Vote Health almost hits the $20 billion mark

NEW ZEALAND’S FIRST WELLBEING BUDGET HEALTH HIGHLIGHTS (by Scott Arrol, NZHIT CEO)

For the 4th year in a row I have attended the budget lock-up at the Beehive in Wellington. It is a surreal experience as there’s an air of anticipation when you’re queued alongside economists, analysts and media types waiting to be let into the hall at 10am.  There’s a dash to get a prime position amongst the very crammed seating arrangements, then for the next fours hours it’s head down trying to pull out the nuggets that NZHIT members will be interested in as it pertains to their organisations. From 10.30am to 2.00pm there’s a strict embargo in place with access only to Treasury’s secure website.

The time goes by very quickly and is interrupted by the Minister of Finance (and a bevy of other Ministers alongside him) at midday providing his presentation to attendees followed by some Q&A.  Then there’s a quick dash to the food table for some lunch (those media folk are great sprinters when the free food is trundled out and this year I missed out altogether!).

So, based on the time available and information provided the following is my high-level take on Wellness Budget 2019 –

What’s so special about this Wellness Budget?

It’s important to have the context of the Wellness Budget's priorities when it comes to how this Government has defined wellbeing as “when people lead fulfilling lives with purpose, balance and meaning to them”.

At first glance it doesn’t look a lot different to previous budget releases except this is definitely a starting point when it comes to bringing a cross-agency approach to this Government’s main priority areas that include –

Taking Mental Health Seriously – a whole new approach to mental health and addiction

Includes strengthening and improving frontline services ($832 million opex), treating drug and alcohol addiction ($58 million opex), housing first and transitional housing ($346 million opex, $134 million capital) and Hapaitia te Oranga Tangata ($131 million opex, $4 million capital).

Included in this is expanding telehealth and digital supports for mental wellbeing ($20.8 million).  This is targeted at increasing access to mental health and addiction support over the phone and online through an expansion of telehealth and digital support.

Improving Child Wellbeing – tackling the country’s persistent and long-term challenge of child poverty.

Includes breaking the cycle for children in State care ($1.1 billion opex, $187 million capital),improving incomes and addressing the cost of living ($535 million opex),addressing family and sexual violence ($311 million opex, $10 million capital) and taking financial pressure off parents ($650 million opex, $95 million capital)

Supporting Maori and Pasifika Aspirations – lifting Maori and Pacific incomes, skills and opportunities

Features a major boost for Whanau Ora ($81 million opex), supporting Te Reo Maori and communities ($208 million opex, $2 million capital), valuing the contribution and ensuring the wellbeing of Pacific communities ($113 million opex) and Kaupapa Maori approaches to tackling reoffending ($95 million opex, $3 million capital).

Building a Productive Nation – supporting a thriving nation in the digital age through innovation, social and economic opportunities

This priority includes –bridging the venture capital gap ($240 million new capital, $60 million existing capital), funding for research and innovation ($106 opex, $51 million capital) and reform of vocational education ($197 million opex).

Important to note for NZHIT members is that this establishes a $300 million fund for investing in venture capital markets (through the NZ Venture Investment Fund) to provide businesses with a sustainable path to grow and develop. Funding has also been allocated to develop and commercialise products and adopt cutting-edge new technologies.

Transforming the Economy – moving New Zealand towards becoming a low-emissions economy

Includes funding for a sustainable future – productive and sustainable land use ($229 million opex),investing in the future of rail ($41 million opex, $2.1 billion capital) and meeting the climate change challenge ($80 million opex, $15 million capital).

Obviously, the above are snapshots of the budget’s detail and should be able to show how each priority requires agencies to work together to achieve the desired results. For example, the priority of “taking mental health seriously” incorporates Health, Justice, Corrections, Police and Housing.

Vote Health almost hits the $20 billion mark

The total apportionment to Vote Health is $19,871 million in 2019/20.  This is an almost 8.4% increase of $1,671 million on 2018/19 ($18.2 billion)

Whilst the quantum is important (as we will surely keep seeing similar level percentage increases year-on-year), the question has to be asked about what it is being spent on and is this positioning our health services for the needs of our population over the next 10+ years?

Of this total funding $13,980 million(70.4% of Vote Health) goes to the 20 district health boards (DHBs). A further $3,221 million (16.2%) goes to health and disability services funded and managed by the Ministry of Health.  This covers a range of services including national disability support services, the primary care strategy, national emergency services, national mental health services and national child health services (and other related national services).

$911 million (4.7%) is apportioned for the support, oversight, governance and development of the health and disability sectors.  This includes $221 million(1.1%) for Ministry of Health operating costs, $414 million (2.1%) to support equitable pay, $212 million (1.1%) for health workforce training and development, $32 million for monitoring and protecting health and disability consumer interests. “Other services” receive $32 million.

A significant increase in capital funding for health over the next 2 years totaling $1.7 billion

This is made up of $850 million each year for the 2019/20 and 2020/21, which follows on from the $750 million injection made in the 2018/19 period.  This funding is for capital investment in the likes of remedial works at Middlemore Hospital, new mental health facilities, extra surgery capacity on Auckland’s North Shore and other projects on a business case basis.  

Over this 2-year period, at least $200 million of this funding will be set aside for investment in capital projects in mental health and addiction.

Funding confirmed for Dunedin Hospital

This budget allocates funding for the Dunedin Hospital rebuild.  This is contained in a contingency“bucket” in anticipation of a business case being completed and will be allocated over the 10-year life of the project.

District Health Boards

The increasing pressures being faced by DHBs from New Zealand’s growing population and cost pressures is recognised with this budget setting aside $2.9 billion over the next 5 years for additional support to the DHBs.  This is for maintaining services, includes an added $40 million for PHARMAC (taking its funding to almost $1 billion) and for more planned services (such as elective surgeries).

The DHB’s sustainability is specifically referred as a fiscal risk (Budget Fiscal and Economic Update 2019’ B.3,page 77).  The estimated combined DHB deficit is $390 million for 2018/19 and it is highlighted that this could be higher than forecast.  If this is the case then that would adversely impact on the Government’s operating balance and additional funding support may be needed to ensure the sustainability of the sector.

Health capital pressure is also recognised as a risk where significant pressures remain over the forecast period driven by asset condition issues and demographic growth.  The update specifically refers to –

“There is also a need to address information technology capability in the sector” (Budget Fiscal and Economic Update 2019’ B.3,page 77).

What this really means, where the money is coming from and how much is not specified and is obviously a “watch this space” area for many of NZHIT’s members.

Other areas of health investment

The ambulance services receives an already announced investment of $21 million (in addition to the $17.2 million operational funding over the next 4 years), the bowel screening programme will roll out to four more DHBs ($36 million) and disability support services will receive $464.3 million over 4 years to continue delivering services in the face of increasing demand. 

In Summary

Clearly, there is much more detail contained in this budget and the interesting thing for everyone in the lock-up has been the different lay-out that this approach to budgeting for wellbeing has created.

Of course, the economic and fiscal outlooks still play a major part in the future of our country and the health and wellbeing of all citizens.  I haven’t included any commentary at this stage on this area as you can access the details at Treasury’s website here.  You can access the specific health appropriations and the full commentary on the Wellbeing Budget’s Priorities.

Additionally, the following two resources are useful for economic, fiscal and social commentaries –

Berl – Dr Ganesh Nana

Newsroom – Rod Oram

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Posted by

Scott Arrol

Chief Executive Officer

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