Áine Brady (Kildare North, Fianna Fail)

Amendments Nos. 20 and 21 both propose a different approach to that currently provided for within the Bill with regard to the cap on the principal residence. Amendment No. 20 states that the percentage of the family home to be repaid to the State should not exceed 15%. However, the amendment does not specify the market value on which this percentage is based. It could be equally argued that it is the value at the time of the original application or at the time of repayment of moneys owed. This renders the provision legally ambiguous and for this reason, but not only for this reason, I cannot agree to accept it.

Amendment No. 21 stipulates that the cap should stand at 15% of the market value of the principal residence at the time of the original application for State support. However, I consider that the current approach set out in the Bill is fairer and more favourable for applicants for the following reasons.

First, the cap is currently applied after the first three years of care. In the case of a single person, the contribution payable is a maximum of 5% per annum, resulting in a total capped contribution of 15% if the person spends three or more years in care. In the case of a couple, the maximum contribution payable by each member is 2.5% per annum, resulting in a total capped contribution of 7.5% Thus, the three-year cap acknowledges the situation of couples by limiting the contributions of each member to 7.5%. Moreover, by capping contributions by reference to a time period, it has been possible to extend the cap retrospectively so that many people currently in care can benefit from having their existing time in nursing home care taken into account.

Second, the legislation provides for a financial review. Thus, in a climate of declining property prices, such as we are currently experiencing, a person can avail of this mechanism and reduce the contribution payable on their principal residence to take account of the declining value of the property in year two or year three. A straightforward 15% cap based on the original valuation of the property would not achieve this.

Third, while the Bill provides for the cessation of contributions after the first three years of care, it also takes account of the time value of money, namely, inflation or deflation. This is fair, since the taxpayer is effectively offering an interest free loan under this scheme. It is also important from the perspective of financial sustainability, particularly given the very generous system of further deferral offered within the scheme. The system of further deferral could result in families deferring the repayment of contributions for 50 or 60 years if they wished. In such circumstances, it is only fair and just that the time value of money would be acknowledged. For all of these reasons, I do not propose to accept amendments Nos. 20 or 21.

On a point of further information, the person submits a valuation with his or her application for State support. This is the point of valuation. However, a person can seek a review of the valuation at any time. The cap is based on three years rather than a percentage, although the effect of that is that the contributions are capped at a maximum of 15%, or in the case of a couple 7.5%.