HOSPITAL FINANCE

Ashburton Guardian, Volume 49, Issue 200, 10 June 1929, Page 5

HOSPITAL FINANCE

BASIS OF TAXATION. REVIEW OF TWO SCHEMES. AN INTERESTING REPORT. Methods of raising finance were dealt with in. an interesting report presented to the Ashburton Hospital Board this morning by the secretary (Mr A. Prentice). The report read, inter alia, as follows: “The Hospitals Act of 1885 marked the inception of the levying principle, and although slight changes have been made, the principle has obtained up to the present time. ' While it agrees to representation on boards being a different basis to taxation, i.e., representation in towns, boroughs, etc., being on a parliamentaryi franchise, and the Counties on a ratepayers’ franchise, the Department does not admit the equity of a taxation, scheme in which population is a factor. The basis of representation is a compromise between those parties which contend, (a) that all representation should be on a value of rateable property basis, and (b) that all representation should be on a parliamentary franchise. Briefly, representation is proportional to a mean between the -two.

“One of the Department’s strongest grounds for maintaining the equity of the present system of taxation, i.e., rateable value and not population being the taxable commodity, is that it is illogical to ask those of the people in the towns who do not use the hospitals to pay on a population basis, while similar country people contribute on a rateable capital value basis. “Various insurance schemes have been suggested from time to time which would embrace the whole of the population for one class of it. At the present time there is a scheme in operation in a mining district in North Auckland where all breadwinners contribute so much per month to the hospital, and receive free hospital treatment. A similar scheme exists on the West Coast, and it has been followed successfully in such groups as are associated in large Public Works schemes. A Friendly Society plan is virtually an insurance scheme, and fees collected under our local agreement approximate very closely to _ our average collection. The question of insurance schemes is now being considered by the executive of the Hospital Boards’ Association.

“When a Hospital Board has estimated its budget it is sent on to the Minister, and on liis approval it is forwarded to the local authorities with an advice as to the amount to be levied. The latter may appeal if it is considered that the levy is too high. Tt will thus be seen that a budget has to pass both the Minister, and the local authorities before it comes into effect. “In all capital matters a board’s budget is shared equally by the consolidated fund and the local authorities. In voluntary contributions a subsidy of £ for £ 'is also granted. The present indications are that it will not ibe long until an endeavour is made to repeal the latter provision which is regarded by the Department as “an obsolete system of hospital finance.” It is stated that the public considers that having paid the hospital rates, there is no need to supplement such payments by voluntary contributions. Further, that the provision, of voluntary contributions is regarded by Hospital Boards as a means not of providing essentials but extras, which would not have been approved had it been necessary to finance through the ordinary channels. . . “It is maintained that a fairer basis of subsidy would be fqr boards themselves to subsidise voluntary contributions, and that this would result in necessary works only being subsidised. It is the consolidated fund which pays the subsidy on voluntary contributions, so that although the incidence of taxation is different, it is still the public generally who pay. At the same time when it is remembered that such items as wireless, gramophones, Christmas extras,' etc., are not authorised expenditure, the value of voluntary contributions which are non-subsidisable but are devoted to these purposes, is evident. ■ “In maintenance finance the method of subsidy and levy is different, the aim of the Act being to help those districts which have a high hospital rate at the expense of those districs which have a low rate. The rate of subsidy for the whole of the Dominion is £ for £, but in this district we have not reached this level, indeed we have at times come as low as 15s 3d in the £. The schedule of the Act governing subsidy on maintenance levies provides for a maximum of 26s in the £ and a minimum of 14s in the £. The Act provides that the levy shall be:— “ ‘ (a) An amount equal to sixteenfortieths of the net estimated expenditure of the board for maintenance pur,poses; and (b) an amount bearing to four-fortieths of the net estimated expenditure for maintenance purposes of all board during the preceding year the same proportion as the capital value of the rateable property in thedistrict of the hoard in question bears to the capital value of the rateable property of all hospital districts.’ “It is further provided that when the total subsidy for any year exceeds the total levy for the year, the boards shall refund out of the following year’s receipts, an amount in the same proportion that the capital value of each district bears to the value of all districts. ' , _ “The refund to the Government is due to the operations of clause (b) above, which provides for the net estimated figures for the previous year being the basis which is worked on. Any difference in operation would involve considerable delay every year as it would mean that all estimates would have to bo received, worked out, a,nd the “four-fortieths” figure arrived-at before Boards could frame their levy for the year. As it is - , the Department notifies "early in April the necessary figure, which is then added to sixteenfortieths of the net estimated expenditure. The refund due to the Government in respect of the. previous year is also advised at the same time which enables Boards to arrive at a basis of levy whenever the estimate, is made. A Board which is in receipt of less than £1 for £1 as maintenance subsidy is really better off from, the point of view of Government assistance in relation to the burden of rates than a Board receiving more than £l. “Briefly, the operation of the Act allows sixteen-fortieths of each Board’s net maintenance expenditure to lie the first factor, and the amount totalling four-fortieths is then spread over all Boards’ capital value. The amount duo by each Board in ; relation to its rateable value is the figure which is

supplied to each, as its particular share of the four-fortieths portion. “It can be seen from the foregoing just how the consolidated fund stands in relation to levies for maintenance purposes, and that although no Board actually receives £1 for £1 yet the average for the Dominion is actually this figure. “Summed up, Hospital Board finance is obtained from four sources:—(l) Patients’ payments, (2) levies on local authorities, (3) Government subsidies, and (4) voluntary contributions. In Great Britain finance is largely on a, voluntary basis; in America approximately 30 per cent, of the hospitals are supported bv municipalities or local governments, the remainder being rim by trustees, churches, orders of various; kinds, and private individuals ; in Australia hospitals are, generally speaking, on a voluntary basis and are subsidised by the State. In referring generally to the New Zealand system the Direc-tor-General of Health has stated that while admitting the system is not perfect, it is considered to provide adequate and desirable machinery for the administration of hospitals and charitable aid.” The secretary was thanked for Iris report.