Leaked document shows 10 District Health Boards face budget cuts: King

Labour health spokesperson Annette King on The Nation

New leaked document shows 10 District Health Boards face budget cuts in real terms in this year’s Budget, says Labour health spokeswoman Annette King.

DHBs in Auckland, Wellington and Christchurch all face cuts in real terms, although DHB funding in dollar terms goes up $340 million overall.

Ms King suspects some money will be added to cover other services, such as Pharmac (slated for a $39 million increase) and the ministry, so the total Budget increase for Health will be just over $400 million.

The Labour Deputy Leader promises per party will lift health spending “immediately” after it becomes government, looking to make up the $1.7 billion shortfall in the budget in its first term

She accuses the government of “postcode surger."

“It depends where you live as to whether you will meet the financial threshold of that DHB and get an operation," she says.

King concedes public pressure led to Pharmac funding of a new melanoma drug, but insists the agency’s independence has not been compromised

She accuses John Key of being “very much in favour of foreign tax havens in New Zealand” and says it’s “disgusting” we allow people to avoid their tax obligations by keeping their money here.

She says the government must have a “full, independent inquiry”

RAW DATA: The Nation transcript:  Lisa Owen interviews Annette King

Watch the interview here

Lisa Owen: Labour claims that health has been underfunded to the tune of $1.7 billion over the last five years, but as we’ve heard from Dr Coleman, he disputes those figures. Labour’s health spokesperson, Annette King, is with me now. Good morning.

Annette King: Good morning, Lisa.

Well, the Health Minister does dispute those figures, and he says that the evidence that you have suggesting there’s a huge deficit is simply wrong, so what proof do you have?

Well, we knew if we did the figures ourselves, they would not be believed, so in fact, we did have them undertaken separately and privately, and so we got Infometrics to look at the calculations that Treasury uses to assess what is needed in a budget – that is cost pressures, population growth and age – and they used their formula, and they said over the last six years of budgets that there was $1.7 billion missing. Now, they’re not our figures; they are from Infometrics. Interestingly, the Government changed what they report in terms of the cost pressures and demographics and health in 2014, when it became so clear you could see what was missing. They now combine them. But we got Treasury to look at the 2015 figures, and they gave them to us, so we are very comfortable with the figures we’ve got.

He says they’re keeping up, including with inflation.

Well, he’s a strange old mixture, isn’t he? Because in July last year in a question to me in Parliament, he admitted that they covered demographics and made a contribution towards cost pressures. He seems to have forgotten he said that.

You’ve got new information about how DHBs’ budgets are looking and their per-capita funding. What can you tell us?

Well, I received a document last week which is setting out the 2016-2017 funding for DHBs, which said it is 340 million, and when you go through it, around 10 DHBs will be having a reduced budget in real terms per capita.

So when you add up those 10, it’s about 6.5%. But some of those are getting boosts. Some of those are in the positives with their funding and above. They cancel each other out, don’t they?

It depends where you live whether you think it cancels it out. When I look at it, you can see where their big increases are – some of the very tiny DHBs that struggle to be able to provide the services but also where there’s been big population growth, so Auckland, Counties Manukau, Waitemata. I suspect the 340 million that’s in that figure that I saw will be added. Some will be added. They have to cover the cost of the Pharmac budget in the health budget. There are other pressures in disability support. The Ministry of Health, for example, asked for 150 million last year’s budget; got 78. They’re under huge pressure. So I think the budget is going to be some- around 400-and-something, but we won’t know until budget day.

Ok. Well, you have said that there is a $1.7 billion shortfall in health funding. Are you undertaking to pump that much into the sector if you were in Government?

Well, you couldn’t put it all in at once. It would be impossible. But you must in health at least cover the cost pressures in the demographic-

So over how many years would you put that money in?

Well, we would look to see how we could do it over the first three years of being in government. It may take longer than that, and we’ll set it out before the election. But you cannot- You’ve got to at least stem the flow and then backfill.

So 1.7, hopefully, over three years.

Yes. I can’t be sure of that yet, but it’ll depend on when we put our budget together. But we’ve made a commitment. We will begin immediately by covering cost pressures, demographics and aging and backfilling as we go, because the other priorities will have to go alongside that in education, where there’s huge pressure as well.

Whichever way you look at it, that is a lot of money. Where are you going to get it from?

Well, it’s about priorities, isn’t it? And health has always been a priority for a Labour government, and the Minister likes to say we put more money in, got less out. He forgets that health isn’t just about his one measure, and as important as it is in terms of operations, there is money that goes into mental health, the money that goes into disability support for old people staying at home, so we made some huge gains in those areas and, as well, in operations, actually. You might notice that he likes to say there’s 50,000 more elective surgeries.

Let’s talk about that – also the waiting list. He says 8,000 on the waiting list. Do you buy that number?

Well, that’s 8,000 that didn’t get a specialist appointment. What we don’t have is the full picture – those that don’t even get a specialist appointment because they’re not sent, and you get a specialist appointment doesn’t mean you’re going to get an operation. And I call it postcode surgery, because he said, ‘Oh, the thresholds, you know, they’re different all around New Zealand.’ That is the problem.

Well, it has been said that the cruel cutting of patients promised operations simply has to stop. That’s strong words, but do you agree with them?

I certainly agree with them, and a specialist is saying you cannot…

I just have to say there that that criticism was actually a quote directed at the Labour health minister Peter Hodgson in 2007 by the National opposition. The point being that everybody faces the same dilemma – demand outstrips supply. You cannot win, can you?

Let me address that. Let me address that. The big need in New Zealand at that time and continues is in orthopaedic operations. That’s what that quote came from – people waiting, hips and knees. The orthopaedic joint initiative was started – announced by me in 2005, in fact – and ring-fenced money to increase the number of elective surgeries. What Tony Ryall did in 2009 was remove the ring fence, and you saw the number go down. So if you look at the figures, the numbers of electives in orthopaedics were going up. In fact, the best year was in 2008/9 with 12,000 more.

All right. I want to move quickly through – we’re running out of time – through a few things. So Pharmac is going to fund a drug for advanced melanoma. Do you think that, in part, is due to the pressure that you’ve put on the government?

I think it’s due in part to the pressure the public and patients and their families put on and the media put on the government to fund a drug where there was no drug at all for advanced melanoma. There was no front-line treatment for advanced melanoma. So the pressure went on with a big campaign.

They’ve succumbed to political pressure, then, in making that decision, have they?

Well, it was obvious on the day that the patients and their family came to Parliament that both the Prime Minister and the Minister were saying, ‘Oh, yeah, there will be something in the Budget for them. We’re sure that a drug will be funded.’ But it’s interesting, though…

But isn’t that a failure of the system? Because isn’t that supposed to be independent decision-making by Pharmac? And it seems you’re saying political pressure has come to bear, so that’s a failing of the system, isn’t it?

Well, I don’t think the model has been changed as such, but if there is not enough money for Pharmac to fund a drug… And if you look at what they said about Keytruda, they didn’t have the money. It was a low priority. So money has now gone in, but it’s for seven drugs. Interestingly, the hepatitis C drugs that the Minister mentioned have been registered for over a year. So over a year people have waited for that decision. So I think there has been pressure put on behind the scenes to fund one of these drugs, and it ought to have been funded. I don’t care which one it is. It needed to be funded – one of them did.

All right. Panama Papers – interesting developments here. The leaker has taken the opportunity to name and shame John Key and him alone. What do you make of that?

Well, the fog and muck around this whole issue seems to get worse by the day, and unfortunately the Prime Minister has been donkey deep in it. We’ve found it difficult to get answers from him, but if you go right back to the beginning, he is very much in favour of foreign tax havens in New Zealand. He supported the policy, and when you read these papers, you can see why the Cook Islands and Niue, who are named in these papers today, would think, ‘If it’s okay for New Zealand to have tax havens here, why wouldn’t we have them?’ And so I think the Prime Minister has to have a full independent inquiry – not the one he set up, because I really find it disgusting that we would allow foreign nations to come down here and not pay tax in their own country. What would we think if New Zealanders were putting their money somewhere else and avoiding tax here in New Zealand when they take all the services – the health, the education, the roads, etc?

We’re going to have to leave it there. Annette King, thanks for joining us this morning.

Tune into NBR Radio’s Sunday Business with Andrew Patterson on Sunday morning, for analysis and feature-length interviews.


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>"DHBs in Auckland, Wellington and Christchurch all face cuts in real terms..."

So we're relying on immigration to bolster our economy, but we're not keeping up in critical services that are directly affected by real increases to our population?

This...err...seems like great management :-|

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The hospitals' and other essential services are being punished so that Bill English can do a sleight of hand and pretend that the government is in surplus.

Our hospitals are being disgracefully squeezed with patients stacked up in corridors, grossly overworked staff, and an inordinate time to get seen, let alone operated on. This is not the way a first world government operates.

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