Budget 2025 will need to include $2 billion in additional operational funding this year just for the public health system to stand still.

"Year on year specialists in our public hospitals are being asked to do more and more," says ASMS policy director Harriet Wild.

"If we do not see this level of investment as a minimum it just means the Government is choosing to dig their own hole that much deeper. Again in 12-months’ time they will gamble on the future of our public health system again, knowing they have made the odds that much worse."

Two billion dollars is the increase required to meet health cost pressures (which run higher than general inflation) including changes in pricing, volumes, and inflation, as well as the increased need created by a growing and ageing population.

New Zealand’s population is growing by 1.3% annually.

New Zealand’s population is also ageing. Almost three-quarters of total life-long healthcare costs occur in the last three years of life. Census data shows 1 in 6 people were aged 65 and older in 2023, this is projected to be 1 in 5 by 2033.

The need for hospital-based acute care is also increasing. Acute discharges in public hospital increased by 28% between 2014 and 2023. Almost 1.3 million people attended an Emergency Department in 2022/23, a 22.5% increase since 2013/14. Over the same period, the population increased by 16%.

Two billion dollars will not remedy decades of underfunding of New Zealand’s health system. New Zealand’s total health expenditure (public and private) as a proportion of GDP has remained well below comparable countries for many years. Prior to Covid-19, New Zealand spent 9% of GDP on health, while countries including Australia, Canada, The Netherlands and Sweden spent an average 10.7%.

The New Zealand Health Survey shows significant volume of unmet health need also remains in our community, with 1.86 million adults experiencing an unmet need for dental care due to cost. 464,000 adults have an unmet need for mental health or addiction services - an increase of 3.3% since 2023.

While investing in primary care will make people healthier overall, it will also generate more cost for our hospitals as unmet need for secondary care is identified by those primary care providers.

$1.43 billion was allocated to meet health sector cost pressures (demographic changes, price and wage increases) in the 2023-4 Budget. However, when appearing before health select committee during Scrutiny Week in March 2024, Te Whatu Ora officials acknowledged this fell short of what was required.

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