Joan Burton (Dublin West, Labour)
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Question 255: To ask the Minister for Health and Children if, with respect to the proposed co-located hospital on the site of Connolly Hospital, Blanchardstown, recent increases in the cost of debt financing may impact on either the financial viability of the project or on the cost to the Exchequer; if she will confirm that Mount Carmel Medical is the only group which has tendered for the project; if she has set a deadline for the completion of the tendering process for the project; when construction of the co-located hospital will begin; and if she will make a statement on the matter. [46954/08]

Mary Harney (Dublin Mid West, Progressive Democrats)
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The aim of the acute hospital co-location initiative is to make available approximately 1,000 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.

Significant progress has been made on the implementation of the co-location initiative. The Board of the HSE has approved preferred bidder status for the development of co-located hospitals on six sites. Project Agreements for four of these have been signed and preparatory work for the remaining two is proceeding. Planning permission was granted for one project last month and two other projects are under consideration by An Bord Pleanála.

A tender in respect of Connolly Hospital has been received by the Health Service Executive and is under consideration.

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. 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. The on-going revenue cost to the public hospitals will be minimal. This is because the beds in public hospitals to be freed up for public patients are already staffed and the back-up services and facilities required to support them are in place. The only staffing cost envisaged is the appointment of additional consultants which is being pursued in the light of the agreement on the new consultants' contract. Additional revenues will 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.

It is a matter for each of the successful bidders to arrange to finance the projects in accordance with the terms of the relevant Project Agreement. Although it is certainly the case that the funding environment has changed radically in the last six months, in relation to both public and private sectors, the co-location initiative like other major projects has to deal with this. The successful bidders are working on the details of contractual terms with banks and other arrangers of finance in the very difficult and changed credit environment. The HSE is continuing to work with them to ensure that the co-located hospitals can be built and brought into operation as soon as possible, and that the goal of achieving new public acute bed capacity at value for money to the State is achieved.

My Department has requested the Parliamentary Affairs Division of the Executive to arrange to have the detailed operational matters raised by the Deputy in respect of the Connolly co-location project investigated and a reply issued directly to her.