Balancing options in a less-than-bumper budget

A headline investment of $8.15bn in the New Zealand health system over the next four years should not disguise just how challenging this settlement will be for sector leaders. While the $2.8bn of cost-pressure funding within the total will go some way to addressing challenges over the next two years, it isn’t a silver bullet solution.

As the health sector in Aotearoa New Zealand grapples with current issues relating to demand, workforce, infrastructure, and productivity it can be tempting to think that politics, geography, and culture make them unique and localised. In fact, the sustainability challenges and opportunities we face are often shared across national borders. Our added context, however, is that this Budget will shape the next steps for a sector two years into major structural reform.

The new Government has been clear about containing public spending. The immediate focus, therefore, will be responding to inflationary pressure while facilitating service improvement and meeting the very clear performance expectations.

Across the sector, demand and cost are running hot while labour shortages - driven by a lack of past strategic investment - place compounding pressure on the bottom line. For many independent providers, these challenges are just as acute as they are for Te Whatu Ora - Health New Zealand. The level to which today’s budget allows for stabilisation within the sector, whilst still maintaining room for strategic investment, will be a key area of interest.

In the longer term, strategic choice is vital. The 2024 Budget isn’t a bumper year for health sector capital, despite the ongoing risks of an aged asset base.

Some allowances tagged for digital modernisation have been trimmed back within the capital settlement for health. Sector investment will, by necessity, need to prioritise productivity. Modernised care delivery must be characterised by ambitious digitisation and prudent investments in contemporary clinical equipment and technology. The world’s leading health systems are fully focused on this, democratising care delivery and shifting the balance of control between patients and the clinical services that support them.