Richard Bruton (Dublin North Central, Fine Gael)
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Question 113: To ask the Minister for Finance if he has conducted an evaluation in conjunction with the Department of Health and Children of the tax relief for private hospital investment; and if it meets the public policy objectives in the health sphere. [7977/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The scheme of capital allowances for the construction of private hospitals was reviewed by Indecon Economic Consultants as part of the overall review of property tax incentives in 2005. Indecon consulted widely in the course of its review, including consultations with the Department of Health and Children and the Health Service Executive. Its report was published on 6 February 2006 and is available on the Department's website. The summary of the main findings from Indecon's analysis is as follows: There has been an overall increase in planning applications and approvals for private hospitals since 2000 but most have not proceeded to date. Most of the extra investment in the sector would either not have been undertaken, or would have taken longer to come online in the absence of the tax incentive scheme. After taking account of the beneficial effects of extra investment as a result of the scheme allowing for opportunity cost and deadweight, Indecon estimates the net cost of the tax incentive to the Irish Exchequer at €23.3 million in terms of tax revenue forgone.

While it is too early to provide detailed estimates of the impact of the scheme on the supply and on the costs of hospital beds, Indecon believes the scheme has the potential to address supply shortages in the sector and to reduce costs. The net cost of this measure to date of €23.3 million estimated by Indecon will be spread over a number of years.

Private health care is a long established feature of the system of health care provision in Ireland and acts as a strong complement to the publicly funded system. Private health care provision spans from general practitioner services through private beds in public hospitals and private hospitals to private nursing homes. The Government is committed to exploring fully the scope for the private sector to provide additional capacity in the health system. The key objective is to provide the required extra capacity, whether this is in the public or private sector. A number of Government policies-initiatives support the coexistence of public and private health care such as the designation of private and semi-private beds in public hospitals; income tax relief on private health insurance premiums; income tax relief on medical-dental expenses; the National Treatment Purchase Fund sources capacity in private hospitals for public patients; and the Tánaiste's policy direction to the Health Service Executive to build private hospitals on public sites, thereby freeing up beds for public patients.