The Minister for Finance has indicated that funding of the Government's €13 billion Health Strategy is conditional on continued economic success and on the prior implementation of new value-for-money systems.
In an article in yesterday's Irish Medical Times, Mr McCreevy also warned that tax increases that could threaten prosperity would be needed if health spending was to continue to rise at its present rate.
He said it was only the high economic growth rates that had allowed health spending to climb so much since 1996. However, the international economic downturn had changed the situation, he said.
The fiscal position was "now much less benign", he said. "It doesn't need a rocket scientist or a brain surgeon to work out that if we allow health expenditure to continue to rise at its present rate, then our levels of taxation will have to increase to maintain the necessary balance in our public finances and that eventually the crucial supportive environment for our economic prosperity would be jeopardised." His remarks were criticised yesterday by Labour's finance spokesman, Mr Derek McDowell, who claimed they showed the Government had "no intention of funding the Health Strategy". The strategy, he said, purported to put in place precisely the system of measuring value for money Mr McCreevy was now seeking.
"The Government has been saying that there is a coherent plan in place. Charlie McCreevy has blown that myth away," said Mr McDowell in a statement.
He said the Government had never said how it intended to fund the strategy.
"Charlie McCreevy's statement now makes it explicitly clear that Fianna Fáil has no intention of funding the strategy and probably never had." A Labour spokesman said yesterday that the party had already said it would consider borrowing if necessary to fund capital health spending, and would also consider using money the current Government has committed to the long-term pension fund.
Fine Gael's health spokesman, Mr Gay Mitchell, said his party was committed to maintaining health spending at the EU average of 8 per cent of GNP - a figure it will reach this year. As GNP increased, the party would ensure health spending increased to retain its 8 per cent share.
However, the implementation of the €13 billion strategy over the planned 10 years would require substantially greater percentage rises than the projected GNP increases. Mr McCreevy said he had been concerned for some time that "the outputs of the health service have not kept pace with the massive increase in funding delivered to the sector in recent years".
He listed the factors that will lead to further pressure on health spending, including the Government's commitments and rising staff and drug costs.
Mr McCreevy said the rate of increase in health spending was "clearly unsustainable", having risen from 21 per cent of all departmental expenditure in 1996 to 26 per cent today. The increase in health spending as a proportion of tax revenue demonstrated the rise even more dramatically.
"In 1996, the gross Health and Children vote represented less than 55 per cent of the income tax yield. Last year it accounted for some 76 per cent and, in 2002, the increased vote, together with the constrained growth in tax revenue due to the less buoyant economy, will combine to push health spending to more than 80 per cent of our entire income tax yield.
"Systems to identify the outputs and outcomes being delivered by the present level of funding . . . are crucial."