Pat Gallagher (Donegal South West, Fianna Fail)

Public hospitals will enter into contractual arrangements with the new co-located hospitals to provide what the former need. The new private co-located hospitals will be required to provide services to the HSE at discounted prices under the rules of the capital allowance scheme. Last night, the Opposition put forward a figure of €70 million for seven years in reference to the cost of the capital allowance scheme. The precise capital allowance cost to the State of each project depends on the financial profile of each of the successful bids. However, this is necessarily less than half the construction cost, since relief would be claimed at the marginal income tax rate applicable at the time.

As the Minister pointed out last night, the capital allowance costs to the State will only come on stream after the new co-located hospital facilities have opened — from 2011 onwards — and the costs to the State will cease after the seventh year. For every €1 million in allowable investment, the gross tax cost to the State would typically be €455,000 at current tax and PRSI rates, spread over seven years, without taking account of tax buoyancy from the activity generated. The expected capital allowance costs have been included in the financial evaluations of tenders.

Last night, Deputy McManus questioned the statutory basis for the policy direction on the co-location initiative that issued to the HSE in July 2005. The Minister is satisfied that this policy direction conforms with section 10 of the Health Act 2004. Claims were made by Members last night and again today that the HSE bullied Tallaght Hospital. However, the board of the hospital was asked whether it wished to continue to participate in the co-location initiative.

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