Officials advise against change to health budget cycle
Tuesday, 3 February 2026
Officials raised red flags over Finance Minister Nicola Willis’ potential push to make Health NZ’s multi-year funding arrangement to an annual cycle.
Treasury advice warned the move would lead to a “much larger” cost pressure bid than the 2024 Budget, would mean planning deteriorated, would create uncertainty about its final budget and divert stretched Health NZ resources from the Health NZ Reset Plan.
The three-year budget cycle was introduced by Labour as part of its major shake up to the health system, where 20 District Health Boards across the country were replaced by a national entity - Health NZ Te Whatu Ora.
When approached by The Post, Willis said she had received advice on the effectiveness on pre-committing funding to Health New Zealand for extended periods and whether that approach should be continued but no decisions had been made.
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Willis previously told the NZ Herald about her intention to potentially move the health budget to a yearly cycle in Budget 2026, saying she was unimpressed by the current arrangement.
Willis’ office refused to comment further on her position.
Te Whatu Ora’s deficit has ballooned in recent years, with a $1.76 billion deficit in 2023 to 2024, up from $1b the year before.
The overspend prompted then Health Minister Shane Reti to replace the Health NZ board with Lester Levy as commissioner in 2024, with the board reinstated a year later.
Official advice presented to Willis in September stated the multi-year budget had benefits, such as longer term purchasing, commissioning decisions which could deliver efficiencies, better value for money and improvements towards health targets.
Labour health spokesperson Ayesha Verrall disagreed the multi-year budget was behind the deficits, and said Willis was “distracting from the underlying issue”.
“The fact that the budget got out of control under Dr Reti has nothing to do with the fact that Health New Zealand is able to plan its budget out for 3 years.“
Verrall, who was briefly on a district health board, said its annual funding allocations resulted in it living year to year.
“We just couldn't plan ahead, and as a result, the investments we needed to make just couldn't be done, we were always chasing our tail with the deficit.”
She said a one-year budget cycle would prioritise balancing the Government’s books over giving the health system the certainty it needed to plan ahead.
“I'm worried the Minister of Finance's comments about fiscal discipline just means more cuts are on the horizon.”
Health Minister Simeon Brown said he had not been part of any discussions.
“There has been no discussions and no decisions. The Minister of Finance may have some advice.”