The number of acute hospital admissions increased 20 per cent in the past seven years while the population only grew 9 per cent, reports the Council of Trade Unions (CTU) and Association of Salaried Medical Specialists (ASMS). The CTU and ASMS today released their joint post-Budget analysis of the first Labour coalition Government’s Vote Health Budget. (see summary at end of article)

The analysis says the 2018-19 Budget is the first in nearly a decade to put more money back into health than the coming year’s estimated spending requirements.

“The health vote however is very tight, with only $57 million estimated to spare in total operational spending of almost $17 billion, and this doesn’t include the additional wage settlements and increased staffing for nurses, allied health staff and others which are coming, and which the Government says will be funded out of a separate contingency,” says the report.

It also notes that two stretched national services – maternity services and disability services – receive significant new funding but a third, the national mental health service, has been left to wait until next year and  the outcome of the current Mental Health and Addictions Inquiry for ‘adequate funding’.

The analysis, undertaken by CTU economist Bill Rosenberg and ASMS researcher director Lyndon Keene, estimates an accumulated funding shortfall in health spending power of $1.6 billion between 2009-10 and the 2018-19 financial years.

“It means that in the next Budget the Government will need to find around $2.5 billion for 2019/20 if it wishes to restore the value of funding to the 2009/10 levels.”

Keen said years of underfunding of  the public health system and other social services had resulted in a dramatic increase in acute hospital admissions.

Health Ministry figures show acute public hospital admissions increased by 20% over the seven years to 2017, and our hospital emergency departments are being inundated. Despite increased use of primary health care services, there is still significant unmet need. The system is stressed at every level.

“So while it’s is a relief that for the first time in recent history the public health sector appears to be in a financial position to maintain existing services, compared with last year, and also pay for new initiatives, it is essentially a stabilising measure,” said Keene. “A great deal more funding is needed for the recovery.”

He said there were also still additional potential costs coming up that could impact on the sector, including current pay negotiations for “crucial groups of health employees” as well as the pay equity settlements, such as for mental health care and support workers, and increasing DHB capital charges, which are taken from operating budgets.”

Key points from Report:

  • Total operational funding announced was $16,972 million, $863 million more than the $16,109 million announced in the 2017 Budget. Capital funding announced was $1,253 million, almost double the $664 million announced in last year’s Budget.
  • The Health vote in the 2018 Budget is an estimated $57 million ahead of what is needed to cover announced new services, the next instalment of the pay equity settlement for care and support workers, increasing costs, population growth and the effects of an ageing population, compared to the 2017 Budget.
  • This is the first year since 2010 in which our estimates show that the Budget was ahead of anticipated costs for the year.
  • However this does not take into account any settlement with nurses and allied health staff on their pay rates and staffing levels. This is expected to come out of a separate contingency fund.
  • We estimate an accumulated funding shortfall in annual spending power of $1.6 billion between the 2009/10 and 2018/19 financial years. It means that in the next Budget the Government will need to find around $2.5 billion for 2019/20 if it wishes to restore the value of funding to the 2009/10 levels.
  • The Health vote is forecast to rise slightly as a proportion of Gross Domestic Product (GDP), from 5.56 percent to 5.57 percent of GDP. If it had maintained the proportion of GDP it had in 2009/10, it would be $2.1 billion higher in 2018/19.
  • District Health Boards (DHBs) received an estimated $37 million more than they need to cover anticipated increased costs and demographic changes during the year.
  • Centrally managed national services such as National Disability Support Services, National Elective Services, and Public Health services received $22 million more than what they needed to cover cost increases and demographic changes forecast for the year and to fund $96 million in new services, offset by $10 million being shifted to DHBs.
  • The pay equity settlement for care and support workers was funded $348 million, exactly as budgeted in the settlement. In the 2017/18 year, $299 million was funded compared to $303 million in the settlement.
  • The Ministry of Health itself was underfunded by $1.3 million and has had significant reductions in staff numbers since 2010.

Read the full Did the 2018 Budget provide enough for health? CTU ASMS analysis here.

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