Government's Health Boost Less Than Claimed, Expert Says

Scoop

29-05-2025

$31b for Health in Budget 2025 just 3.6 percent increase, compared with what was 'actually spent' in 2024/25, Professor Tim Tenbensel says
Most of last year's boost to HNZ's bottom-line 'absorbed' by Holidays Act remediation payouts to staff
Axing pay equity settlements in the health sector 'saved' the Government $420m.
A leading health systems expert is questioning the Government's claim of 'record investment' in the public system, saying the real increase to the health budget this year is half of what the government claims.
Health Minister Simeon Brown and Finance Minister Nicola Willis have said the $31 billion allocation for health in Budget 2025 represented an operating funding increase of 7.4 percent – or nearly $2 billion – year on year.
The two ministers donned hard hats and high-vis vests for a site visit at Wellington Regional Hospital on Wednesday, where they announced details of a further $100 million investment in its ongoing upgrade.
Speaking to media following the tour, Brown said Health NZ had also had a $1.4 billion uplift in operating funding this year – the second instalment of a $16.6 billion cost-pressure boost over four years.
'It's a significant uplift to allow them to invest in the front-line workforce required to give New Zealanders and timely and quality healthcare they need,' Brown said.
The government's investment in health far outstripped either population growth or inflation, the Finance Minister added.
'For context, that operational funding uplift was more than 7 percent over what it's been, which even on a population basis is more than 6 percent,' Willis said.
'So, we're ensuring that funding is going in at a far faster rate than either population growth or inflation.'
In response to RNZ's request for a detailed breakdown of the percentage increase, Brown's office later said the figure of 6.2 percent was 'based on Treasury's annual growth rates set out in Budget Economic and Fiscal Update 2025, and the nominal Vote Health operating spend for Budget 2025'.
However, Auckland University health policy Professor Tim Tenbensel said, according to his calculations, the $31 billion allocated for health in the Budget was only 3.6 percent more than what was actually spent last year.
'So, we're pretty much treading water at best, or rather sinking a little, in this budget,' Prof Tenbensel said.
Furthermore, operational funding last year only increased about 1.2 percent in real terms.
'And the reason for that is because a lot of the money for this financial year's Budget in health was soaked up to remediate the underpayment of staff under the Holidays Act,' he said.
'So, that might help to explain the reality of people in the sector wasn't matching some of the things said by government.'
Tenbensel said the Government's oft-quoted claim of a $16 billion boost to Health NZ's bottom-line was 'a bit like your boss giving you a $3000 payrise each year for four years and then claiming your pay has gone up by $30,000 over that time, not $12,000'.
The trick was to keep adding on the previous year's increase as 'new money', ignoring the fact that it would have been eaten up by inflation.
'It's a very creative ploy that one, so I think we need to see it for what it is,' he said.
'All governments do this sort of thing, but in the scheme of things, this one is pretty brazen.'
Dumping pay equity claims, including for primary care nurses, saved the Government about $420 million in health, which mostly paid for the near $500 million investment in digital health, after hours and urgent care in the Budget, he said.