Funding Request Will Be Favourably Considered
1 May 2001
West Coast Funding Request Will Be Favourably Considered
THE Ministry of Health will favourably consider a request from West Coast District Health Board for an $800,000 equity injection. The final decision rests with the Minister of Health and the Minister of Finance.
"When the West Coast District Health Board makes a request, it will be favourably considered by the Ministry. The need for this money has arisen only because the planned sale of the Seaview Hospital site has been delayed, leaving the West Coast District Health Board temporarily short of funds to pay for the redevelopment work recently completed at the Grey Base Hospital," Ministry of Health Hospital Monitoring Directorate Deputy Director General Andrew Duncan said.
"This is effectively bridging finance to assist the West Coast District Health Board until the sale of Seaview has been completed," he said. As this is a bridging issue, there may also be other options to consider.
Mr Duncan said District Health Boards are responsible for managing their own finances, which includes management of any existing debt, making decisions about whether or not to incur any new debt, and ensuring that operating costs are covered by income.
"When District Health Boards decide what health priorities they intend to spend money on, they are very mindful of the realities of spending within their means and the Ministry is keen to see them get into a position where they can effectively manage their own finances. We recognise that in the cases of some District Health Boards, this may mean restructuring existing debt, disposing of unused or non-strategic assets, or capital injections from the Government," Mr Duncan said.
The West Coast District Health Board completed a revaluation of all its assets as at June 2000, which resulted in a significant reduction in the value of its assets. This revaluation had an adverse affect on the West Coast District Health Board's balance sheet.
"We are currently assessing the validity of this valuation for acceptance or otherwise. If the valuation is accepted, the Crown will need to help the West Coast District Health Board restructure its balance sheet, most probably by way of an equity injection to return the Crown investment to an acceptable level," Mr Duncan said.