Budget rise for health tipped to lead to further cuts

Health Minister Tony Ryall. Photo / Mark Mitchell

The Government's increase in health spending in next month's Budget is predicted to be as little as half the rise of a year ago, leading to further cuts in services.

Health Minister Tony Ryall is sticking to the convention of concealing the increase until Budget Day, but he has reiterated that, because of the recession, money will be tight.

Last May, the Government increased Vote Health by $750 million, to around $12.9 billion for this financial year. That was half of all the new government spending of $1.5 billion.

In next month's Budget, the pool for all new spending is $1.1 billion.

"It is clear Vote Health will not get an increase of the size it got last year," Mr Ryall has said.

The Auckland District Health Board has been told it will receive a funding increase of 3.3 per cent - 1.7 per cent to cover "cost pressures" and 1.6 per cent for population growth.

Labour health spokeswoman Ruth Dyson calculates, based on information provided by DHBs to the health select committee, of which she is a member, that DHBs' direct share of the increase will be $330 million, compared with $540 million last year.

Senior doctors' union executive director Ian Powell predicts a smaller increase in the total Vote Health of around $300 million - little more than 2 per cent.

General inflation last year - aside from the extra demands on DHBs from population growth - was 2 per cent and health sector inflation is usually higher.

Health and hospital unions representing 43,000 workers have reached a deal with the 21 DHBs for a 2 per cent pay rise to take effect halfway through an 18-month agreement.

Mr Powell said the effect of what would be a cut in spending power for public health services would inevitably be cuts in services.

"I think probably it's going to be community support services in the first instance that it's going to impact on because it's hard for those people to get a collective voice because it's a more disparate sector."

Ms Dyson said health boards were already cutting services, such as home help to the elderly in the south, and were preparing for more reductions.