Budget 09: Backtrack on long-term health spending

Doctors say the system is already struggling and the recession will increase demand for health services. Photo / Hawke's Bay Today

The National Party looks set to break an election pledge that pre-committed the Government to increasing health spending by $750 million in its next two Budgets.

Health Minister Tony Ryall said last night that while Vote Health was increasing by that much in the coming financial year - as pledged - the recession meant the Government could not now commit itself to specific increases later.

"I expect it will be much harder to increase the health budget by that amount next year if the economy continues to face these difficult economic times."

Last year National tied itself to the Labour-led Government's projected health spending rises of $800 million and then two of $850 million.

And when the economy tightened before the election, National committed to Labour's revised path - three increases of $750 million. But the economy has deteriorated since.

District health boards welcomed the last government's statement of a forward funding path, saying it enabled them to plan ahead better.

Senior doctors' union director Ian Powell said last night it was predictable that National would quit its Vote Health pre-commitments, but the health system was already struggling and the recession would increase demand for health services.

"It's a short-term response that is likely to have predictable longer-term negative consequences in terms of the ability to provide better, sooner, more convenient health care."

Mr Ryall said that despite the worsening economy, the Government would "protect the public health system as a top priority".

More than 40 per cent of all new Government funding in the Budget was for health priorities, he said.

Labour's health spokeswoman Ruth Dyson said Mr Ryall's first health budget had failed to deliver even on his promise of $750 million of new money for the sector in 2009/10 - because of transfers to other votes such as energy, education and social welfare.

The home insulation fund was a worthy initiative, she said, but because the money was being transferred out of the health budget to energy, "it means health services will struggle with a cut in overall services funding of more than $100 million".

HEALTH BUDGET
* $100 million for home insulation fund.
* $60 million - hospices and palliative care.
* $185.7 million - medicines.
* $45.5 million - devolving some hospital services to community clinics.
* $116.5 million - training more health workers.
* All items are over four years.