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Health $3.2 billion under-funded since 2009/10

23 May 2019

A pre-budget analysis conducted by the Council of Trade Unions and Association of Salaried Medical Specialists has highlighted a vast spending shortfall in health since 2009/2010.

For the Health Vote to regain the spending power of the 2009/10 Health Vote and pay for the initiatives and additional costs announced over that time, it would need to increase by $3.2 billion to $20.2 billion in Budget 2019. The analysis can be read here:

It shows Vote Health operational spending needs to increase by more than $1.3 billion, or 7.7%, just to maintain current services.

The District Health Boards’ combined budget needs to rise from $13.2 billion to $14.3 billion, an increase of 7.9%, to maintain current services.

In addition to the $1.3 billion needed to maintain services, there are big expectations for a significant step up in mental health funding in response to the Mental Health and Addiction Inquiry. An analysis of the mental health spend will form part of our joint post-Budget analysis.

The paper estimates that $515 million will be needed for pay settlements such as those for nurses, midwives, allied staff and doctors. Some of these claims have yet to be settled.

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Wage increases go some way toward narrowing the gap between public and private sector pay increases. State Services Commission data shows that between 2010 and 2018 public sector wages increased by 12.5% compared with 16.3% in the private sector.

“Running down health funding by $3 billion has consequences,” says Lyndon Keene, ASMS Director of Policy and Research.

“DHB budgets have been unable to cope with the rising cost of increased demand and the cost of wage catch-ups. It appears the Government has not compensated DHBs for a large portion of the latter, contributing to their deficits.”

Canterbury Charity Hospital Trust Chair Professor Phil Bagshaw says it will take several favourable budgets for the deficit to be effectively addressed.

“A limited New Zealand survey published in 2017 estimated that about 300,000 adults could not access a government-funded secondary elective healthcare service, for which they had an established need.

“Experience at the Canterbury Charity Hospital indicates that the level of unmet need has not diminished since then, particularly in the areas of dental health, women’s elective healthcare and colorectal endoscopy.”

“A large national survey of unmet secondary elective healthcare is urgently required to accurately qualify the overall amount and drill down into specific areas of need. Research from the European Union has indicated that extra investment is these areas would pay large long-term fiscal dividends,” Professor Bagshaw says.

Forensic psychiatrist Dr Justin Barry-Walsh says there has been a big increase in demand for mental health and a significant increase in resource is needed across the spectrum of services.


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