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Govt Bungling Causes Auckland Health Crisis

ACT Health Spokesman Ken Shirley today revealed that the Auckland District Health Board came within days of a serious breach of its bank borrowing arrangements earlier this year - such is the financial strain it is under as a result of this Government's mismanagement of the health system.

"I find it remarkable that under this Government matters have deteriorated to such an extent that the country's largest health services provider was reduced to effectively begging for an extra $2.3 million to prevent a financial meltdown that was only days away," he said.

Health Ministry documents supplied to Mr Shirley under the Official Information Act show that the Auckland Board approached the Government for the money on February 8, 2002 - and indicated that a serious breach of its banking covenants was likely to occur on February 15 unless the extra funding was received. Officials warned Minister Annette King that a breach of the covenants would have allowed the board's bond holders to `call in' their bonds, which would have triggered `substantial' costs.

The documents also show that such was the haste of the funding arrangement that Ms King didn't actually formally notify the board of the extra funding till February 20 - five days after the breach would have occurred. The breach was avoided by Health Ministry officials telling the board earlier than this that they were recommending the funding. Only after this was the board able to provide its bankers with the guarantee that it was meeting the terms of its borrowing requirements.

"What sort of health system is this Government running if the largest health services provider is living in fear that its lenders might be about to bail on it? The Government has thrown health services around the country into crisis. Many other boards are experiencing similar difficulties to Auckland.

"The downward spiral must be curtailed. ACT advocates a greater involvement of the private sector to ensure that all health resources are allocated and used in an optimum manner. The level of wastage within the public health sector is appalling. Most of that wastage flows from inefficient resource allocation, made worse by stop-go, short-term, central funding decisions. This Government is moving in the wrong direction - with increased central control and more state provision. This can only compound the problems. What is needed is a 180 degree turn in policy - very quickly," Ken Shirley said.

Ends


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