12 Oct 2020

DHBs still operating under strain and in deficit under Labour

3:25 pm on 12 October 2020

Labour has failed to get DHB deficits under control this term, despite going hard on the issue when in opposition.

All but one of the country's DHBs operated at a loss this financial year.

All but one of the country's 20 DHBs operated at a loss this financial year, but some say the prognosis is better. Photo: 123rf

The deficit problem - which basically means most health boards spend more than their budgets - has been around for almost 15 years.

Labour gave National heaps from the opposition benches for failing to get deficits under control, but once in power, it found itself in the same boat - deficits for almost all DHBs for all three years.

Infometrics economist Gareth Kiernan said deficits had been situation normal for the last several governments.

"It's a constant battle for the DHBs to try and provide the services that are expected of them. Often what we've seen over much of the last decade is the funding increases they've been given by government haven't kept up with those pressures," he said.

Deficits are either a measure of how efficient or inefficient health boards are, or how much they are underfunded - or a little bit of both.

Nineteen of the country's 20 DHBs were in deficit this past financial year, just South Canterbury was in the black.

In this year's budget, Labour announced it would spend about a billion a year on health over the next four years - an increase of 8 percent on the year before.

But Ian Powell, who headed a senior doctor's union for 30 years, said that was a drop in the bucket after years of underspending.

"That's not a bad budget for health, but it's one of about 11 budgets. It will never make up for that first 11 or so budgets that were inadequate," he said.

And Kiernan said, in real terms, the billion-a-year injection was not quite what it seemed.

That was because many DHBs were running hundreds of millions of dollars of extra costs for things like population growth.

"It helps, don't get me wrong, but it's nowhere near as much as the headlines would have you believe," he said.

That extra money does mean Labour is likely to deliver a largely deficit-free 2021, he said.

The big question was, would it be a one off, or would the next government keep meeting the increased costs of a growing - and ageing - population, he said.

Massey University Te Au Rangahau Māori Business Research department senior lecturer Matthew Roskruge said there were some big inequities from DHB to DHB when it came to deficits.

For example, those with populations with more complicated health needs, or with old buildings and equipment.

"It's expensive to look after obsolete infrastructure. It's expensive to maintain it, to keep it warm, it's expensive to work within it. And so that places a lot of pressure back on operational budgets," he said.

The government should really just fund health services for what they need to care for their populations, rather than setting unrealistic budget expectations, he said.

Health Minister Chris Hipkins said though Labour did not get deficits in check this term, if had made significant funding increases to mean there may be very few next term.

"It is a recognition by our government that DHBs haven't been funded for what we've expected them to deliver in the recent past. And we need to move beyond that.

"We need to move to a point where they are getting the level of funding they need to provide good health services for their population," he said.

Labour would continue to invest more in health if reelected, he said.

DHBs also had a role to play to use the money they were given wisely, but ultimately it was the responsibility of the government to make sure they were on track, he said.

Get the RNZ app

for ad-free news and current affairs