Media Release

Friday, 1 November 2013

Commercial banks prosper while DHBs cheated of funds

“In the 2012-13 financial year New Zealand’s DHBs were forced by government policy to give away over $104 million of taxpayers’ health funding, mostly to overseas-owned commercial banks” according to Democrats for Social Credit (DSC) health spokesman David Tranter. Mr Tranter noted that this figure does not include the Wairarapa DHB whose CEO, Graham Dyer, was the only CEO who refused to answer the OIA question put to all DHBs by the DSC.

“The current government loans to DHBs attract an administration charge of 0.15%, so it is reasonable to suggest that if the loans were arranged through the Reserve Bank only the administration charge would be required. Taking an average figure of 6% for the rates presently charged the administration charge is one fortieth of this, meaning that instead of $104million the board’s loans would have cost under $3million, a saving of over $101million. A DSC source believes that under Reserve Bank loans even the administration charge would be a one-off to set up the loan so that from then on there should be no significant costs. The DSC reminds government that the Reserve Bank is our bank and should be used for the benefit of its shareholders, the people of New Zealand” Mr. Tranter said.

“Even the savings outlined above pale into insignificance when one considers the sort of loans provided for such projects as building new hospital facilities” Mr. Tranter said.

“According to figures obtained from Health Minister Tony Ryall a ten year loan for a hospital re-build attracts 5% interest under the present lunatic funding system and since the rate increases with longer term loans the question needs to be asked as to how DHBs permanently borrowing to stay afloat can ever pay off such a loan.

“When I repeatedly pressed Tony Ryall last year for an explanation as to why his government will not arrange DHB loans “through the Reserve Bank at interest rates that would only need to cover the cost of administering the loan” the Health Minister replied (letter dated 13.9.12), ‘Because doing so would not align with the government’s fiscal policy’. This is nothing but a pathetic cop-out which echoes previous responses given by Finance Minister Bill English” Mr. Tranter said.

“This government, like previous administrations, has no rational explanation for why they are financially hammering DHBs - and all the other organisations providing essential public services.

“Given that the elected members of the DHBs were there, in the words of Annette King when she launched the boards in 2001, “to make a difference”, the DSC calls on the newly-elected DHB members to raise this issue in the public sessions of their monthly meetings and call upon their board chairs to ask Messrs English and Ryall why they are unnecessarily keeping the DHBs in financial bondage.”

ENDS

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