Health service cuts flagged by Auckland health chiefs could cost the country more through increased rates of chronic illness and emergency care, a medical union says.

The Association of Salaried Medical Specialists was responding yesterday to the Auckland District Health Board's intention to review all service contracts because of the recession.

Officials told a committee they expected the board's Government grant would amount to a funding cut in the year from next July.

All contracts with external service providers and with the board's own hospitals and health services would be reviewed. Services out of line with the DHB's and the Government's priorities would have specifications altered, and some services might be amalgamated or terminated.

Another option was to cut the funding to all contracts by 5 to 10 per cent, a board paper said.

Health Minister Tony Ryall said next year's national health funding increase would be less than this year's and some programmes would end. He wanted money shifted from the likes of the jobs of fruit-in-schools co-ordinators to reducing waits for cancer treatment.

The specialists' association's executive director, Ian Powell, said other boards were likely to be considering similar cuts to Auckland's, and they would be devastating for patients.

Despite a doubling in government spending on health in the past 10 years, Mr Powell said public hospitals were under-funded. "While hospital costs have increased by around 6 per cent per year, funding has increased by around 3 per cent."

Ten per cent cuts on top of this "will risk compromising patient access to public hospitals, the quality of care, and patient safety."

"Funding cuts don't actually save money. They will end up costing more through, for example, increased chronic illnesses and emergency admissions."

Health boards and the Government aim to restrict pay rises to health workers but nurses want to maintain their parity with police, who received a 2 per cent rise this year, and secondary teachers. And DHB doctors will renew their push for pay hikes to stem losses to higher-paid jobs in Australia.

Waitemata DHB states: "Zero per cent cost growth has been assumed for all employment agreements expiring during 2009-10."

Unions recognise the constraints, but will push hard against positions like Waitemata's.