The business case for the proposed national bowel screening programme was "poorly developed" in the month before the Government committed to the scheme in its May Budget, according to a Treasury email made public today.

The Health Ministry's money-handling abilities have been questioned by the Treasury over the planned screening programme.

In the Budget, Health Minister Jonathan Coleman announced spending of $39.3 million over four years for the programme, with Hutt Valley and Wairarapa to become the first two district health boards, from next year, to join the scheme with Waitemata, where a pilot programme is already running.

But in an April email on Budget planning, a Treasury official wrote that there was a "strong view here" that funding for the programme "must be held as a tagged contingency" because of the "poorly developed business case and material implementation risks". This, however, did not prevent its being announced in the Budget as "part of the overall Vote Health figure".


If instead of being a contingency, the funding was applied "directly appropriate to Vote Health", there was a "material risk that implementation will begin before the programme is properly developed".

Several days later a Treasury colleague strongly questioned why capital funding for the scheme was to be provided as an injection "in the absence of a complete programme business case or the implementation business case for the IT system in particular".

"As it stands now, we have no effective information as to what the [withheld] million will buy as there was only a half-page summary in the business case that was submitted. We have no way of verifying if this amount is actually required to deliver the capability needed for the national IT platform - no options analysis has been provided - how it will be procured, how the project will be managed, what benefits are expected to be derived from the system, etc."

"Given the ministry's track record in capital management, providing a capital injection in the absence of any reasonable information on what the money will buy seems to be a very high risk strategy that is inconsistent with the entire capital management regime."

It was not the only example of the Treasury questioning the ministry's ability to manage its books.

Treasury told Finance Minister Bill English to bail up Coleman about the ministry's ability to look after its finances at a time of growing pressures.

In an aide memoire to English before a March meeting with Coleman, Treasury noted the financial performance of the DHBs had declined with larger than expected deficits. While that was expected to improve, "significant risks remain".

"There is little evidence that the ministry has an overarching strategy at the centre for managing financial sustainability over the medium-term." Treasury believed Coleman and the ministry could do more "to drive the sector's direction".

It suggested English raise the following with Coleman: "There are growing pressures, noise in the media, and little by way of a clear strategy for managing the financial sustainability of the sector. How well does the Ministry of Health understand the cost drivers in the health sector and what is the minister's strategy for managing these issues including reprioritisation options and trade-offs?"

In the Budget, Health was given a $2.2 billion injection of funding over four years, of which $1.6b was for the DHBs. That took the total health budget to $16.1b in 2016/17. The Treasury documents show the average increase for health from 2006 to 2010 was 8.2 per cent - and the previous Labour Government had increased it from 8-10 per cent each year. Since 2011, it had dropped to 3.2 per cent a year.

The papers also show that Treasury's early estimate of what was needed in health was a much lower $1.4b over 4 years - or $350m a year. It noted that it expected the Ministry of Health would ask for $400 million a year. In the end, an extra $560m a year was given.