Health minister, Labour spar over who ‘manufactured a crisis’ at Health NZ
Tuesday, 3 December 2024
Health Minister Dr Shane Reti and Labour’s health spokesperson Dr Ayesha Verrall have locked heads in a fiery exchange over the financial problems at Health NZ - Te Whatu Ora.
Reti was appearing before the Health Committee for Scrutiny Week, which is intended to allow cross-party politicians to hold ministers and public sector leaders to account in a public forum.
Verrall kicked off questions by challenging the minister on the difference in the predicted deficit from the embattled Crown agency, which has just been revised from $1.76 billion to $1.1b for this year in Health NZ’s annual report.
Verrall accused Reti of cooking the books, claiming using a higher number to justify cuts was “reckless management of public health services”.
Reti turned the tables: “What was reckless was not having an operating model or internal monitoring framework as declared by the auditor general when he pointed this out year on year on year from 2022 … that then meant Health NZ was unable to accurately account for the costs until it was too late.”
Verrall said: “You stood on a podium earlier this year, fired a board, appointed a commissioner, started a reign of health cuts saying there would be a $1.6b to $1.8b deficit. That is not true. Did you manufacture a crisis to justify your cuts?”
Reti fired back: “No. You manufactured the crisis and what we’ve needed to do is actually needed to fix it. $1.4b was the deficit as we extrapolated from March, it’s now turned out to be $1.76b as we’ve got amongst it. This is not manufactured, this is real and the auditor-general can see that.”
But Reti and Verrall appeared slightly confused on the numbers.
The first number revealed about the predicted deficit by June 2025 was $1.4b. This was the widely referenced ‒ and widely challenged ‒ figure when Reti appointed Professor Lester Levy as commissioner in July. That then jumped to $1.76b in October, and has now been revised to $1.1b.
Why Reti was still quoting the $1.76b figure in the Health Committee is unclear given he said his office has had the annual report for more than a week.
Verrall also accused Reti of being “out by a billion dollars”, which is unclear given there is only a $660m difference between the original deficit and the latest one.
Verrall said the lateness of the annual report was frustrating, as Health Committee members had only just seen it: “This is an unprecedented level of secrecy on public spending.”
Health NZ warns cuts will continue till 2027
Health NZ - Te Whatu Ora said it was making major progress on savings, but is not expecting to be back to budget until June 2027.
This target has been pushed out by a year from the originally planned two-year reset, initially intended to have it break-even by June 2026.
In its just released annual report for 2023/24, Health NZ chief executive Margie Apa said a revised predicted $1.1b deficit by June 30 2025, was “significantly lower” than the $1.76b deficit originally predicted, but there was more work to be done and it would take longer.
“Some of the significant changes made in recent months are having the desired effect, but it is clear further change is needed to live within budget.”
Apa said the significant changes made in recent months were having the desired effect, “but it is clear further change is needed to live within budget.
“That is why we are also signalling today a more realistic timeframe to do that within.
“We have revised our reset timeline and will be implementing our cost reduction plan over three years, to get us back to budget by the end of the 2026/27 financial year.
“By making cost reductions over a longer timeframe, we can implement change without compromising our focus on delivery of health targets and mental health and addictions targets.”
Apa also said the agency ended the last financial year with an audited deficit of $722 million ‒ also much lower than its unaudited deficit of $934m.