Andrew Little Budget 2022 post-Budget health speech, Auckland, 20 May 2022

Morena tatou katoa. Kua tae mai i runga i te kaupapa o te rā.
Thank you all for being here today.

Yesterday my colleague, the Minister of Finance Grant Robertson, delivered the Wellbeing Budget 2022 – for a secure future for New Zealand.

I’m the Minister of Health, and this was a health budget.

That will be my focus today.

Good health is vital for good quality of life.

Access to quality healthcare underpins our social cohesion and economic prosperity.

And so good health services are vital for communities, and they are also a basic expectation in developed countries like ours.

For New Zealand, with its now-established tradition of free hospital services, and strongly state supported primary and other services, health spending is a very significant portion of the government’s total spending.

SECURING THE FUTURE OF HEALTH FUNDING
In the current financial year ending 30 June 2022 alone, we will spend $24 billion – and this doesn’t even take into account health spending on COVID-19, which this year will run into $1 billion.

Even with this spend, the district health boards – our main frontline service providers and funders – are expected to end the financial year with a combined deficit in excess of half a billion dollars.

Indeed, in 12 of the 13 years since 2008, the DHBs collectively have ended the year in deficit to an accumulated value of $3.5 billion.

A small amount of this deficit performance will reflect poor financial control. The vast bulk of it simply reflects chronic underfunding of the system.

We know for example, that our population increased by about 600,000 people in the 10 years to 2018.
Simply put, funding for health services did not keep up with that growth.

There has been a price to pay for deficits and underfunding.

It’s the poor state of many hospital buildings.

It’s a workforce where – until recently – remuneration wasn’t keeping pace.

It’s a system that for various reasons was unable to share best practise and innovation.

There is another respect in which our health system has struggled to perform, and that is in equity of access to health services, and therefore, equity of outcomes.

Much of this was exposed when we faced the biggest health challenge in more than a century: the COVID-19 pandemic.

Budget 2022 gives us the chance to overcome these historical financial shortcomings, and to set up the new health entities, Health New Zealand and the Māori Health Authority, unburdened by them.

But just reshaping the financial base of the health system is not the only factor necessary to ensure our health system can strive to do better. The health reforms are not – cannot be, and have not been designed to be – just about structures and money.

We must put patients and communities at the heart of our health system.

But this a post-Budget speech, so I will address the issues of money firstly.

Budget 2022 fills the structural funding gap represented by that aggregate DHB deficit.

So about $550 million a year will be added to health services funding from the first of July.

Roughly, a further $1.3 billion a year starting on one July is added to take account of cost pressures.

This is a total increase in operational health spending of $1.8 billion a year, starting this year.

And in the next financial year after that a further nearly $1.3 billion will be added to operational funding.

For the first time we have done a health budget covering more than one year – this one covers two years, and then future Health budgets will be three year cycles.

Multi-year budgeting will allow our health entities to plan and innovate with greater confidence.

In addition to the uplift in operational funding a further $1.3 billion is added to the health capital envelope.

This capital funding is not confined to a particular year and is drawn over multiple years.

I want to make clear what a landmark reform multi-year budgets are.

Almost every provider I have spoken to as Health Minister has told me the annual funding cycle just doesn’t work for patients anymore.

Healthcare is increasingly complex.

Chronic conditions require ongoing care. Increasingly, patients have not had the certainty that they should have that critical services will continue to be available to them – and providers have struggled to retain staff because they could not guarantee ongoing employment from one year to the next.

I want to return to focus on health infrastructure. Because we’ve heard the horror stories about our hospital buildings.

A chunk of the new $1.3 billion health capital funding will go just to meet the cost escalations of existing projects, and the rest will enable us to make progress with the next major hospital rebuilds in Nelson, Whāngarei, and at Hillmorton in Christchurch.

We know we have a major challenge to keep our hospital estate fit for the job.

Just this week the Hutt Valley District Health Board made a decision to decamp from one block of that campus because of the earthquake risk.

It is a timely reminder that there is large queue of infrastructure projects waiting, and we need to be prepared for the unexpected too.

I am confident that, because of Budget 2022, Health New Zealand in collaboration with the Māori Health Authority will now be able to plan coherently and consistently for a future hospital estate that will reflect the needs of regional networks and the nationwide health system – rather than DHB region by DHB region.

This year’s Budget also contains a number of other initiatives that will improve services and address health inequity:$488 million into primary and community care to start establishing comprehensive primary care teams, to increase funding for GP practices to better support high needs populations, and to support locality provider networks;
More than $300 million for specific Māori and Pacific health initiatives, such as dedicated commissioning, supporting Iwi Māori Partnership Boards, and boosting kaupapa Māori and Pacific health providers;

$191 million over two years has been added to Pharmac’s medicines budget which I expect will allow Pharmac to address treatment gaps, especially in cancer;

More than $250 million has been added for road and air ambulance services, which will add vehicles, upgrade aircraft and add a new helicopter to the fleet, and fund the crews that go with them;

There is also additional funding for workforce development, establishing our new public health agency and boosting its work on population and public health.

MENTAL HEALTH
I want to talk about mental health specifically for a minute, because through the pandemic the importance of good mental health and wellbeing has come to the fore.

Successive governments really did not prioritise mental health.

Our government inherited a broken system, and we made a commitment to build a whole new mental health system.
You can’t just buy health of the shelf. It takes planning, and infrastructure, and staff, and contracts, and trust with patients and their families who felt let down.

So in 2019 this government made the biggest investment into mental health ever. That was to put in place services for those with mild to moderate mental health needs, so that people could get help with little issues before they became big problems.

Through that Access and Choice investment we’ve now had more than 380,000 primary mental wellbeing sessions delivered and more than 900 additional full time equivalent people are now working to support mental wellbeing in the community.

Now in Budget 2022 we’ve taken the next step and put $100 million in over four years for fixing services for those with the highest needs.

There is a lot more to do in building a whole new mental health system, but with this Budget we’ve taken the step of addressing another major need.

Altogether then, this a Health Budget. And it’s put the health system on a strong financial platform.

THE REFORMED HEALTH SYSTEM
So with the money secured, the next step – Parliamentary process willing – is to pass the Pae Ora legislation to confirm the new system structure within which to make decisions about health services.

So now I’ll turn to the structural reforms of the health system, and my expectations of those structures.

It’s no secret that the way we deliver healthcare in New Zealand needs to change.

We’ve heard it through the Health and Disability System Review, the Waitangi Tribunal’s WAI2575 Health Services and Outcomes Inquiry, and the Government’s Inquiry into mental health and addiction which resulted in the He Ara Oranga report. And most recently, we have heard it again through the public submissions to the Pae Ora (Healthy Futures) Bill.

These have all provided the foundations for the design of a reformed health system.

Transformation of the health system will take effect over time and getting the structure right is a crucial first step.
In the coming months and years, there are five key areas where substantial change will be seen:

Firstly, the health system will honour Te Tiriti o Waitangi.

It will do this by ensuring that Māori are empowered to design, prioritise and deliver health services that better meet the needs of Māori. Māori communities will also play an important role in making sure our health services work for Māori, and the many other New Zealanders accessing kaupapa Māori health services. And that will be better for everyone, because a health system that does better for Māori does better for all;

Secondly, people will be able to get the healthcare they need closer to home. Health services will better reflect community needs and preferences. There will be a strong emphasis on preventing illnesses and other factors that support healthy lives – like whether they live in a warm, dry home;

Thirdly, when people need emergency or specialist care, it will be available, and it will be of high quality. And networks of doctors and medical professionals will work together with community services to educate and keep people well so that fewer people need healthcare in the first place;

Fourthly, we will the huge advances connected technology to provide people with more services in their homes and local communities;

And finally, we will plan for our future health workforce requirements, and provide for the training and development needs of New Zealand’s contemporary workforce of tomorrow so our healthcare workers will always have the skills they need.

As I said, the first step towards transformation is the transition to the new health system structure; and then putting that structure on a firm financial footing. That includes Health New Zealand and the Māori Health Authority being formally established on 1 July, as well as strengthening the Ministry of Health’s role as steward of the health system.

Health New Zealand will be the operational leader of the future system. It will inherit the functions and assets of the 20 district health boards, and will be responsible for funding and commissioning health services, and will own and operate public hospitals. Health New Zealand will have a workforce of nearly 80,000 people. It will become New Zealand’s largest employer.

The design of Health New Zealand will enable us to address many of the issues district health boards faced. A single, national health system will tackle unwarranted variation, eliminate unnecessary duplication, and make better use of our health resources and workforce. It will make better use of the talent and capability we have in the health system by removing that duplication and drawing on skills and capacity of the health system at the local, regional and national level.

A key feature of the new system is the Māori Health Authority. When I announced the structures of the new health system, I said that the Māori Health Authority is a real step towards enabling rangatiratanga in health. It will lead the system’s focus on hauora Māori, and partner with both Health New Zealand and the Ministry of Health. It will commission kaupapa Māori services directly, and co-commission other health services with Health New Zealand. It will be a game changer for Māori health.

The establishment of these two entities heralds the creation of a truly national health system that will be unified, simplified and coordinated.

And the health system will be enriched with the voices of Māori at all levels of decision-making.

Investing in Māori health is a necessary part of making this new system a success. Enabling Māori to play a greater leadership role in our health system will require resources to invest in services that work for Māori, and to grow a stronger base of kaupapa Māori health providers, and the workforce that goes with it.

In Budget 2021, the government invested over $240 million into hauora Māori. In March, I announced how the first $22 million of the Māori Health Authority’s commissioning budget would be spent. In Budget 2022, we have increased the Māori Health Authority’s commissioning budget by a further $168 million over four years.

This new investment will buy more kaiāwhina and kaimanaaki staff, life-course intervention services for Māori whanau and mātauranga Māori solutions for primary care services. On top of this, $69 million will be invested in Māori provider and workforce development.

In addition, the Māori Health Authority will manage more than $1.2 billion over four years of existing funding currently managed by DHBs. This funding covers hauora Māori services and provider and workforce development.
Let me be clear. This is not about creating a separate system, with separate health services for Māori. It is about augmenting a system with voices that should have been permeating through health decision making for decades. Instead, the current structure has meant that those voices weren’t heard, or weren’t heard loudly enough, and it’s resulted in Māori being disadvantaged. It is time to put an end to that.

A crucial part of the reform is that the Ministry of Health’s role will be strengthened.
The Ministry is central to how our health system works. It is the chief steward of the system, and the lead for health across government. The health system cannot operate effectively without this critical role to set direction, to ensure funding and system settings, and to monitor progress and broker support over time.

These reforms are in part about creating the space for the Ministry to truly develop this role, to build new teams and harness new ways of working. And so it is important that we back the Ministry with investment to build its skills and resources over time.

Budget 2022 includes $91.9 million over four years to allow for the strengthening of the Ministry of Health and to build its stewardship role.

BETTER ACCESS TO QUALITY CARE, CLOSER TO HOME
The investment in data and digital will also help increase access to health services, especially for people in rural and remote communities who may not be able to travel to physical appointments.

It’s innovations that see care provided closer to people’s homes that will emerge out of a transformed health system, supported by different ways of doing things.

 

People’s first contact with health services is typically through primary care and community services. Although our primary and community teams do great work every day, they face serious challenges and deficits that stop them playing the full role they could in the health system.

WORKFORCE
Of course the crucial factor in all of this investment and system design is having a skilled workforce.
We need more health workers. Last week’s announcement that we are bringing forward the border opening might help to see more health workers come into the country.

But the need is much longer-term, and we need to take a strategic approach supported by investment.
There are challenges we need to address to make health an attractive employer. Fair remuneration and addressing pay equity are issues that extend across the broad employment settings in the health sector.

As well as supporting our health workforce in primary and community care, we also need to address issues in settings like aged residential care and in-home care in the community.

If we get these things right, they will be better for our workforce, but also better for the people our workforce are there to support.

But addressing these challenges takes time, and they take investment.

We have allocated funding to support the growth of a more sustainable pipeline of health workers – particularly our primary and community care and Māori workforces – with $76m over four years has been set aside to make progress.

And we’re investing $31 million over four years to support innovation in education, training and development for our workforce.
CONCLUSION

There are limits to how much we can spend on health, just as there are to any area of public spending. All investment should be concentrated on the key areas that will bring benefits for people across New Zealand.

We need to invest to address inequity, to develop our future workforce and to ensure people can get the right type of healthcare, when and where they need it.

One Budget does not make a health system transformation. Transformation takes time. But Budget 2022 is about getting the foundations right so we have a solid platform to launch from as we undertake longer-term transformation.

We have a big challenge ahead of us. Reforming a country’s health system is not a t

that a Government takes lightly.

We saw and heard the undeniable reasons why change needed to happen, and why we couldn’t wait and just keep kicking the can down the road.

What we do has to be right for Aotearoa New Zealand. And this health reform gives us the best chance in a long time to set ourselves up for a long-term future with better health for all.
Ngā mihi nui. Thank you very much.