Tommy Broughan (Dublin North East, Labour)
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Question 137: To ask the Minister for Health and Children her plans to review the proposals for co-located hospitals on the grounds of public hospitals in view of the deteriorating finances of the State and the high amount of tax that will be foregone by the Exchequer in the context of these proposals; and if she will make a statement on the matter. [42429/08]

Mary Harney (Dublin Mid West, Progressive Democrats)
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The aim of the acute hospital co-location initiative is to make available additional public acute hospital beds for public patients by transferring private activity, with some limited exceptions, from public acute hospitals to co-located private hospitals. Each co-location project is required to demonstrate value for money for the State, taking into account its comprehensive benefits, as well as the cost of tax allowances and private bed revenue currently accruing to public hospitals.

I do not accept that, relative to its value, a high proportion of tax will be forgone by the Exchequer in respect of co-location projects. The scheme of tax allowances under the Finance Act 2001 means that, for each €100 million of qualifying capital expenditure, the cost of tax relief to investors (assuming a marginal tax rate of 41% for those investors) will be some €41 million in gross terms, spread over 7 years. Additional revenues would accrue to the Exchequer from the extra activity generated by the construction of the hospitals, the employment arising and the related services provided on which taxes will be paid.

The Programme for Government contains a commitment to carry out an independent review of the co location initiative following completion of the current programme of developments. In accordance with this commitment, my Department will make the necessary arrangements to commission a review in due course.