More cash, but health boards told to economise

By MARTIN JOHNSTON, health reporter

The Government's health budget is planned to rise by $711 million next year.

The new money, all announced well before the Budget, includes $400 million for "baseline" health and hospital spending, $207 million for population growth and $58 million deferred from this year for the meningococcal disease vaccine.

There is also $22 million more for ACC to treat accident victims in hospital, $15 million for sanitary works subsidies and $1.25 million for counter-terrorism preparedness.

Separately, capital spending (which includes hospital construction) is expected to be $240.4 million.

Finance Minister Michael Cullen said operational health spending would have increased to 6.5 per cent of gross domestic product in 2005-2006, from 5.4 per cent a decade earlier. But he warned district health boards to economise.

"In particular, district health boards need to understand that wage and salary increases must be met within their current forecast incomes."

Health sector unions said this comment was "unhelpful" and did nothing to address the shortages of health workers.

Predictions on health board deficits have worsened for next year, from $90 million last December, to $120 million. The Government is warning of the need for "cost containment measures", without cutting services.

But a ministry financial manager, John Hazeldine, said discussions with boards indicated deficits could be under $90 million next year and half that the following year - partly because of extra money some were receiving to smooth the introduction of bulk funding on July 1.

A pre-Budget announcement devoted $19.8 million to allowing all primary health organisations, the new structure for many GPs, to charge low fees for patients under 18 from October 1 and for people with high health needs from January.

That money is part of the $410 million of new money over three years, starting last July, for the primary health care strategy.

Doctors welcomed yesterday's promise of extra dollars, but repeated concerns about the inequity of different levels of subsidies depending on each area's poverty level and proportion of Maori and Pacific Islanders.

Union leader Deborah Powell, who represents more than 4000 health workers, tagged Dr Cullen's pay-rate comments "stupid". Nurses Organisation chief executive Geoff Annals said the comments were "unhelpful", especially since New Zealand was short of at least 2000 nurses.