I propose to take Questions Nos. 41 and 49 together.
The Government has a significant fiscal deficit which needs to be closed. We are bound by our commitments to our international partners. They are our lenders of last resort. For now, we depend on them to enable us to pay our way. Our country has suffered the greatest economic crisis in living memory leading to a large fall in Exchequer revenues. Tax revenues fell from €47 billion in 2007 to €34 billion in 2011. However, we are rebuilding our revenue base - 2011 tax revenue was up €2 billion on 2010 - but we do not have the resources to fund all the services that we would like to provide.
It is in this context that expenditure plans for 2012 - 2014 were set in the Comprehensive Expenditure Report, published last December. The Health sector as with other sectors has incurred a reduction in the resources allocated to it. Further significant cost reduction/extraction is required in 2013 and 2014. This year, in accordance with the National Service Plan, the HSE had to plan for a reduction in expenditure of €750m in order to meet the targets set by Government as well as unavoidable pressures. In the Comprehensive Expenditure Report for 2012 the Government has indicated that further savings of €280m in line with Government targets in current health expenditure would be required over that period. However, additional savings will also be required to fund unavoidable pressures particularly in the area of community drugs schemes, additional superannuation costs and service pressures arising from demographic trends. Savings will also be required to provide for investment to meet commitments in the Programme for Government.
The savings being sought over the period are designed to reduce the cost base in the health service, particularly in the areas of drugs costs and procurement and also provide for a more efficient and equitable collection of income from the use of private beds in public hospitals. Initial indications are that between €750m and €900m will have to be taken out of the cost base of the health sector next year to meet the commitments I have outlined. Some savings will arise from the reduction in the numbers employed in the Health Services in line with the Government's policy in respect of employment in the public services generally. There are also some efficiencies being sought in the provision of services. The objective is to reduce costs while maintaining services to the greatest extent possible. It is acknowledged that the Programme poses serious challenges to the management of the health services in the coming years particularly in the context of the major reform programme being undertaken by the Government. However it is intended that through the achievement of greater efficiency in the delivery of services and the operation of the Croke Park agreement the savings can be achieved with the minimum impact on services.
My Department is working intensively with the HSE on proposals for submission to Government to address structural expenditure issues in the context of the 2013 Estimates. This includes reconfiguration of services, maximising the potential for flexibility under the Croke Park Agreement and curtailing expenditure in the Primary Care Reimbursement Service.
This is in line with the Programme for Government which is focussed on reforming the way health services are funded and delivered to achieve greater productivity and more cost effective services.
