The Royal Australian and New Zealand College of Psychiatrists criticised the decision, citing severe workforce shortages.
The fund aims to support community mental health projects but faced criticism for its criteria and effectiveness.
Money earmarked for frontline mental health services, including tackling severe workforce shortages, was “reprioritised” to pay for the Government’s controversial $10 million mental health innovation fund.
Minister for Mental Health Matt Doocey allocated the money last April, after his budget bid for$20m in new funding to create the innovation fund was rejected by Finance Minister Nicola Willis, documents released to RNZ show. The fund was a National campaign promise.
The Royal Australian and New Zealand College of Psychiatrists (RANZCP) says that money would have been better served to deliver National’s pre-election promise of training more psychiatrists, rather than an innovation fund with an unproven track record.
“There are now 650 mental health vacancies, including 130 psychiatrists. Some regions have a 30% vacancy rate among psychiatrists,” RANZCP national chairman Hiran Thabrew said.
It was disappointing the National-led coalition did not honour its promise to allocate money in Budget 2024 to training an additional 13 psychiatry registrars, he said.
“We were told there wasn’t enough money to offer more. Well, that’s clearly not the case.”
Mental Health Minister Matt Doocey during his appearance at the health select committtee hearing at Parliament, Wellington, December 4, 2024. Photo / Mark Mitchell
The innovation fund – which launched in July and has already given out $2m to three organisations – aims to give cash to time-limited initiatives within the grassroots and community mental health sector to improve mental health outcomes.
Doocey said the fund aimed to make use of available mental health workers in the community and NGO sector to free up demand in the public sector, and he rejected the criticisms it had so far received.
The design of the innovation fund was based on what the sector wanted, he said.
“When I was in opposition, a number of mental health sector community groups talked to me about wanting a matched fund approach.
“My view is that it has been well received and already making a difference.”
Money reshuffled after rejected Budget bid
But documents released to RNZ under the Official Information Act show the fund very nearly did not make it into Budget 2024 at all.
After Willis rejected Doocey’s budget bid for new funding, he had to go back to the drawing board.
He asked Ministry of Health officials to find a way to fund a “scaled-down” version of the project from within existing budgets.
Officials found $9.72m of forecast “underspends” from Health New Zealand’s (HNZ) mental health and addiction budget for 2023/24. The money was identified in February 2024 and was unlikely to be spent by the end of the financial year in June.
The money had originally been allocated by Labour’s Budget 2019 and Budget 2022 to pay for acute mental health services in hospitals, community-based services and workforce development.
It included $810,000 for forensic mental health services, $750,000 to improve the quality of specialist alcohol and drug addiction services; $1.4m for increasing the specialist mental health and addiction workforce; $2.6m for Access and Choice workforce development and $1.6m to expand the reach of Access and Choice, a flagship Labour policy providing free mental health and addiction support for those with mild to moderate needs.
A further $280,000 of uncommitted funds from Health NZ baselines allocated to 2025/26 was also repurposed to top up the innovation fund to $10m. Uncommitted funds means there are no contracts yet in place for that spending.
Doocey could not say why the money was not being spent as budgeted. He initially blamed the previous Government for poor planning before RNZ reminded him the last half of the 2023/24 financial year had been on his watch.
“We had only been in office about eight weeks when the underspend was identified in February. The first focus was on setting up [my new] role and delivering on our coalition agreements,” he said.
HNZ said it would respond to RNZ’s questions about why the money had not been spent under the Official Information Act. The Information Act is traditionally about gaining access to copies of government documents and reports, not answering questions, which are usually the domain of public relations staff.
Thabrew said the underspend was likely due to services not being provided or contracted because of workforce shortages.
He questioned why the money was not then directed into growing the mental health workforce as promised.
He estimated $10m could train up to 20 new psychiatrists. The money could have also been used to retain existing mental health workers who were leaving in droves, he said.
And while he applauded the innovation fund’s focus on prevention and early intervention, he questioned whether it would work.
“The way that the funding has been proposed to use, it’s for only two years, which doesn’t give organisations much time to set up, deliver services or show results. Grassroots groups actually need stable, long-term funding, not just a short-term boost.
“Shifting money away from hospital and workforce funding isn’t the answer. We’re just plugging one hole while another one leaks.
“We need to do both. We need to make sure that specialist services are well funded and well served in terms of workforce, while also investing in prevention and early intervention.”
Doocey did not think he had broken a pre-election promise to fund more psychiatrists.
“The first Budget was about delivering on the coalition agreement.”
The Mental Health Workforce Plan, published in September, would deliver 17 more psychiatry trainees a year from 2025, he said.
However, RANZCP disputed those figures, saying it provided more like five extra places a year.
‘So many questions’
Health New Zealand officials were also surprised at how the innovation fund was to be paid for, according to HNZ emails released to RNZ.
They show senior officials – who had thought the project was dead in the water after Willis' rejection – were kept in the dark about the ministry’s plans to create a slimmed down fund using their forecasted underspends.
The news it was still going ahead was sprung on them just a month out from Budget day.
“This is a problem as we’ve been very clear that we can’t roll forward the underspend to use this in future years for an innovation fund,” a senior staffer wrote to a colleague after being told the news.
“Yes – came as a surprise to me. We need to understand what mechanism has been proposed,” the colleague responded.
“Well, looks like it has just been reallocated for him … I have SO many questions. Though none useful for this conversation,” the first staffer replied.
The officials were confused because there are strict rules regarding what happens to unspent money in government budgets. Any underspends at HNZ are automatically returned to government coffers.
A minister usually has the power to roll forward any underspends or uncommitted funds to a future year, but needs Cabinet approval to transfer it to an entirely different area of spending.
Unbeknown to HNZ staff, Cabinet had approved the transfer of funds from their mental health and addiction budget to the innovation fund just a day prior.
The HNZ staff, who were then charged with getting it up and running as quickly as possible, also raised concerns about the pitfalls of rushing such a project given there was not enough time to consult or engage with the sector, emails showed.
“There is a risk we will receive limited responses to the first RFP [request for proposal] – the funding criteria (particularly the matched funding requirement) may exclude many providers, or they will need more time to prepare.
“We’re unlikely to spend $5 million allocation in Year 1.”
Fund applicants had to contribute at least $250,000, which the Government would match dollar-for-dollar up to $1m per year per initiative, and could independently prove their projects gave a good return on investment.
The first tranche of funding from the innovation fund was announced in December. Just over $2m was shared between Youthline, the Sir John Kirwan Foundation and MATES in Construction.
More recipients will be announced soon, said Doocey.
‘Significant trade-offs’
The Ministry of Health also raised concerns.
In late March, a month before Cabinet approved the transfer of funds, Doocey met Willis to present his new proposal to use existing mental health budgets to pay for it.
A ministerial briefing paper given to Doocey ahead of that meeting warned him of the risks in doing so.
“With reprioritisation comes significant trade-offs between provision of existing health services.
“This may result in decreased delivery of other mental health and addiction services or reductions to frontline staff; or trade-offs with planned expansion of mental health and addiction services,” it warned.
Doocey disagreed with that advice.
“That probably is opaque official speak, because I cannot for the life of me draw the conclusion how money sitting under-utilised in Wellington … will have an impact when it’s actually by technical definition not being used in the first place,” he told RNZ.
“At the end of the day we have $2.6 billion funding for mental health and addiction services every year in New Zealand and I want to make sure that it actually is delivering on the front line.
“The last Government proved to us that it’s not all about money. It’s where you spend that money.”
The innovation fund’s aim was to fund the community sector to take the pressure off the constrained public mental health system, he said.
“Gumboot Friday is a good example of that approach. Several hundred counsellors on a platform are being funded so they can deliver real-time services, quite often within 24 hours, to take pressure off our publicly funded adolescent mental health system.”
‘Vanity project’ – Labour
Labour’s mental health spokesperson disagreed, saying the fund favoured big providers at the expense of smaller ones.
“The Mental Health Innovation Fund is basically a rushed vanity project for Matt Doocey, who is robbing Peter to pay Paul,” Ingrid Leary said.
“There was no consultation. There was a mysterious last minute $250,000 co-fund, which has effectively locked frontline community groups out of that government funding, and some have even had to close their doors as a result.”
The Government was ignoring the “crippling” workforce crisis by not delivering on its promise to train more psychiatrists, and the $280,000 from baseline health funding to top up the innovation fund amounted to a frontline cut, Leary said.
Sign up to The Daily H, a free newsletter curated by our editors and delivered straight to your inbox every weekday.
