John Armstrong: Ire over health-sector cuts tellingly absent

It is not that long ago - only a matter of months - that the loss of 500 jobs in a crucial branch of the state sector would have been the major news story of the day.

Newspaper headlines would have plumbed the troughs of despondency in ugly competition to sound the gloomiest and doomiest. Television news readers would have donned their fake facades of concern to feign emotions of empathy with those just thrown on the employment scrapheap.

Heartless radio talkback hosts would in contrast have mercilessly shouted "bring out your dead - and the more the better" as they catapulted further flaming balls of invective into the rapidly collapsing castle walls of Wellington's under-siege bureaucracy.

Sympathetic or not to the plight of public servants, the media could not be accused of indifference to them.

The same could not be said about this week's announcement that the axe will fall on close to 500 positions in the Ministry of Health and across the country's 21 district health boards over the next 18 months.

The media reaction was very ho-hum despite the layoffs actually being closer to 700 once 200 vacant positions in the Ministry of Health which will not be filled were included in the tally.

And there may be even more to come. Cabinet papers accompanying Wednesday's announcement by Health Minister Tony Ryall point to even more positions likely to be canned under the restructuring once further policy work is completed. The size of the ministry could drop from close to 1700 last year to as low as 950 - the latter figure including personnel who will run the new National Health Board, which will inevitably be the veritable cuckoo in the ministry's nest.

The relative silence of the media spoke volumes. The daily news product is driven and shaped according to journalists' perceptions of the public's mood and appetite for certain stories.

Increasingly, the feeling is that the public has - to borrow from Helen Clark - moved on from the days when it could get outraged by the merest hint of slash-and-burn spending cuts or privatisation. The assumption was that National won last year's election through John Key positioning his party more to the centre. It is clear now that a large portion of the electorate had already shifted to the right.

The Cabinet's response has been not so much an accompanying lurch in the same direction but more a cautious groping for policies of that ilk - a groping which has become less tentative in recent months.

Ministers have been pleasantly surprised that the sky has not fallen poll-wise at the sheer mention of such supposed heresies as mining on Conservation Department land.

The Government is consequently feeling more emboldened to pursue policies of the right outside its manifesto parameters and which it had previously ruled out. The most obvious example is accident compensation. The portfolio is aptly named. For months, it has been a car smash in slow motion. Its minister went totally over the top in scaremongering on the state of the ACC's finances. That has backfired. Nick Smith has started losing the political argument over the need for the scheme to be fully funded to meet future liabilities.

As capable as he is of sounding convincing, his abrasive style and occasional erratic behaviour is producing a credibility problem. That was hardly helped this week by the Prime Minister contradicting Smith's earlier declarations that ACC was in too much financial strife for National to contemplate fulfilling its election promise to investigate opening up the ACC's work account to competition from private sector insurers.

Smith's assurances that such an investigation was not a priority counted for nothing when National needed such a carrot to secure Act's help in passing legislation making emergency changes to the overall scheme.

Such u-turns might be an unpalatable fact of life for minority Governments. The question at the end of the week, though, is just how far such expediency can be made to stretch. Key's refusal to rule out other ACC accounts, such as the one covering motor vehicles, being opened up for competition as a result of the current "stocktake" of ACC being conducted by a technical advisory group led by former Labour minister David Caygill suggests National is willingly succumbing to Act's demands because it suits National ideologically to do so.

Perhaps for the first time since the election, Labour's inevitable cries of "secret agenda" had some substance to back them up.

Such charges are not so easily flung at Ryall who, if he has a penchant for more private provision in the public health system, is doing a darned fine job of hiding it.

While letting his flinty-looking ministerial review group, which was chaired by former Treasury boss Murray Horn, loose on the sector, Ryall has ensured he kept his distance from its initial prescription of more private provision of services.

A lot of that prescription - most notably a suggestion that patients be able to choose whether they go to a public or private hospital - mysteriously disappeared between the review group's drafts and its final report.

Ryall has picked up the group's major recommendation of the establishment of a National Health Board based in the Ministry of Health which will supervise the close to $10 billion spent in hospitals and on primary health care, plan specialist national services and co-ordinate infrastructure and information technology planning.

As the Cabinet papers point out, this new bureaucracy could be used to resurrect the purchaser-provider split of the late 1980s. It could thus be a Trojan horse for competition by forcing DHBs to bid for funding on the price of services they provide rather than on the basis of the population they serve.

The Cabinet papers show Ryall putting on the record that he does not support such an approach. He says the competitive model does not work in health. He instead wants more co-operation between DHBs, especially at a regional level.

He has deliberately foregone major restructuring of the sector, especially mergers of DHBs. He is acutely aware that it can take years for the financial benefits to flow.

He has deliberately linked staff cuts in "back office" functions in terms of the consequent savings that will be poured into bolstering "front-line" services. The savings of an estimated $700 million sound impressive. But that saving is over five years. And it remains just that - an estimate produced from assumptions made by consultants.

Ryall has one significant advantage over Smith. The funding crisis in health is something which everyone can see coming but which - unlike ACC - has still to hit.

That has given Ryall more time and more flexibility. Unlike Smith he has been careful to preserve it. Unlike Smith, Ryall has won praise for his handling of his portfolio from quarters not usually in tune with the thinking of National Party ministers.

Ryall has shown his true colours to some degree by allowing more state-funded elective surgery to be carried out by private hospitals. But he has always sold this as a pragmatic way of cutting waiting lists rather than being driven by ideology.

National may be expanding its comfort zone in terms of turning more and more to ideologically driven policies. In Ryall's case, however, he will ensure he has plenty of camouflage on hand to hide it.