Budget 2025 Fails Rural Health Promises – Hauora Taiwhenua Warns Of Growing Inequities

Scoop

23-05-2025

Hauora Taiwhenua Rural Health Network is sounding the alarm following today's Budget announcement, which has failed to acknowledge — let alone invest in — rural health.
'For a National-led Government, we would expect the word rural to appear somewhere in the health budget. Instead, rural New Zealand seems to have been sidelined once again,' says Dr Grant Davidson, Chief Executive of Hauora Taiwhenua.
The Government has also failed to act on the flagship rural health policy it entered the last election on and reiterated in its first 100-day plan once elected: the establishment of a third medical school at the University of Waikato focussing on rural general practice. In budget 2025 there is no investment or plan outlined for increasing rural medical placements, either through existing institutions or by establishing a new school. This inaction comes at a time when the rural workforce is in crisis and struggling to meet the needs of growing, ageing, and often underserved populations. We looked forward to congratulating a Government on implementing long-term planning for the rural health workforce but have been sadly let down.
The health budget has increased by 4.8% overall which doesn't cover increases in the cost of health care delivery and population gains. The Budget lacks any specific commitment to address long-standing inequities in rural healthcare. We are waiting to see what capitation uplift will be offered, but early signs are that this is likely to be less than the Health New Zealand calculated increase in the cost of health services of 6.4% which will mean any gap will need to be made up by further increases to patient co-payments, which will need to be well above 6.4%. Any increased fees will only decrease access to general practice to those who most need it and then cause a further decline in already poor health outcomes in rural areas where there are higher populations of low-income, older and Māori populations. The funding for Comprehensive Primary and Community Care (CPCT) Teams, which allowed extra funding for general practices to add allied health and healthcare workers to their teams to improve services, has also been discontinued.
Hopes that Budget 2025 would deliver pay parity for primary care nurses have also been dashed. Instead, legislative changes mean any progress will now be delayed at best. Primary care nurses, especially those working in rural settings, continue to be paid significantly less than their hospital counterparts, worsening recruitment and retention challenges.
Hauora Taiwhenua is also raising concerns about the proposed transfer of mental health crisis response responsibilities from Police to health services. Funding to support the transfer of responsibility of this from Police is included in the budget. This may offer long-term benefits in urban centres, but it raises serious questions for rural areas, where health teams are already stretched and crisis response capacity is limited or non-existent. We are waiting to see if any resourcing or rural contingency planning will be announced to support this shift in the implementation phase.
We acknowledge the pre-budget announcements to enact a Primary Care Action Plan, including funding for urgent and unplanned care initiatives. We are excited by the potential to finally deal with the major issue of providing after-hours and urgent care in rural and remote areas, including surges in demand during holiday times. But there is little detail around these and no ring-fenced funding for implementing them in rural areas.
The Minister's commitment to what he terms 'enhanced capitation funding' is for the delivery of extra services and targets that have not yet been announced, not for the support of already underfunded rural primary care. We understand that Health New Zealand's own analysis shows that delivery of primary care in rural and remote areas costs more than in urban areas, and yet the project to re-weight capitation formulas to provide increased base payments for those in rural areas where increased costs and high co-morbidity demands lie has been put on hold.
There is still some possibility that Health New Zealand may choose to commit some of its increased funding in operational spending to improve the sustainability of under-siege community-owned rural hospitals and interprofessional rural training hubs that are in the Health NZ workforce plan, but we have been holding our breath for over a year already on both of these projects.
'Budget 2025 was an opportunity to demonstrate that rural Aotearoa matters. Instead, it sends a message that the promises made before the election are not being honoured,' says Dr Davidson. 'Without urgent action, we risk further erosion of rural health services and deepening inequities for the communities who already struggle most to access care.'
Hauora Taiwhenua Chair, Dr Fiona Bolden summarises, 'This is a budget which will leave rural health providers and rural communities feeling even more despairing than before when it comes to the sustainability/viability of rural health services and the safety of patients.'
Hauora Taiwhenua will continue to work with the Government, policymakers, Agency staff, rural providers and the community to ensure that the voices of rural New Zealand are heard — and that future decisions reflect their needs and realities.
'We know that delivering healthcare in rural and remote areas comes with unique challenges and opportunities,' says Dr Davidson. 'Our members are ready to work with Government and Health New Zealand to co-design solutions that ensure rural communities receive equitable, high-quality care.'