Michael Noonan (Limerick East, Fine Gael)

Deputy James Reilly laid out the Fine Gael position on this. There are many good things in this Bill; the principle is good and the scheme proposed is better than the existing one. However, I also believe there are major flaws in the scheme and many of them have already been pointed out by Deputies James Reilly and Jan O'Sullivan.

I have personal experience of matters related to the Bill; a close member of my family is in a nursing home. I draw attention to this fact because I wish to make it clear that I have no financial interest in either the existing scheme or the proposed new scheme. My family does not benefit from subventions and will certainly not benefit from the new scheme. In case there is any speculation about my personal position, my contribution is an attempt to improve the Minister's approach and I am not advocating a scheme that will serve my family's needs.

The current position is inequitable and the subvention scheme applies unfairly. People on exactly the same level of income get different levels of subvention, depending on the institution in which they reside. By and large those fortunate enough to be in a public nursing home will pay less than those in private nursing homes, despite the fact they may be in the same circumstances with the same need of long-term care. They could have the same income yet there could be a huge variation and that is unfair and must be corrected.

Relatives of residents of private nursing homes are severely penalised under the current scheme. The subvention goes some way to meeting the cost of a nursing home but, as it is means tested, in many cases sons and daughters, who already have many financial demands due to their family commitments, must make up the balance. This is a serious imposition that the new scheme will do away with and when it replaces the existing scheme there will no longer be a call on the cash of family members. As other members said, the family home will not have to be sold to pay nursing home fees, though there will be a charge on it. This is all of benefit.

The principle begins to fall down in the area of practical application, however. This is where questions arise and we have not received satisfactory answers yet. In a Dáil question yesterday I asked the Minister what was paid out by her Department in subventions in 2007 and she kindly answered €205 million. She expects an additional €12 million to be paid out in 2008. Her first shot at a budget for the new scheme is €55 million. The current scheme cost €205 million in 2007 and the new scheme's budget is €55 million. How can the new scheme be substantially better than the old one if it costs around €150 million less? There is a problem there. Obviously, if there are deferred payments, these would make up the balance. What worries us on this side of the House is that not all those in nursing homes who are in receipt of subventions at present would qualify under the new scheme. That is key, and must be answered.

The interdepartmental committee which considered this issue when the Bill was being prepared in 2006 stated that 30% of patients in nursing homes are at a medium or lower level of dependency and the Irish private nursing homes association state that 12% of their patients are at low levels of dependency. This Bill is geared for persons who require care because they have high dependency. Therefore, on the face of it and working on the interdepartmental, Civil Service figures, the opening position is that 30% of existing patients would not qualify. What mechanism does the Department have to cover this 30% of people? They will no longer have a subvention and, in fairness, they cannot be put out in the road, so how does it work out? At the same time, the funding does not seem to be going in. Some €55 million is going in but this is in contrast to a current figure of in excess of €200 million. While there will be a loans system, ancillary support and deferred payments to be got back in the future, when one considers the profile of who is in nursing homes at present, it does not make sense.

The second issue I wish to raise is the assessment of needs. This Bill will apply to persons who are assessed to be in need of long-term care. A number of factors can be taken into account in this assessment, for example, cognitive ability, the extent of orientation, the degree of mobility, the ability to dress unaided, the ability to feed unaided, the ability to communicate, the ability to bathe unaided and the degree of continence of the person, and there are also other factors to do with social dependency and support from families and so on. This would be the normal way to assess dependency.

The first problem is that no scale is applied to any of these elements of the assessment. I listed eight elements and there are other general elements. If, for example, we gave ten points to each of the eight elements and applied 20 points to the general elements, making a total of 100 points, at what point would one qualify? Is it past point 60, 70, 80 or 20? This is not addressed in the Bill so there is a serious flaw in the assessment. It is not enough to say the Department of Health and Children or the HSE will look after that issue and that we will apply a scheme which will be fair — that is no longer the way the world works. There is a low enough level of trust in the HSE. If this is not spelled out in detail, if a weighting is not given to the different elements of the assessment and if it is not stated clearly at what point somebody will qualify, then this will not run. That is a serious matter.

The biggest problem in this section is that the Minister makes it very clear this a resource-capped scheme. Department of Health and Children schemes like the drugs refund scheme, medical cards schemes and so on are all demand-led. If there was ever a demand-led scheme, this is one. If one's mother has Alzheimer's and needs to go to a nursing home, she is entitled to the nursing home place as soon as she is assessed as needing it because she can no longer be looked after at home. However, if it is a resource-led scheme, there will be a waiting list for nursing homes of persons assessed as having very high levels of dependency who are absolutely in need of care.

This will not run, including legally. If the Minister was present, I would ask her to go back to the Attorney General. I believe it will pan out that somebody will take a case and this will be found to be unconstitutional. If a scheme is set up to assess high levels of dependency, and if the consequence of being assessed as having a high level of dependency is that one is entitled to support from the State for one's stay in a nursing home, and a Minister then says that although there are 20 vacant beds in the neighbourhood nursing home, the money is not available this year because it is a resource-capped scheme and so the person cannot go into the nursing home, there is a case in law for that person. This is particularly so if the State has already helped that person's neighbours to go to the nursing home, and others in similar circumstances, because everybody must be equal before the law in situations such as this. The HSE as the agent of State cannot be arbitrary in an assessment — it cannot choose one over the other. People in similar circumstances must be treated similarly, which is fundamental in law.

There is a serious problem here. I can see what the Department is trying to do — it is trying to cap the costs of this scheme. However, in what is essentially a demand-led scheme, the costs cannot be capped by artificially turning it into a resource-capped scheme. The Minister has gone to the trouble of writing in a section to state it will be resource-capped scheme. I do not believe it will work, so there is a serious problem.

The definition of a couple in the Bill will also give difficulty because that definition is based on sexual relationships. One is either married, a heterosexual couple living as a married couple or a gay couple living as a married couple, but what about two sisters or a sister and a brother living together? This has consequences for disposal when there is an assessment against the family home. When the person in the nursing home dies and the HSE, with the help of the Revenue Commissioners, go in to recover the 7.5% of the value of the home, plus a consumer price index add-on, what is the position of the second sister? It is quite common across the country that a sister or brother would own the home and another sister or brother would live with him or her. Why, unless someone was deliberately trying to make political mischief, would one define a couple in terms of sexual relationships rather than in terms of cohabitation, which one would have thought would be the way to deal with an issue concerning a home? This should be reconsidered because it has consequences, particularly when the loan, if I can call it that, must be collected subsequently.

The financial assessment is also curious. All net income is taken into account, which is fair enough. There is a write-off on assets of €72,000 for a couple and €36,000 for a single person. A couple could have €100,000 in savings and €72,000 would be written off, with the couple imputed to have savings of €28,000, which is €14,000 each. Some 5% of the €14,000 would be taken as income and added on to other income. That is fair enough. However, it is trickier when it comes to the assets because the family home is always included, at least for the first three years of assessment. My understanding is that all other assets at home or abroad, of any kind, are included in the assessment.

It gets very tricky at this point because this does not apply to everybody and is calculated relative to the cost of the nursing home. The level of support will be greater for people in Dublin, where nursing homes are dearer, and less for people down the country, although it depends on the nursing home. A complicated formula is contained in the Schedule but it is not that complicated. In my part of the country and in the counties surrounding Limerick, the average cost would be approximately €800 a week for a nursing home. People I know in a nursing home in Rathgar pay €60,000 a year, which is approximately €1,200 a week, so there are variations between Dublin, Limerick and elsewhere. The interdepartmental committee has supplied figures which give the range, so these are not absolute figures, but €800 a week, or roughly €40,000 a year, is the cost with which I would be familiar.

The Bill states that nobody will pay more than the cost of the nursing home, so nobody would pay more than €800 a week by way of contribution in my area, and the State will make up the balance between the imputed income and the €40,000 a year. I found this difficult to understand when I first read the Bill. We are familiar with means tests, whereby if one qualifies under the means, one gets something. This Bill provides for a reverse means test so that if one qualifies under the means, one makes a contribution. The lower the means an applicant has, the less of a contribution to be made; the higher the means, the more of a contribution to be made. It is a peculiar take on a means test as it decides what contribution a person will make rather than what he or she will get. It is the reverse of what we would be familiar with when we assist people in getting medical cards, subventions and so on.

Under the scheme everyone will pay, even those on the non-contributory old age pension who may currently have free care in a public nursing home. The budget increased the non-contributory pension to €209 per week. With this scheme, there will be a 20% discount on that, which comes to €42, leaving the recipient with €167. In my example of a weekly nursing home fee of €800, the State will come up with the difference between €167 and €800 and pay it directly to the nursing home. Under this Bill, the elderly lady or gentleman whose only income is the non-contributory pension will contribute €167 to their keep. We could have an argument about that. On the other hand, someone with an income of €800 or over will not qualify for any subvention and will have to pay the full nursing home fees.

The means test comes in at fairly low levels of income. Take the example of an individual with an imputed income of €20,000. That is not a large amount but would correspond to the pension of a garda, civil servant, teacher or nurse. Two such pensioners, a couple, would have €40,000 between them when allowing for savings and pensions. If they had a family home worth €500,000, then 5% of its value would be used, €25,000, which is a substantial amount of money. If that is added to the €20,000 then they go over the limit and receive nothing. I presume what will work out in practice is that since they do not have the money to pay, the difference between the €20,000 and the €40,000 becomes the charge on the family home at 7.5% over three years. This will, however, present problems.

When assessments of land values in the cases of farmers are taken into account, one sees how serious the problem gets. Like other property prices land prices went mad over the past several years. Take the example of a modest farm which could be worth up to €5 million. If the 5% calculation is applied to that, the couple in question would have no chance of qualifying under the scheme. All they have is an asset that they can work from which to get an income. There is no income deriving from its value. While it is clear that the 2.5% up to 7.5% charge on the value of the family home can be used as a deferred payment, it is not clear that an assessment of 5% on the value of a family farm can be used in a similar fashion. The imputed income would take such a couple well beyond the limit at which the new ancillary financial support would apply.

I am sure the Department's officials have thought all this out and have answers for it but we do not know them yet. This will have to be explained in the Minister's reply and how it will work in practice.

Another issue that needs to be examined is the tax position. The Minister for Finance in his Budget Statement said he would apply the standard rate of tax to medical rebates and nursing home fees. Form a conversation I had with him recently, I believe he is reconsidering that.

A payment to a private nursing home can be claimed against tax. Whether it is the standard or higher rate, the principle is the same. However, because of the way of assessing income under this scheme, the tax will have a variation on it. If someone pays, say, €400 of the €800 weekly nursing home fee, they are entitled to claim that against tax. Yet as income is assessed as net income, as soon as it is claimed against tax the person's income goes up, which affects the original assessment of income. When one's income goes up, one gets less from the State. When it goes down, one gets more. If the State is notionally providing half of the fees and an individual is providing the other half, he or she will claim it back on tax. However, he or she is no longer entitled to half of it because in the definition of income, the income has risen. The individual concerned will have to pay more tax and is entitled to less from the State. In the case of someone on the marginal rate of tax, one could be getting substantially more, which is a problem.

When it comes to deferred payments after three years, what is the tax position of the repayment? The Department, on behalf of the HSE, is repaying the Revenue an amount of money that was paid for nursing home fees which is claimable against tax. Take the example of the inheritor of a family home with a 7.5% charge on its value plus the CPI on that. Will he or she be able to claim that against income tax as a medical expense? I will return to these issues on Committee Stage.

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