in certain places, such as in Waterford, and we are building on it. The idea is right and with some luck it should address some of the Senator's concerns and, hopefully, there will be involvement by all stakeholders.

Based on what the Minister of State has said, we are going to get an outline of a strategy in the coming months which probably will not see much action before the end of the life of the Government. Would the Minister of State agree that the Government is failing our region given that we have fallen so far behind the other regions, resulting in rural decline and a lower rate of employment than any of the other regions and we far too dependent on foreign direct investment such that the indigenous sector has not seen any growth worth talking about? Therefore, the strategy of the Government has failed the western region in this regard.

I would not say the Government has failed. The issue in recent years has been to get jobs into this country and to create new jobs. It is fair to say that much of the original growth and new jobs happened in the east and in some of the larger cities, such as Cork, Galway and Dublin. Our first aim is to try to stabilise that position and to win new jobs and then to try to address the regional imbalance. Many of the regions need extra attention. That is the reason we are responding with specific strategies for each region. The drop in unemployment across the board is about 4%. That is common in the western region. It is coming from a higher base but the percentage drop is the same.

It is just emigration.

The Minister of State to continue without interruption.

We always say the levels on the unemployment register have dropped due to a combination of reasons, such as people leaving the country, moving around and also taking up a job. It is clear from the number of jobs created in the past three or four years that the number of additional people at work is 80,000. It is not a case that everybody has left. There are new jobs. In the early years the jobs were concentrated in the east and in Dublin city but in the past year, according to a review of the figures from recent months, there has been a push out to the regions. We are going to try to build on that and the only way we can do it is to have a regional strategy. Otherwise it will not happen. The strategy tries to bring together all the local talents to focus our minds. This has worked in other areas and in other regions. If the Senator does not want to be part of it, that is his choice.

I want it more quickly.

It will not be a case of putting this aside for a couple of years. We had the first regional strategy before Christmas, which covered part of this area. It was quite beneficial and there will be planning for that in a couple of months. We will not make plans and leave them sitting for two years. The Action Plan for Jobs has been an annual plan with a 90% success rate each year. Likewise the regional plans will show annual targets every year. It is not a case of producing a plan that will be allowed sit there for six or seven years. That is not going to happen.

It took four years to get it.

Bovine Disease Controls

I welcome the Minister of State, Deputy Tom Hayes, to the House.

Cuirim fáilte roimh an Aire Stáit. This issue was brought to my attention some months ago by a young farmer who had recently inherited his father's farm. We are all asked by Government and farming associations to encourage people to transfer family farms to young people who, perhaps, would be more efficient in terms of how they do their business and who are committed to farming and to improving farming practices.

Much has happened in recent budgets to facilitate the transition, and inheritance, from fathers to sons or daughters.

This situation that I bring to the attention of the Minister this morning relates to bovine viral diarrhoea, BVD, testing. For a myriad of reasons, it is important that BVD testing is done. For any particular herd, there is two-year compulsory BVD testing and then there is optional yearly testing. In this case, the father did the BVD testing on the herd in 2012 and 2013, and his son, who inherited the same cows in 2014, was required to repeat the process and do another two years of BVD testing. I know this family well. They are based in a part of County Clare that has extremely good-quality farming practices. It is a bureaucratic nuisance and an unnecessary financial burden to require a son to do testing, at some expense, on a closed herd that has already been tested by his father.

These are the types of bureaucratic problem that we need to deal with. There is no need for it. The herd had complied with the BVD testing requirements at a cost to the young man's father, yet when this young man, who has gone through third-level farming colleges and has his certificates - he is a good farmer - inherits the farm he must repeat the process simply because his father decided to sign over the farm to him. It seems grossly unfair and unnecessary because it involves the same cattle. Traceability has resulted in this country having an extremely impressive reputation abroad. Why are we requiring a son to turn around and repeat the process that has been done in a closed herd, that has been fully traced and is fully accounted for? It seems ridiculous. At this late stage, in this particular case, the details of which I will give the Minister of State afterwards, is there some way of giving a rebate or even a partial rebate to a farming family who are just starting out with good intentions and are doing their business correctly? They inherited a herd for which the business was done right. Surely a common-sense approach must be adopted here. More fundamentally, because there is money involved, the policy needs to changed. It needs to be rectified and it needs to be streamlined.

I thank Senator Conway for giving me the opportunity to come to the House this morning to address this important issue.

The Senator highlighted the case of a particular individual, a young farmer. One must bear in mind at the outset, before I get into the exact detail, that never before in the history of the State have so many concessions for young farmers been introduced in a budget.

In fact, only last week I addressed a meeting in Tipperary where the hall was packed. It was addressed by persons who have considerable ambition for the agricultural sector, and one of the issues they spoke about was how to produce food - meat, such as beef, or milk - not only in a cost-effective manner but in such a way that one could sell it on to the world market, where there is demand, and get a high price, which Ireland is now demanding and getting all over the world.

The introduction of the industry-led national BVD eradication programme on 1 January 2013 came after a number of years of careful planning by Animal Health Ireland and after the implementation of a voluntary scheme in 2012. This compulsory phase required farmers to tag and test calves born after that date for all breeding herds. Under the programme, where positive results are detected, herds are required to undergo further testing, particularly to clarify the status of the dam of the positive calf. Some 80,000 breeding herds are now participating in the programme, of which approximately 7,200 also took part in the voluntary phase of the programme in 2012.

The experience of the first two years of the BVD eradication programme has been very encouraging. The rate of compliance with the requirement to test for BVD has been almost perfect, with just fractionally less than 100% of calves born in those years having been tested for the disease.

From the outset, Animal Health Ireland has made it clear that the eradication programme will fall into two three-year periods. In the first of these periods, all herds are required to tag and test calves with the aim of achieving negative test status. Negative test status can be achieved by identifying and removing animals that are persistently infected with the BVD virus from herds, or through accumulation of negative test results. Already, more than 4,000 herds that entered the programme in 2012 have achieved negative herd status.

During the second three-year period, the emphasis of the programme will be on monitoring to ensure that herds that have achieved a negative herd status remain free of infection while dealing with remaining herds where infection is still present. It is intended that this monitoring will be available at a reduced cost relative to that available in the first three years of the programme, and it is already the case that herds that have achieved negative herd status can avail of testing at a rate approximately 25% less than that previously required of them. Work is ongoing to investigate alternative methods of monitoring that will offer further cost savings, and it is hoped that these will be available for the 2016 calving season.

The need for continued monitoring is all the more vital in light of the retention by a minority of herd owners of persistently infected animals that have been identified in the programme to date. In addition, while the overall level of engagement by farmers with the programme has been exemplary, the failure of a small number of herd owners to participate poses a further risk to the programme achieving its goals in a timely fashion. My Department is conscious of the financial burden that the testing regime imposes on farmers, but the position is that the presence of persistently infected animals in a herd necessarily reduces the profitability of the herd on an ongoing basis and the eradication programme is designed to remove the source of this income loss on a permanent basis. That is the key. This is a cost factor, a negative cost on farmers. If the disease was eradicated it would improve their profit margins, particularly in light of difficult financial circumstances such as the fall in beef prices in September and October last.

I should express my gratitude to the BVD implementation group for its solid contribution towards the development and management of this eradication programme, which is of great significance to the farming community. I ask the BVD implementation group to renew its efforts in advancing the programme in the course of 2015, as farmers do not want a prolonged or drawn-out programme. My Department will be glad to support the group in the implementation of the additional necessary measures.

Finally, it should be noted that while farmers bear the cost of testing in the programme, and the testing period may appear to some farmers to be unduly long, the end result for farmers is worthwhile because analysis has shown that the annual benefits to farmers of the eradication of BVD are estimated to be in the region of €100 million.

That is a considerable amount of money in the overall context of agriculture. It is all about profitability. It is in everybody's interests to reduce the costs and to make farming more and more profitable. It is of the utmost important that disease is eradicated and that the associated cost is reduced. I accept the point made by Senator Conway and I would be only too glad to meet with Senator Conway to speak about the constituent in question in order to see whether we can help. In terms of the overall good, one cannot focus on one particular individual. The issue relates to the agricultural industry and farmers in general - a considerable number of people. The current approach has been fully backed by the veterinary profession and it is good for agriculture in general and for farmers. That is the reason the testing process is in place.

No one disputes that. I wish to make two very quick points that I omitted to make in my opening remarks. The first is that the gentleman's father voluntarily participated in the scheme in 2012, along with the 7,500 other farmers in the country who were involved. Second, his herd was shown to be negative for the disease. With respect to the officials who prepared the Minister of State's script, who did it very well in terms of giving us an overall analysis of BVD, the point I made related to the double charging of a father and son with a specific closed herd that was tested in 2012, 2013 and 2014, and the fact that they must now repeat the process for another two years.

Senator Conway has gone way over time.

An additional cost is being incurred. The farming family in question will incur double costs through no fault of their own following the transfer of the farm from father to son. Surely to God the Minister of State would agree that is not fair.

Irrespective of whoever prepared the script, I know something of the matter. As someone who inherited a farm myself, I know that the first thing one must do is to transfer the herd number. It would be grossly unfair to select one person and to say that because a farm was transferred the family should be relieved of their responsibilities and duties. The responsibility lies with the herd keeper, be it an old person or a young person. The herd is monitored on the basis of the herd number. Senator Conway is not correct in the assertion he made about the transfer of the farm from father to son. The same animals are at issue but under a different herd keeper. The disease must be monitored and checked. One could not accept the argument made by Senator Conway that the family in question should be exempt from the scheme because the farm has passed from father to son. That would be silly and wrong.

But they should-----

I ask the Senator to wait a moment. It is akin to saying that following the transfer of the farm from father to son the herd should not be tested for TB.

But they should not be penalised financially for doing it.

Energy Prices

I welcome the Minister of State, Deputy Joe McHugh.

I also welcome the Minister of State, Deputy Joe McHugh. The issue I raise relates to the energy regulator. Heretofore, the only time I was aware of the energy regulator was when the ESB or Bord Gáis applied to it for a price increase. The regulator was seen to do its job in that when Electric Ireland applied for a 21% increase in charges it was only allowed to introduce an increase of 14%. The energy companies do not have it all their own way. However, I have become concerned in recent months in particular. Approximately 40% of this country's electricity is produced from gas. The price of gas has dropped by approximately 30%, yet there has been no reduction in the cost of electricity to the consumer. That is the reason I call on the Minister to intervene. I understand the regulator is an independent entity, but energy producers can seek price increases from the regulator, and on behalf of the people I ask that the Minister seek a decrease in price from the regulator, given that the price of gas, from which 40% of electricity in this country is produced, has fallen by approximately 30%. Accordingly, there should be a decrease in the cost of electricity to the consumer. I cannot understand why that has not happened.

I thank Deputy Sheahan for raising this timely issue, especially in light of the publication of a new climate change Bill this month. If and when enacted, it will become the first climate change Bill this country has ever had. We are looking to 2020 and 2050, at our energy mix and our reliance on fossil fuels. It is important that we begin this conversation.

The Government is acutely aware of the financial challenges faced by families and businesses from high electricity prices. However, it is important to note that the electricity and gas markets are commercial, liberalised and competitive and they operate within national and European regulatory regimes, supported by legislation.

Responsibility for electricity and gas market regulation is a matter for the Commission for Energy Regulation, CER, which is an independent statutory body. The CER is focused on actions to mitigate costs for business and residential consumers, such as rigorous scrutiny of network costs, deeper integration with European energy markets and the delivery of a truly competitive market in the interest of customers. The commission continues to monitor the electricity and gas markets to ensure that competition continues to develop and that customers benefit from competition. The Department liaises with the CER on these matters on an ongoing basis.

At a national level, electricity and gas prices are no longer regulated by the CER. The competitive energy market results in choice for consumers and businesses in terms of suppliers, products and prices, and this exerts downward pressure on prices.

The reduction in wholesale gas prices since the beginning of 2014 has led to a reduction in the wholesale electricity price. It should be noted that wholesale electricity prices tend to reflect the price-setting fuel in the market, which is natural gas, not crude oil. It is worth noting that only 1% of electricity was generated from oil in 2012. Lower wholesale gas prices in 2014 compared to 2013 should have a knock-on impact on retail prices, and that is reflected in the latest EUROSTAT figures published by the Sustainable Energy Authority of Ireland, SEAI, on 9 December last. However, I should caution that wholesale gas prices have been rising since the summer of 2014 and this rise is likely ultimately to feed through to retail electricity and gas prices.

The SEAI report shows that all business consumption bands in electricity and gas experienced reductions in average prices in the first half of 2014, ranging from 0.7% to 4% for electricity and 6.7% to 12.9% for gas. Similarly, in the first half of 2014, EUROSTAT figures show a reduction of 5.7% in the average price of gas in the residential consumption band with the largest share of the market. The average price of electricity in the residential consumption band with the largest share experienced a reduction of 1.3%.

Electric Ireland, the larger supplier of electricity in this country, reduced its unit rate for domestic customers by 2% in November 2014. Consumers can, and in many cases have, mitigated electricity and gas prices by shopping around to get the best possible price and service deal from suppliers. I encourage people to continue to do so. Measures such as comparison websites, approved by the regulator, are there to assist people in this endeavour. Even if customers wish to remain with their existing supplier, they should contact that supplier and insist that they be placed on the best possible offering.

I realise that energy supply companies have not automatically passed savings on to their customers, but I expect that savings will feed through to domestic prices in due course.

However, all supply companies offer competitive deals to customers who switch or engage with their suppliers. For example, a customer can go online today and achieve a discount of approximately €150 per annum by switching from the standard rate electricity offering. A customer can achieve a discount of more than €150 on gas by switching from the standard rate. That equates to a saving of more than €300 a year by switching electricity and gas suppliers. However, I fully appreciate that some customers, particularly older and more vulnerable people, are reluctant to switch or feel unable to do so . In this situation I urge all stakeholders, including the energy companies and the regulator, to make the more vulnerable customer categories aware of the most competitive offerings available and to facilitate their transition to the best value deals in the market.

The Minister for Communications, Energy and Natural Resources is scheduled to meet the chief executive officers of the various energy supply companies next week to outline the Government's concerns regarding these matters and to impress on them the need to offer their customers the best value available in a competitive, liberalised market. I will convey the Senator's observations and suggestions to the Minister in advance of that meeting which will provide an opportunity to have a broad-ranging discussion. As the Senator correctly pointed out, if prices in certain sectors are going down there has to be a knock-on effect for customers. I thank the Senator for raising this matter.

The Minister of State said in his reply, "The CER is focused on actions to mitigate costs for business and residential consumers". My problem is that this is not being done for the consumer. I refer to the recommendation that consumers should switch providers. In my understanding of economics and business one does not chop and change because there is an expectation that the supplier will look after its customers. I note that the Minister of State urges that more vulnerable customer categories should be made aware of the most competitive offerings available to facilitate the transition to the best value deals in the market. That is not looking after the customers and that is my concern and complaint. Reductions are not being passed on. For example, gas prices have fallen by 27%. I could line up 100 people in the morning and I do not think any one of them will tell the Minister of State that his or her electricity bill has dropped. I have documentation from a constituent which shows that his electricity bills have gone up. I refer to the Minister of State's remarks that some customers, in particular, older and more vulnerable people, are reluctant or feel unable to switch. They should not have to switch. The Commission for Energy Regulation, which is there to mitigate costs for business and residential customers, should insist and ensure that the electricity companies pass on the benefits of the reduced costs of gas.

I will provide the 2013 figures for the number of customers who switched providers. A total of 266,224 electricity customers and 117,002, gas customers switched providers. I take the Senator's point that certain categories of customers are used to working with their supplier and we should facilitate them. There is a role for the Commission for Energy Regulation to raise awareness for them. The Senator has been of assistance by raising this matter today.

The difficulty with the geography and the type of energy mix in this country means there is a significant 85% reliance on fossil fuels. We are working towards the target of a 40% increase in the use of indigenous renewables by 2020. However, the reality is that we are still relying 85% on fossil fuels, including gas and peat. For example, Italy has a similar reliance but it also relies on hydroelectricity for 25% of its fuel. Holland has a similar trajectory but it has its own oil and gas supplies.

While these are constraints, they are not excuses. We need to make a determined effort to ensure that we work towards a future use of a renewable mix. I attended a conference this morning in Carton House, Maynooth, which dealt with the topic of how to introduce more competition and how we can work with our counterparts. I was involved in efforts to set up a bilateral agreement between the United Kingdom and Ireland in my capacity as Co-Chair of the British-Irish Parliamentary Assembly. This did not come to pass but I do not think we should give up on the subject of interconnectivity, be it on a British-Irish basis, on a European basis or a connection with France. We need to consider all this mix. We must be conscious of the opportunities as well as the constraints. We have a single, all-island market which is creating more competition. Scottish and Southern Energy plans to launch a plant in County Wexford this year, next to Senator Cullinane's part of the world. There is a plant in Cork, next door to the Senator's county, at Aghada and Whitegate, which was opened in 2010. The vast bulk of our purchase of gas comes from the United Kingdom. These are the challenges but they are not excuses in that we must continue to work towards facilitating more competition to ensure a downward pressure on prices for customers.

While the economy is moving in the right direction, people are still getting bills through the door. Senator Sheahan knows well the challenges faced by people. They will have a few more pounds their pockets at the end of this month but they still have bills such as car insurance, the tax bill, the television licence fee and the electricity bill. The Senator has raised a very important issue and I thank him.

The word should go out from here this morning that more people changing their supplier is the only way to bring down the cost of electricity.

We are way over time. This matter has taken 14 minutes.

Community Care Provision

I welcome the Minister of State to the House. I hope he is the bearer of good news for Waterford with regard to this matter. I seek an update from the Minister for Health - I am sure the Minister of State will give this on his behalf - about plans to build a 100-bed community nursing unit in the grounds of St. Patrick's Hospital in Waterford. I will provide an update of the situation and a brief history of the issue.

In 2008, HIQA carried out inspections in St. Patrick's Hospital and as a result of those inspections, it advocated that St. Brigid's ward in St. Patrick's Hospital should close, with the result that 19 beds were lost to the system. At the same time, the HSE carried out a review and the Prospectus report was published which dealt with bed capacity for geriatric care facilities in the State and for community nursing units.

The review was completed in 2012 and the Prospectus report examined bed capacity up to 2013. This informed the Minister's multi-annual capital plan which runs from 2014 to 2018. At the time when St. Brigid's ward was closed, the then Minister for Health promised that a replacement 50-bed unit would be built to replace those 19 beds but also to bring additional beds into the system. Like a number of capital funding promises, along came the crash and this project was put on hold. A further review was carried out and a new purpose-built 100-bed unit was promised. However, this does not provide any additional beds because this 100-bed unit is assigned to replace further wards and beds in the existing St. Patrick's campus.

The Minister will be aware that there are HIQA inspections of a range of community nursing units and geriatric care facilities across the State. What I want to achieve, and what I hope the Minister wants to achieve, is that this unit be built as quickly as possible, given that there are going to be further HIQA inspections. Notwithstanding my concern about bed capacity generally, and that this is the only geriatric care facility and community nursing facility in Waterford city, I welcome the commitment to build this 100-bed unit on the St. Patrick's campus grounds. Has the design team been appointed? Have the tender documents been completed? Has planning permission been sought? Is capital guaranteed for this project under the HSE's multi-annual capital plan, which runs up to 2018? The most important and direct question is, when will work on the ground start? When will we see work happening? There are a lot of capital projects promised for Waterford. A palliative care unit is another example of a facility that we were promised, and we are being told that there is commitment, that we are moving in the right direction, that it is a long process and that we are on the next stage. People want to know when they will see diggers on the ground and work happening to make this a reality.

I had a good conversation with the Minister, Deputy Varadkar, yesterday evening, and, as the Senator knows, I am taking this commencement matter on his behalf. Community hospitals are a critical and integral component of the overall health system. Even at the beginning of this month, when the conversations were focused very much on general hospitals and trolleys and blockages at accident and emergency departments, a key component was filtering and fluidity between the hospital and the primary community hospitals. For example, when I was in Letterkenny General Hospital last Friday we got a statistical breakdown of the demographics, which revealed that the vast majority of patients were over 75 years of age. It is important that we keep a firm focus on the critical need for community hospitals and that the Minister for Health is acutely aware of that.

I would like to thank Senator Cullinane for raising this issue, as it enables the Minister for Health to provide the House with an update on the plans for a new community nursing unit for Waterford. As Senators are aware, it is Government policy to support older people to live in dignity and independence in their own homes and communities for as long as possible. Where this is not feasible, the health service supports access to appropriate high-quality long-term residential care, including the provision of financial assistance under the nursing homes support scheme. Providing public residential care for older persons forms a significant and crucial part of the services. The overall objective is to protect the viability of as many units as possible within the funding and staffing resources available. Therefore, improving the supports available for older persons is a significant commitment in our programme for Government.

As we are aware, all developments must be addressed in light of the resources available and based on priority of need. HIQA has indicated that a number of units do not fully meet the standards one would expect to find in a modern nursing home. This is not surprising, given the age and structure of many of our public nursing homes. Currently, funding for the community nursing unit programme focuses on the upgrading and refurbishment of existing facilities to achieve HIQA compliance.

The Health Service Executive is responsible for the delivery of health and personal social services. This includes provision of the appropriate infrastructure to support service delivery, such as the facilities at St. Patrick's Hospital. Given that demand for capital finance for the community nursing unit programme far exceeds the funding available, investment must be allocated as objectively as possible based on the HSE's assessment of priorities of needs.

The HSE has identified Waterford city as a priority location for a new community nursing home unit. The design team has been appointed. Currently it is projected that a planning application could be lodged with the local authority in the second quarter of 2015. Following the award of planning permission, it is expected that the project will progress to the tendering and construction phases in late 2015.

As with all capital projects, the community nursing unit infrastructure programme, which includes this project, must be considered within the overall capital envelope available to the health service. There will always be more projects than can be funded by the Exchequer. There is limited funding available for new projects over the next multi-annual period 2015-2019, given the level of commitments and the costs to completion already in place. Therefore, the reason capital funding is not ring-fenced by project is to ensure the HSE has the flexibility to manage within its voted capital allocation in the event that one or more of the hundreds of construction projects under way at any time do not progress as scheduled. Indenting rather than ring-fencing enables the HSE to leverage its capital allocation efficiently, so that it delivers the maximum number of priority projects for the funding available.

I welcome the fact that the design team has been appointed, that a planning application will potentially be lodged in the second quarter of this year, and that towards the end of the year we could move to construction. At the same time, there is a caveat in the Minister's response, in that it is subject to capital funding which has not been ring-fenced. My understanding of what the Minister for Health is saying is that it is based on priority in terms of need, and that HIQA has identified a number of facilities which are not, as they see it, up to standard. The obvious question is whether Waterford is one of those areas. The Minister said that HIQA had identified a number of units that do not fully meet the standards one would expect to find in a modern nursing home. I would imagine from that, then, that the Minister is looking at those facilities to make sure we do not end up with a situation in which units are closed, leaving older people without facilities, because we did not build the new units that are needed.

While there seems to be good news in this, there is a strong caveat as well in that we cannot guarantee that the funding is there at this point in time, but the expectation is that towards the end of the year we will move to construction. It is my responsibility as an Opposition Oireachtas Member in Waterford to push Waterford's case. Again, the question to the Minister is, in light of those HIQA inspections and with the Minister working on a priority basis, has HIQA identified Waterford and St. Patrick's Hospital as belonging to one of those areas where there are potential problems with the existing facilities?

I thank the Senator and will convey his question to the Minister for Health. The important thing that is stated in black and white here is that Waterford city, as the Senator has correctly pointed out, has been identified based on priority. That is the first important component. The Minister for Health has outlined the reasons why the voted allocation of capital funding does not happen at this stage but must go through a process. No doubt the Senator's own role as an Opposition spokesman on this issue and as a Waterford Senator means he will be keeping this on the agenda. No doubt his good colleagues in the Government will be heard loud and clear as well. The fact is that it has been identified and prioritised. I will pass on the question regarding whether HIQA has a hierarchy of priority nationally, or where it fits into HIQA's schedule, to the Minister for Health and will ask him to contact the Senator directly.

Sitting suspended at 11.30 a.m. and resumed at noon.