The most recent Budget allocated about $27b for the purchasing of health and disability services in the current year.
Reti blamed the previous Government’s “mismanaged health reforms, which resulted in an overly centralised operating model, limited oversight of financial and non-financial performance, and fragmented administrative data systems which were unable to identify risks until it was too late”.
But Labour’s Health Spokeswoman Ayesha Verrall, herself the former Minister of Health, said the previous Government could not be blamed for the current Government’s deficits.
Health NZ’s 2022/23 annual report, its most recent, also included a deficit, but this was put down to a handful of one-off post-Covid problems. The agency was expected to have no deficit in the 2023/24 year and in fact deliver half a billion dollars worth of savings thanks to streamlining systems post-merger.
But Reti said he was made aware of a deteriorating financial position for the 2022/23 year and beyond in March.
Reti’s Cabinet paper to appoint a commissioner noted that those half a billion dollars of savings were put “in doubt” in the middle of the financial year and other solutions to bridge the gap needed to be found. The Cabinet paper said Levy would be responsible for driving a transformation plan based on “delivery and accountability, fiscal responsibility, creating an effective internal control environment and focusing on value through enhancing productivity”.
Verrall said the problem stemmed from the Government’s decision not to put enough money into health in the 2024 Budget. The Government topped up the Health budget by $1.4 billion at the Budget.
The $1.4b figure was calculated as an appropriate funding increase before the election, but Verrall noted that it was rendered out of date earlier this year, when Health officials appeared before Parliament’s select committee.
She said it should have been updated at the Budget to reflect the latest demographic trends. Instead, a lower figure was used.
“The deficit Te Whatu Ora has is a result of them being underfunded. At Health Select Committee we heard the estimate for how much the health system needed was inadequate.
“The Government is trying to pretend this is something to do with Health NZ governance. It is to do with their Budget,” Verrall said.
Prime Minister Christopher Luxon hinted that this could be driven by restructuring parts of the health system to remove layers of bureaucracy between Health NZ’s leaders and patients.
He said “there can be up to 14 layers of management” between the Health NZ’s chief executive and patients.
Reti denied that funding constraints had resulted in a hiring freeze at Health NZ.
“There hasn’t been a hiring freeze,” Reti said.
“Hundreds of nurses and doctors as well have been employed or taken up offers of employment in the past few months,” he said.
Verrall said this was “completely at odds” with what she had heard from the front line.
“They are saying that they see vacant roles in the department that were approved for funding being cut, [job] ads that were on the website disappearing, they’re hearing about maternity leave cover for their colleagues not being filled,” Verrall said.
Reti said alongside the fiscal changes he planned to “regionalise” Health NZ, by creating a structure that would “pass decision making, budget holding and commissioning” back to four regional parts of the health system.
Regionalisation is not entirely new. The health reforms already included four “health regions” with regional commissioning boards that oversee primary and community health services.
Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.
