Budget health bite less meaty at second glance

The Government says it has given more money to health in the Budget. Critics say it hasn't. Confused? Political reporter FRANCESCA MOLD searches for the bottom line.

The Government thought it was a nice fat slice of the tasty funding pie.

Critics labelled it a mouldy old sandwich.

The truth is, next year's health budget is a bit like short rations - enough to sustain but nothing more.

There were plenty of warning signs before Finance Minister Michael Cullen revealed in his Budget that health was not going to be a big winner this time around.

In the 2000-2001 year, which ends on June 30, the Government allocated $7.475 billion for health. It ended up spending $7.429 billion.

Compared with the previous year, the figures meant the cash-hungry health sector received a 6.1 per cent ($412 million) boost to its dwindling coffers.

But the Government's generosity appears to have waned this year.

Dr Cullen has given health $7.472 billion for the 2001-2002 year. He touted the allocation as a generous 5 per cent rise.

But his calculations included funding carried over from the previous year and Treasury officials have estimated the real increase to be 3.3 per cent.

The mood among public hospital managers became distinctly chilly when they crunched the overall Vote Health figures and discovered their portion of the rise would be just $900,000.

The figure has been calculated using a complex system of money shuffling.

The Government took away $73 million from hospitals' elective surgery, disability support services and mental health budgets.

Some of the mental health work will be farmed out to community services or the non-hospital arm of the new district health boards. The elective surgery was work that hospitals had not completed and was likely to be carried over to next year.

The disability support services work, mostly assessing, treating and rehabilitating patients, had not been done by hospitals in the past two years so funding for it was removed.

In return, the Government offered hospitals an extra $46.7 million to cover the increased cost of providing their services.

A further $28 million was given to hospitals from an $84 million pool of money designed to cover demographic pressures associated with caring for a growing and ageing population.

Critics say the funding offer amounts to a 0.4 per cent increase, which in real terms amounts to a cut considering hospitals are facing an approximate 4 per cent rise in costs.

They say the only option is for hospitals to run up big deficits or cut services to try to stay in the black.

Statistics New Zealand figures have shown hospitals' operating deficit has risen from $600,000 in the nine months to March last year to $33.8 million in the nine months to March this year.

The Government has explained it wants to shift funding away from hospitals to spend more on improving preventive care and making visits to GPs cheaper for all.

The first sign of this shift was the very modest $23.5 million boost in the Budget for primary services like laboratories, doctor subsidies and immunisation.

Money was also set aside for improving oral health ($3.9 million), caring for the terminally ill ($3.7 million), cervical screening ($3.9 million), maternity ($3.7 million) and giving Pacific health providers a helping hand ($2.8 million).

The Government also had to spend money to avoid potentially negative publicity from not continuing a series of one-off funding streams due to end this year.

An example was the special pool of money set aside by the previous National-led Government to slash waiting times for operations.

This was due to run out in June and the Government knew if it did not find the money to continue the funding it would be criticised for cutting up to 60,000 extra operations in the coming year.

So it built the $84 million fund due to end in June into baselines so that the $500-million-a-year pool set aside for routine operations was kept.

It also added a further $7.4 million to continue improvements for mental health services. Pharmaceutical and laboratory testing also received an $8.8 million boost.

The health sector's unending appetite for cash will never be sated.

The real question will be whether this Government can stave off the hungry and increasingly noisy rumblings of health workers and critics until the next election.

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