Rt Hon Winston Peters

New Zealand First Leader

Member of Parliament for Northland
6 OCTOBER 2016

Speech by New Zealand First Leader and Northland MP Rt Hon Winston Peters

NZ Aged Care Association,

Sky City Convention Centre

9.30am, Thursday, October 6, 2016

Government health message filled with inaccuracies – not keeping pace with population

New Zealand First commends you for your dedicated focus on care of the elderly – this is a challenging industry.

You have increasing numbers of clients and are dealing with longer life expectancies and a multiplicity of other challenges.

Baby boomers

A few years ago the first of the baby boomers reached 65.

In another 15 years, your industry must be ready for a sharp demographic rise in the number reaching the age when they go into aged residential care.

Because your sector is largely dependent on the aged care subsidy, you are vulnerable to restrictions on funding by DHBs and changes in regulations.

Ladies and gentlemen, funding is going to become an even more pressing issue in the years to come.

But first, let’s look at some recent history: Some of you might remember New Zealand First took action in 2006-2007 after a PricewaterhouseCoopers report showed that the sector was seriously underfunded by about 20 percent—a percentage that has only ever increased over the years.

As part of New Zealand First’s confidence and supply agreement with the Labour Government in 2005 we boosted funding by $587 million over two Budgets.

After 2008, the National government took its eye off the ball, and it did not inflation adjust the increase we worked so hard to get.

That has led to the situation you grapple with today and which will become more urgent as time goes by.

Skilled staff

Staffing is one of your challenges.

New Zealand First believes we should be encouraging and training our Kiwi workers into specialist fields to deal with increasing specialist services such as palliative care, dementia care and respite care.

These jobs have to be higher valued and reflected in what these specialists are paid.

The aged care sector should be working with training establishments – making it easy to channel not only school leavers, but adults who are looking at re-training into their second or third career changes.

Your industry is heavily reliant on migrant labour.

And that is mainly because the rates of pay, or lack of them, are attractive to migrants many of whom are coming out of the Third World where even a low wage in New Zealand is vastly superior to what they would have received at home.

Public perception

Rightly or wrongly, the public perception of the aged care sector is that Government money is going to line the pockets of (overseas) conglomerate investors while not addressing the quality of care in rest homes.

The public see record profits being made by the largest aged care providers, while minimum care workers receive the minimum pay.

The man on the street questions why massive profits from the retirement village/property investment side of the business cannot compensate for slight profits of the other.

Also the public asks - why is there is no auditing or accountability of Government funding for provision of rest home services?

Policy

New Zealand First is aware of these perceptions.

However we recognise how important funding is.

That is why we would ensure Government funding for aged care services keeps pace with the annual rate of inflation.

On Tuesday Minister of Health Coleman made the following statement to you:
“I just want to take a moment to look at the big picture in health. Some of you may have heard this before, but it’s worth reiterating.

“Health has remained the Government’s number one funding priority.

“Budget 2016 delivers on that by investing an extra $2.2 billion in health over four years for new initiatives and to meet cost pressures and population growth.

“The Government’s investment in health will reach a record $16.1 billion in 2016/17 – that’s an extra $568 million this year, the biggest single increase in seven years.

“Claims that health funding has been cut are incorrect. Under this Government health expenditure share of GDP has averaged 6.5 per cent – that’s up from the previous Government’s level of under 6 per cent.

“Over the last eight years, health funding has kept up with demographic pressure and inflation.”

If “health has remained the government’s number one priority”, as the Minister of Health told you on Tuesday, then that is an indictment upon this government. It is true that this year’s Budget commits an extra $2.2 billion to health over the next four years.

It is not true that this funding is adequate to meet cost pressures and population growth.

We are about to experience a nationwide doctors’ strike and that alone, alongside countless other examples of underfunding, refutes the government’s claims.

In the next statement that Dr Coleman made - he said “claims that health funding has been cut are incorrect.”

Remember he said “the health expenditure share of GDP has averaged 6.45% - that’s up from the previous government’s level of under 6 per cent.”

That statement is meaningless unless it is related, not to GDP but the total population the health system is meant to serve.

In other words, Dr Coleman deliberately failed to inform you that current health expenditure has to provide for an extra 440,000 people which is the population increase under National.

In short, health spending per capita or per person in New Zealand has gone down not up. And this statement is irrefutable. Because if he had to compare that with the same equation in 2008 he would be admitting what you already know. That spending to meet need is down not up.

That’s why Dr Coleman omitted to tell you what spending per person was in 2016.

The claim that an extra $568 million this year is the “biggest single increase in seven years” is true but is a case of using figures to cloak a serious defect in the government’s arguments.

His statement that “over the last eight years health funding has kept up with demographic pressure and inflation” is a deliberate obfuscatory mirage.

Demographics is about the ages in the population not the total population. And frankly, you should have been, if you weren’t, aghast at a Minister throwing out bold figures without relating them to anything of interest to your industry.

In short, your industry is under the pump, you know it, and the government prefers statistical propaganda to comparative statistical facts.

New Zealand First would increase the aged residential care subsidy annually, indexed to the Consumer Price Index (CPI) and require DHBs fully pass this funding on to ensure staffing levels are appropriate and that staff receive on-going training.

And we would relate the health budget to the total population of New Zealand and to forward forecasts of population growth.

This would lead to the direct improvement in the quality of care for elderly patients.

Make no mistake.

Rest home workers deserve our admiration and thanks for the tasks they must carry out as part of their daily work routines.

We must also encourage necessary re-investment in the aged care sector so it can adequately meet those future demands.

Once funding is made available we would ensure checks would be made to see funding is allocated for the purpose intended – such as maintaining care workers’ wages and improving maintenance of residential care facilities.

We would fund equal pay rates between Aged Care Nurses and Government sector Nurses

To put it quite simply, our senior citizens must be treated with respect and dignity and not as a burden on society.

NZ Super

On another topic now – but one relevant to your sector – NZ Super.

All New Zealanders should be concerned about what some people have been saying about the affordability of NZ Super.

The Public Finance Act 1989 requires that the Treasury prepare a statement on New Zealand’s long-term fiscal position at least every four years.

In 2013 Treasury issued its Affording Our Future Statement (the third such statement).

That statement showed that NZ Super would still be under 8% of nominal GDP by the year 2060.

NZ Super is not lavish and it is taxable.

Our NZ Super is world class and is recognised as such around the world.

At 3.8 percent net of GDP per year the cost of New Zealand Super is low by international standards.

Our record compares very well with an OECD average of around 7%.

NZ Super ensures all Kiwis have some retirement income security.

Opponents of NZ Super refuse to admit a very demonstrable fact.

And that is our NZ Super, as a percentage of GDP, would stay the same even with an ageing population through New Zealand’s doubling its GDP by 2050.

But here is the important point.

This can only happen if the population is not artificially inflated by mass immigration.

NZ Super is sustainable: What is not sustainable is almost net 70,000 new immigrants a year.

Well over 80,000 older migrants have gained access to NZ Super and many have contributed nothing towards it.

All they have had to prove is that they have been here for 10 years.

Also, when National stopped contributions to the NZ Super Fund, New Zealand lost out in billions of dollars of savings.

Remember the NZ Super Fund was designed to prepare for and offset the greater Super costs of an ageing population.

But National has taken no interest in the sustainability of NZ Super over the long term.

The fund is a top ranked sovereign fund performer in the world, worth $30 billion.

It would have been over $47 billion had National committed to contributing over 10 years as the previous government did.

Conclusion

Finally, to return to aged care:

We need to plan our funding path and the capital expenditure involved – by working together.

We need to plan the provision of services and care – again by working together.

Careful planning is needed to get the mix right between retirement villages, rest homes, more acute care and those who choose to have home based care.

Many years of under-funding have seen large numbers of non-profit charitable organisations exit this industry because they couldn't afford to stay.

That void was filled by many in the private sector.

We cannot now turn around and say – you can't make a profit.

What we can expect is that you deliver the best possible care and at the best possible prices and that you will pay your staff the best possible wages and give them the best possible training. This is why planning is so critical.

But you will never as an industry get the outcome that you want if many of you sit here and accept bland governmental statements as fact, or worse, think that you can go on supporting the same political players and somehow get a different result.

Nothing will change unless your industry changes as well in its understanding of how politics works and who you can really trust to deliver on commitments.

ENDS

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