Treasury wanted Labour to break all health election promises bar one

PM Jacinda Ardern reveals her proudest moment of Budget 2021 and hits back at the critics. Video / Mark Mitchell

Treasury told the Government to kick its election promises like funding for Pharmac, cochlear implants, and Pacific health to later budgets and focus its resources in Budget 2021 on the massive cost of fixing the health system.

The Government rejected that advice and topped up Pharmac's budget by $200 million over four years, and doubled the number of cochlear implants available, costing $28.3m over four years.

Budget documents released on Thursday reveal Treasury wanted "all" Labour's manifesto commitments "that are not highly time-sensitive deferred to future Budgets so that there is room within allowances to prioritise HDSR [Health and Disability System Reform] critical initiatives and fund critical cost pressures".

The health reforms got $486m in the Budget. This funding was not calculated in Labour's pre-election fiscal plan, although money was set aside for the reforms.

Treasury warned it would be difficult to keep pace with the "significant financial pressures in the sector".

Treasury said that many health providers had warned that "if full funding is not received, they would need to cut services," or request that the Government limit the number of people who would be covered by the service.

The briefing warned of "severe disruption" to the health service and "growing inequalities and rising acute demand" if funding was not secured.

Treasury said the increase in Pharmac funding should be deferred to Budget 2022 to 2023 so that the findings of an independent review into Pharmac could be considered before implementing any funding changes.

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This is despite funding being excluded from Pharmac's terms of reference.

Treasury also recommended that Ola Manula, the Pacific Health and Wellbeing Action Plan should be delayed until 2022 or 2023.

Labour decided to reject this advice, but cut the project's funding from $20m promised at the election to $16m.

Funding for cochlear implants was also slated for deferral. Labour rejected this, and did not cut its funding.

One manifesto commitment that did not get any attention was funding for emergency dental grants.

At the election Labour promised to spend $176 million on emergency dental grants and $37.5m for mobile dental clinics, beginning in the 2021 Budget.