2019 Health Budget Analysis - Has the Government Budgeted enough for the health of New Zealanders?

CTU Economist and Director of Policy Dr Bill Rosenberg along with Lyndon Keene, Director of Policy and Research at the Association of Salaried Medical Specialists (ASMS) have completed their detailed line by line analysis of the Governments 2019 health budget.

Rosenberg and Keene’s research in the lead up to the 2019 Budget estimating what funding was needed to maintain the same level of service as the previous year, can be viewed here: http://www.union.org.nz/wp-content/uploads/2019/05/How-much-funding-is-needed-to-avoid-the-condition-of-the-Health-System-worsening-2019.pdf

"In summary, the Government has not budgeted enough. We have estimated that there is a shortfall of $134 million. There is not enough money in the 2019 Budget for the Government to fund the new services they have announced, increasing costs, population growth and the effects of an ageing population, when compared to the 2018 Budget," Rosenberg said.

"We welcome the boost given to primary mental health services, which have been neglected for far too long, costing people’s lives. However the new funding to the Health system will start slowly this year and we estimate that the existing DHB ring-fenced funding for specialist mental health services for people facing the most severe challenges received $55 million less than what it needed to cover cost increases, pay settlements and population growth. We are concerned that the services for people with severe mental health needs will continue to be under-resourced and we will continue to see crises within these specialist units at the cost of both people with severe needs and the staff who have to cope with insufficient resources to meet these demands," Rosenberg said.

Key findings:

- The Health vote operational funding in the 2019 Budget is an estimated $134 million behind what is needed to cover announced new services, increasing costs, population growth and the effects of an ageing population, compared to the 2018 Budget.

- District Health Boards (DHBs) received an estimated $139 million less than they need to cover increased costs and demographic changes during the year, and to fund new services.

- We estimate an accumulated funding shortfall in annual spending power of $1.6 billion between the 2009/10 and 2019/20 financial years. It means that in the next Budget the Government will need to find over $2.5 billion extra for 2020/21 if it wishes to restore the value of funding to the 2009/10 levels.

- Health Vote operational expenses are forecast to remain static as a proportion of Gross Domestic Product (GDP) compared to last year, at 5.73 percent of GDP. If it had maintained the proportion of GDP it had in 2009/10, it would be $1.7 billion higher in 2019/20.

- Centrally managed national services such as National Disability Support Services, National Maternity Services and Public Health services together received $4 million less than what they needed to cover cost increases and demographic changes and to fund new services.

- National Mental Health Services received $73 million additional funding compared to the 2018 Budget, but DHB ring-fenced funding for specialist mental health services received $55 million less than what it needed to cover cost increases, pay settlements and population growth.

- The Ministry of Health was underfunded by $2.3 million and has had significant reductions in staff numbers since 2010.

- The pay equity settlement for care and support workers was funded $414 million, this year including Mental Health and Addiction Support Workers ($36 million) following their inclusion, agreed in 2018.

- Capital funding announced was $1,713 million, $460 million more than was announced in last year’s Budget, which in turn was almost double the amount announced in 2017.

The full report can be found here http://www.union.org.nz/wp-content/uploads/2019/08/Did-the-Budget-provide-enough-for-Health-2019.pdf

The Excel spreadsheet is here http://www.union.org.nz/wp-content/uploads/2019/08/Health-vote-2019-post-Budget.xlsx

ENDS

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