Vote Health’s operational funding needs a $549 million boost just to maintain services

Vote Health’s operational funding will need to increase by $549 million in this year’s Budget just to maintain the current levels of service. This is one of the key findings of a pre-Budget analysis of government health expenditure prepared by the New Zealand Council of Trade Unions and released today.

“This is the amount we estimate is needed just to keep pace with population growth, ageing, and increases in costs,” says CTU economist Bill Rosenberg.

“Anything less than this should be regarded as a real cut in funding and is likely to result in cuts in availability or quality of services.”

“When the Government’s new announced initiatives and cessation of programmes from the current financial year are taken into account, Vote Health’s operational expenses will need to increase by a conservatively estimated $629 million. If further new services are announced, the need will increase accordingly.”

The bulk of Vote Health goes to the District Health Boards, whose combined budget requires an increase of at $446 million to maintain the current level of DHB services - and more if the new services announced have to be funded by the DHBs. A leaked Cabinet paper, reported in the media in December, shows Treasury recommended giving DHBs just $250m, while the Ministry of Health proposed $320m. Treasury warned that under either option, DHBs would face “considerable” financial pressure. Our estimates indicate a funding shortfall of $196 million, just to maintain services if Treasury’s recommendation were accepted, but would be higher than that to pay for additional services.”

“Given there has been a substantial shortfall over the last five years we have been tracking the Health Vote, any further shortfall will see more deterioration in services, much of which is hidden from view in areas such as unmet health need and staff shortages. These estimates are conservative ones,” says Bill Rosenberg.

ENDS

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