Health sector needs $564m just to stand still, says CTU

The CTU says the government will need to free up more than half a billion dollars just to maintain current health service levels. Photo / Thinkstock

The health sector will need almost three quarters of the $800 million to be reallocated in this week's budget just to maintain service levels, according to a pre-budget analysis by the Council of Trade Unions (CTU).

The Government has said there will be no new spending in the budget but has pledged to find $600m-$800m in cuts from other areas, with most of the reallocated funds going to health and education.

The CTU's pre-budget analysis of health expenditure, released today, found the sector would need a funding increase of at least $564m to keep pace with increases in costs, new treatments and technologies, population growth and ageing.

That amount was almost 70 per cent of the $800m the Government plans to redistribute in this week's budget.

The CTU's pre-budget analysis last year was right on target. It estimated the health sector needed an extra $512m - the same amount the Government delivered in its budget, and a higher amount than the Ministry of Health's own estimate of $507m.

CTU economist Bill Rosenberg said the estimated $564m needed for health in this year's budget left no room for funding improvements in health, let alone maintaining spending in education and other public services.

"It seems most unlikely that health will get what it needs," he said.

"If we want improvements in the health system or to address existing problems such as persistent deficits in district health boards (DHBs) and loss of services, further increases in funding are required over and above this."

Mr Rosenberg said it was understood that DHBs had been told they would again receive $350m in new funding this year, which was $111 million less than what was needed to stand still.

The CTU estimated DHB funding would need to increase by 4.6 per cent, or $461m, while funding for other health programmes would need to increase by 3.6 per cent, or $97m, to maintain current service levels.

The estimates took account of population growth, anticipated salary and wage increases, a 0.8 per cent allowance for new treatments, and other cost increases at forecast inflation of 2.6 per cent.

The estimates did not take account of an anticipated $20m-$25m cost of transferring employer KiwiSaver contributions from the State Services Commission to the health sector, which is among the changes to the savings scheme understood to be in the upcoming budget.

The Government this month announced $54.5m of health spending in this week's budget would go towards maternity care and services to help new mothers.

Health Minister Tony Ryall said $33.2m more would go into maternity services over four years to improve safety and quality. A further $21.3m would boost extra WellChild services, with a particular focus on first time mothers.

The funding was a mixture of new and reprioritised money but details would not be provided until the budget.

The health budget last year totalled $13.5 billion, with the extra $512m in funding falling short of the extra $750m in the 2009 budget.

- NZPA