Hon Dr Shane Reti
Minister of Health

In response to serious concerns around oversight, overspend and a significant deterioration in financial outlook, the Board of Health New Zealand will be replaced with a Commissioner, Health Minister Dr Shane Reti announced today.

“The previous government’s botched health reforms have created significant financial challenges at Health NZ that, without urgent action, will lead to an estimated deficit of $1.4 billion by the end of 2024/25 – despite this Government’s record investment in health of $16.68 billion in this year’s Budget,” Dr Reti says.

“Health NZ first reported a deteriorating financial position to me in March 2024, despite earlier repeated assurances by the organisation that it was on target to make savings in 2023/24.

“In the months since, the situation has worsened. Health NZ is currently overspending at the rate of approximately $130 million a month.

“That’s why today I am announcing the appointment of Professor Lester Levy, the recently appointed Chair of Health NZ, as Commissioner for a 12-month term. This is the strongest ministerial intervention available under the Pae Ora Act and not a decision I have taken lightly, however the magnitude of the issue requires such action.

“The issues at Health NZ stem from the previous government’s mismanaged health reforms, which resulted in an overly centralised operating model, limited oversight of financial and non-financial performance, and fragmented administrative data systems which were unable to identify risks until it was too late.

“Professor Levy is tasked with implementing a turnaround plan with a savings objective of approximately $1.4 billion to ensure financial balance, and actions to strengthen governance and management.

“Operational responsibility for the turnaround plan will sit with the Commissioner, however I have made it clear that it should focus on cost efficiencies in areas such as any back-office bureaucracy which has blown out, particularly in middle management, as a result of the previous government’s damaging reforms.

“As one example between March 2018 and March 2024, back-office staff numbers which formerly sat at district health board level grew by around 2,500.

“As a Government, we’ve made it clear that our first and foremost priority in health is improving the delivery and quality of frontline services. We have already invested very significantly in health, with $16.68 billion announced in the Budget to support frontline healthcare services.

“As Minister, I am not confident I would have adequate oversight of that spend if the existing Board structure at Health NZ were to remain in place.

“Today’s move to appoint a Commissioner is one of several steps our Government has been forced to take over the past eight months due to concerns about the governance of Health NZ and resulting performance issues, including health workforce and hospital wait times.

“Previously, I have appointed a Crown Observer, a new Chair and a Board member with financial expertise. Through those measures we have been able to identify long-standing issues with the existing governance and operating model.

“Lester Levy has assured me there will be no adverse impacts on the delivery of care in implementing a turnaround plan – rather, he and Health NZ will be seeking to bring the frontline closer to decision-making.

“Following today’s announcement, the Ministry of Health will continue its monitoring role and play a key part in reporting on the Commissioner’s performance in lifting Health NZ’s financial position, both to me and to New Zealanders.

“Today’s announcement is in no way a reflection on the work of frontline staff in our hospitals and health care facilities. As always, I thank them for their professionalism and want to reassure them that we are taking these steps to secure a better future for health in New Zealand,” says Dr Reti.

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