Former Health NZ board members disappointed in Prime Minister Christopher Luxon’s ‘personal’ and ‘baseless’ comments

Dr Curtis Walker said accusations the former Health NZ board were financially illiterate were inaccurate. Photo / RNZ, Karen Brown

Former board members at Health NZ say they are disappointed in the Prime Minister’s personal attacks on their credibility, with one board member describing Christopher Luxon’s comments as “disinformation”.

Luxon and Finance Minister Nicola Willis stepped up their criticism of the former board in a post-Cabinet press conference on Monday, questioning their financial literacy and governance.

Willis said not only were the board members “not across” Health NZ’s deteriorating financial position but did not know what questions to ask to “get the information that New Zealanders had a right to have”.

The two remaining members of the board were replaced by a commissioner, Professor Lester Levy, last week, after three other board members decided against seeking reappointment and two members resigned.

Former board member Dr Curtis Walker, a renal specialist at Palmerston North Hospital, described Luxon and Willis’ comments as “disinformation”.

“I think it’s inaccurate that the board’s financially illiterate,” he said. “And I disagree that the board lacked financial skills and oversight.

“All of the questions that are being asked now publicly were asked around the board table of the management.”

He added: “You might argue with a few senior clinicians coming off the board that it might now be seen as clinically illiterate.”

Walker said until early this year, the board was expecting Health NZ to have a “significant” surplus. The board became aware its financial problems as early as possible, in March, he said.

The projected surplus was derailed by the pay equity settlements for nurses and the unexpectedly successful recruitment of nurses, Walker said. Data shows a net increase of 1200 nurses in the last quarter alone.

“We make no bones or apologies about that,” he said. “That’s where the bulk of the $130 million [deficit per month] has gone.”

Former board member Vanessa Stoddart said “blame and misinformation will not fix the health system”.

Former board member Vanessa Stoddart said she was disappointed by the “personal comments” made by the Government, but noted “blame and misinformation will not fix the health system”.

Stoddart, who had held several governance roles in the public and private sectors, said “everyone was all over” the deficit that emerged earlier this year, contrary to what Luxon and Health Minister Dr Shane Reti have stated.

She said the deficit was largely a result of “unbudgeted recruitment of nurses”, which needed to be funded through measures such as reducing non-frontline roles or overtime levels.

“This plan was underway, and Lester will need to see it through,” she said.

Stoddart said Health NZ’s challenge to merge more than 20 payroll systems made it difficult to track and assess staff numbers and labour costs and as such, risked quickly changing the organisation’s financial state.

“Rectifying payroll systems is not a simple task - and certainly not one that has been budgeted for.”

She acknowledged the board, which she said was addressing the issues, could have acted “faster and harder in some areas, with the benefit of hindsight”.

However, Stoddart encouraged those now leading the reforms to focus on fixing the health system so as to provide an improved service to patients.

“The reform will only be successful if the system works together and allows leadership to focus on patient outcomes and not get caught up with activity that does not lead to improved patient outcomes.”

Another board member, who asked to remain anonymous, said they “absolutely refuted” the Government’s comments about the board’s performance.

“I feel that it’s completely baseless,” they said. “[Luxon] doesn’t know the reports we were getting, or the discussions we were having. He or ministers haven’t taken time to speak to board about the issues.”

The former board member noted some of the constraints members faced. They were strictly directed by the Ministry of Health to not work more than 30 working days a year, which was “light governance” for an organisation with a budget of $26 billion and about 90,000 staff.

Another board member said this was also an unrealistic expectation, and members ended up doing significant overtime.

Despite promises from the Health Minister of stability during a time of upheaval, Health NZ had four different chairs in the last year, which repeatedly stalled transformation efforts.

After former chair Rob Campbell was fired in early 2023, the board had sought a replacement with similar skills, but this did not happen until Roger Jarrold’s appointment in March - after the financial problems were uncovered.

The board was also forbidden from spending money on consultants to get independent advice on risks and spending.

Prime Minister Christopher Luxon and Finance Minister Nicola Willis stepped up their criticisms of the former Health NZ board on Monday. Photo / Mark Mitchell

Asked about the board member’s comments today, Luxon said he was “ruthlessly focused” on delivering better outcomes for New Zealanders.

“I expect results. I expect governance and boards to understand what’s going on. I expect action to happen on the back of that.”

Reti said the board was aware in March of a significant overspend and there was a paper trail of information that they were not sharing with others, such as the Ministry of Health and Treasury.

He also said there was not an operating model or monitoring framework which they could get information from - issues which were previously flagged by the Auditor General.

“Either they weren’t getting the information, or they were and the plan wasn’t working. There is a lot of information to suggest they weren’t getting the information.”

Several board members said after taking on the job they immediately discovered countless challenges that stemmed from decades of underinvestment in the health sector - from payroll problems to underfunded infrastructure projects.

At the same time, the Government had issued a highly ambitious Government policy statement and national health targets which were uncosted, one board member said.

The health sector was also increasingly being swamped by more patients, and more complex health conditions.

Walker said he was working in an emergency department in Palmerston North that was designed for 17,000 people a year but was seeing 50,000 a year.

“I wish the commissioner a success, because God knows we need it.”

Isaac Davison is an Auckland-based reporter who covers health issues. He joined the Herald in 2008 and has previously covered the environment, politics and social issues.

Adam Pearse is a political reporter in the NZ Herald Press Gallery team, based at Parliament. He has worked for NZME since 2018, covering sport and health for the Northern Advocate in Whangārei before moving to the Herald in Auckland, covering Covid-19 and crime.