$100 million cuts in health services on cards

Well over $100 million cuts in health services on the cards

Health services across New Zealand face cuts of well over $100 million in the year ahead, says the CTU as deeper analysis of the Budget Health Vote reveals the full extent of the funding shortfall and the reality of ‘reprioritised savings’, inflation, and cost shifting from ACC.

“The $508 million in additional operating funding, announced in the Budget, is barely enough to meet previously anticipated costs,” said CTU Economist and Policy Director Bill Rosenberg. “Any service improvements and restructuring costs must therefore be funded from cuts in other services, deterioration in their quality, increased user charges or increased DHB deficits, unless efficiencies can be found.”

"We estimate that taking into account possible efficiencies, around $118 million of cuts or other deterioration in the Health system will be required. The cuts are likely to be even greater than $118 million due to the effects of high inflation and costs from the cuts in ACC being loaded onto public health services.”

“Our pre-Budget analysis, which estimated $555 million would be needed just to stand still, allowed for inflation at 2.4 percent in 2010/11, but the Government’s own forecast is for it to go as high as 5.9 percent. That would cost $58 million excluding the rise in GST.”

“We have not factored in any consideration of the inflation impact on wages but note that the Government will have to find another $90 million for each 1 percentage point wage increase greater than that allowed for in the Health Vote.”

“The greatest part of the burden will have to be borne by DHBs. As well as the increased pressure on their operating budgets, DHB deficit support for the coming year is around $20 million less than forecast DHB deficits for the year to June 2010," said Mr Rosenberg.

The attached paper, Did the Budget provide enough for Health? details the CTU’s analysis in full. It can also be found at http://union.org.nz/health-working-papers.

ENDS

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