Budget blunder means DHBs will hand back millions

Health Minister Jonathan Coleman. Photo / Mark Mitchell

The spotlight is back on financial management at the Ministry of Health after most DHBs were promised millions more in funding than they will actually receive.

Deloitte have been called in to work out how the $38 million calculating error was made.

Health Minister Jonathan Coleman said he was "very unhappy" about the mistake - which comes in an election year in which health funding is a hot button issue.

The embarrassing bungle comes after serious financial mismanagement at the ministry last year saw it ask the Government for $18m to pay for a refit of its head office, which was meant to be entirely self-funded.

That saw Labour call for the Director-General of Health Chai Chuah to resign. A new chief financial officer was brought in and new finance department personnel.

Today, Coleman told the Herald questions needed to be answered.

"Two different CFOs have been in charge of those two errors.

"It does raise questions. The fact that it has happened twice. And it's completely unacceptable and I have made that clear to the Director-General."

Coleman said Chuah had not offered his resignation, and he did not expect him to: "I don't want his resignation, I want the work to be done properly".

"This is the ministry's mistake, and frankly it can never happen again because it undermines all the rest of the good work they are doing."

Budget 2017 allocated $439m to DHBs. That total will remain the same, but $38m was incorrectly distributed and will now need to be reallocated.

Fourteen DHBs received too much money and will see their funding total drop, with six DHBs to be reallocated more funds.

Coleman said he was first told of the issue around Budget day on May 25. More information became available, and last Monday he told the ministry "you just have to redo these numbers".

Chuah has personally apologised to Coleman, DHB chairs and chief executives, and central agencies. He was appointed to a five-year term in March 2015 and has been in the role since November 2013, has not offered to resign.

He said an internal error meant draft figures were submitted for Budget 2017. The error was paper only, given the next financial year doesn't start until July 1, he said.

"As soon as the error was discovered, I commissioned Deloitte to look into how this happened. The initial findings from this review are expected later this month."

Labour's health spokesman David Clark said Coleman had "egg on his face". DHB leaders had been summoned to Wellington and told their Budget allocations would change.

"This has turned financial planning for crucial frontline services upside down, while generating further uncertainty for thousands of DHB staff and patients."

Last year it emerged the ministry had to ask the Government for $18m to pay for a refit of its head office, which was meant to be entirely self-funded.

Treasury said the mistake was serious financial mismanagement. When the error came to light Coleman said the ministry needed to perform better and had made the changes needed to do so.

"They've got a new CFO, they've got new personnel there and new processes," he told media.

DHBs to get less money than initially allocated:
Counties Manukau (less $6,630,000)
Southern (less $5,667,955)
Capital & Coast (less $3,708,000)
Mid Central (less $5,496,100)
Hutt (less $3,655,000)
Taranaki (less $3,473,000)
Canterbury (less $2,692,000)
Hawkes Bay (less $1,995,000)
Wairarapa (less $1,477,000)
South Canterbury (less $1,178,260)
West Coast (less $780,922)
Whanganui (less $658,600)
Bay of Plenty (less $256,079)
Nelson Marlborough (less $136,780)

DHBs to get more money than initially allocated:
Waitemata ($12,602,890)
Auckland ($10,614,000)
Northland ($6,296,000)
Waikato ($4,384,000)
Lakes ($3,453,000)
Tairawhiti ($459,000)