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Capital charge changes merely a Band-Aid

Today’s announcement that the Government will assist District Health Boards (DHB) with their capital charge costs doesn’t address the underlying causes of their deficits, National’s Health spokesperson Michael Woodhouse says.

“The Minister is using the possibility of financial relief as a lever against poor performing DHBs. If he really wanted to see improved performance then he would be better off providing more funding like he said he would in Opposition.

“The capital charge signals that capital is not costless. It incentivises DHBs to use their assets efficiently. This is a symbolic gesture that takes away good incentives and does the least for DHBs with the largest deficits.

“DHBs that have already embarked on significant capital projects are ineligible for relief, which creates an uneven playing field between those that are in the midst of large projects, and those that have plans on the horizon.

“The Minister’s handling of the DHB deficits is another example of this Government failing to deliver on its promises. David Clark said he would rein in deficits but instead we’ve seen them balloon to record levels.

“Despite what the Government claims, removing the capital charge will not affect the overall level of funding available for DHBs because the Government will simply have less additional money available for DHBs each year.

“This is a case of the Government failing to acknowledge that someone has to pay the costs of borrowing to fund capital investment, and in this case it will be New Zealanders who have to pick up the slack.”

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