Budget 2018 Overview for NZHIT Members


Dear Members,

Today I was involved in the Budget 2018 lock-up prior to the Minister of Finance, Hon Grant Robertson announcing his maiden budget to the House at 2pm, 17th May 2018.  I have prepared a high-level overview of the key areas contacted within Budget 2018 for NZHIT members and you can obtain a copy of this and related documents below:

Budget 2018 Overview for NZHIT Members 170518 Budget 2018 Overview for NZHIT Members 170518 (251 KB)

Budget 2018 at a glance Budget 2018 at a glance (367 KB)

Summary of Initiatives in Budget 2018 Summary of Initiatives in Budget 2018 (1624 KB)

Vote Health estimates 2018 Vote Health estimates 2018 (1648 KB)

My initial views based on a quick analysis of the budget initiatives and appropriations are –

  • The budget is based on an optimistic view of the NZ economy over the next 4 years including an average of 3% growth in the economy each year, employment falling to 4.1% in late 2019 and wage growth forecast to be higher than inflation each year, gradually increasing to 3.4% in 2022.
  • Vote Health has been allocated a large chunk of additional spending increasing from a total of $16.7 billion in 2017/18 to $18.2 billion for 2018/19.  An increase of $1.5 billion or around 8%.  This includes a significant increase in capital expenditure of $850 million.
  • On the face of it, this is a significant increase in funding for the health sector that sits within the Coalition Government’s priority area of “Rebuilding critical public services”.
  • It is pleasing to see a commitment to the Health Strategy’s vision of “all New Zealanders to live well, stay well, and get well, in a health system that is people-powered, provides services closer to home, is designed for value and high performance, and works as one team in a smart system”.
  • Whilst an increase to midwifery is specifically mentioned there is no estimate made of the potential impact of wage claims currently in play in the sector and what contingencies (if any) have been made in this regard.
  • From an IT perspective it is very difficult to identify the total amount allocated for expenditure in this area.  If we assume a “wet finger in the air” spend of 2% of total Vote Health then this could equate to $364 million, which would be an increase from $334 million (+30 million or +8%).
  • However, we all know that making these sorts of assumptions are risky given the factual base numbers are still yet to be determined.  Also, in any event 2% of total spend is known to be at least half of what should be spent in health technology in order to invest in the IT infrastructure and innovative solutions that are necessary to fully enable the delivery of quality health services.
  • Failure to recognise this in future budgets will add to the increasing pressures being placed on the health sector whilst it remains reliant on a traditional bricks and mortar delivery model and cannot take advantage of care being available and delivered closer to, or on (or in), the person.
  • At first glance there is no specific mention made of the National EHR business case and whether there has been any appropriation made for it to progress to the full business care process – more news on this is surely to come.
  • The National Bowel Screening programme gets an increase of $16 million to increase the roll-out to 5 more DHBs (currently in 5) with total expenditure of $67 million (the new IT solution sits within this allocation).

There will be further analysis of the more detailed appropriations but please feel free to contact me if you wish to discuss anything in relation to Budget 2018.

Kind regards

Scot Arrol

Enabling a Healthier New Zealand
+64 21 414631
Join me on Twitter @nzhealthit

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