Projected Health NZ deficit jumps to $1.8b

Tuesday, 8 October 2024

Health Commissioner Lester Levy has been tasked with turning around the beleaguered agency.

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Health New Zealand - Te Whatu Ora could be in the red by almost $1.8 billion by the end of the financial year, documents from the beleaguered Crown agency reveal, far greater than the $1.4b deficit originally feared.

“Without interventions Health NZ is estimated to continue to lose about $147 million every month, which would lead to a projected deficit of $1.76 billion by 30 June 2025,” according to the documents, which were requested by the health select committee last month.

They were made public on Monday afternoon.

Professor Lester Levy, who took over as Commissioner in July, is tasked with turning this around, leading to thousands of jobs on the line and $3.2b worth of capital projects being reviewed, including the new Dunedin hospital build.

Health New Zealand Commissioner Lester Levy, in his first Parliament appearance, called the agency's issues a 'cocktail' of problems. Appointed to address financial concerns, Levy appeared without key documents. Jenna Lynch reports.

The documents also reference the 2024 deficit of $934m.

“Several measures were put in place during Quarter 4 to offset the expenditure trend, however total savings were insufficient to rebalance expenditure back to budget,” wrote chief executive Margie Apa in a letter to the committee.

In April, Health NZ imposed 14 cost-saving measures, including hiring freezes on vacant non-clinical roles, ends to double shifts for clinical staff, minimising “back fill” when staff were on leave and closing off some vacant roles.

“These efforts continue into the 2024/25 year as part of Health NZ’s reset.“

Health NZ Te Whatu Ora chief executive Fepulea’i Margie Apa.

Front line staff continue to say their teams are also experiencing hiring freezes, though the agency maintains this is only in non-front line roles.

Labour’s health spokesperson Ayesha Verrall said the Government’s claims about financial mismanagement at the agency were still yet to be backed up with evidence.

The documents reveal the agency is spending more money than it has: averaging a monthly expenditure of $2.4b compared to average monthly revenue of just under $2.3 billion.

Verrall said this was more evidence of underfunding and could be explained by “Cabinet withholding pay equity settlements, and having more staff”.

This year’s $934m deficit was revealed in a quarterly report last week, which said the result was, in part, owing to a $529m pay equity settlement payment for midwives, nurses and allied health workers that was not received when it was expected.

The quarterly report also stated, in a footnote, the new savings target was $2b, but Health NZ stated this was an estimate.

The document stated Health NZ planned to provocatively release more information on its financial performance soon.

Health Minister Shane Reti has been approached for comment.

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