NewstalkZB host Mike Hosking, who can usually be relied on to give Prime Minister Christopher Luxon an easy run, did not do so yesterday when he interviewed him about the HealthNZ deficit.
Luxon is trying to use a deficit reported last year by HealthNZ as yet another example of the Labour Government’s profligate financial mis-management.
That political motive was underlined shortly after the Hosking interview when a statement emerged in the name of Health Minister, Shane Reti, except he was described as the “National Party Spokesperson for Health”.
“The deficit of $1.4 billion by the end of 2024/25 is of Labour’s doing, and just like the ferries, Te Pūkenga, Kainga Ora and many other agencies, National is left to do the clean-up job and get our country back on track,” it said.
These politics have their origin Luxon’s announcement yesterday that the board of HealthNZ had been sacked and replaced by a Commissioner, Dr Lester Levy.
But yesterday he said the Government’s actions had been triggered by a deficit that was first reported in March this year.
“Health New Zealand is now currently overspending against budget at the rate of approximately $130 million a month,” he told his weekly post-Cabinet press conference on Monday.
“This is clearly unsustainable and, if carried forward to the next financial year, would lead to an estimated deficit of $1.4 billion.”
But yesterday he said he first became aware of HealthNZ’s financial problems when it reported a 2022-23 deficit of $1.013 billion in its annual report which was published in December but which Luxon apparently saw in October.
In fact, the annual report indicates the deficit was a one-off. As POLITIK reported yesterday HealthNZ took several big hits on its payroll; from pay equity settlements, a big nursing pay increase and the long running non-payment of holiday pay asnd they were what pushed its spending out over budget.
The report set this out.
“Personnel costs are over budget by $1.389 billion with most of this relating to accruals for pay equity settlements completed post balance date ($859m) and, the balance reflects greater than budget expenditure mainly Holidays Act liability uplift, actuarial valuation of Long Service Leave and Retiring Gratuities, interim pay equity payments, MECAs settled above budgeted assumptions, provision for redundancy and costs for funded initiatives,” the report said.
National had obviously, by yesterday morning, decided that its best tactic would be to highlight that $1 billion deficit rather than the $130 million one.
Luxon then went on to Hosking’s NewstalkZB show yesterday seeming to think he was going to get a free hit at HealthNZ.
He began responding to Hosking with an outline of what he considered to be the inefficiencies at HealthNZ:
Luxon: There are 2500 more managers. And it was six years ago, despite having ditched 20 DHBs there are 14 layers of management from CEO to patient. The financial performance you’ve talked about and you know, frankly, you know, we’ve put more money and more people in and then we got worse results on wait times.
Hosking: I get all that. But when were you alerted to the fact that we’re losing $130 million a month?
Luxon: Well, it was actually in October last year.
Hosking: October!!!
Luxon: There was what’s called an annual report, and that identified a $1 billion deficit at that point in time. Within a couple of weeks on December 18, or somewhere round there, before Christmas Shane Reti put in place a crown observer on the board. And then we’ve had the auditor general’s report in March. We’ve got more money in, obviously, in this budget. But what we want to make sure is that we are getting the organisation straight out on the front line.
Hosking: Whoa, whoa, whoa. Why when you knew something was awry in October are we sitting here in July only acting on it now?
Luxon: Yeah. Well, we got back into office obviously at the end of November.
Hosking: Why didn’t you do it on January 5th?
Luxon: Well, we’ve had a series of escalations and we’re doing …
Hosking: (interrupts) A series of escalations at $130 million a month! January, February. March. April. May. June. One hundred and thirty times … You do the numbers. Why are you acting now?
Luxon: We are acting because we’re getting it done. And we’re putting in place a commissioner who’s going to have, you know,
Hosking: (interrupts) But why weren’t you doing it in January? February?
Luxon: Well, we have.
Hosking: You haven’t
Luxon: We’ve been a bit late just before Christmas, in our first few weeks we put in a Crown observer.
Hosking: What? To tell you what you already knew? It was buggered then; it’s buggered now.
Luxon: Yeah, but yeah, you’ve got to have a bit more detail before you make a big change like we’re doing and putting a commissioner in. That doesn’t happen often. When you do that, you want to make sure you’re doing it right.
Hosking: Tell you what mate, If I arrived to run the country in October. And somebody told me there’s $130 million a month being lost; they’d be sacked on the spot.
Luxon: We started in early December; you know that we’ve worked our way through.
Hosking: Alright I’ll give you this year You have had seven months this year to do something You’re supposed to be fixing this place up. You’re too slow.
Luxon: Oh, come on, come on, give me a break.
Footnote: Why didn’t Luxon simply tell Hosking that the $1 billion deficit was a one off and not related to the current deficit and that the $130 million a month only appeared in the March Quarterly Report from Health NZ.?
