Budget 2020: Health


Budget 2020: Health

Moving forward with COVID-19


“Your livelihood or your life” – this has been of the most difficult choices in managing health in the face of COVID-19. Many Non Pharmaceutical Interventions (NPIs) to address the pandemic have negative consequences: shut-downs have an adverse impact on the economy, postponement of elective surgery affects non COVID-19 related health and wellbeing, lack of Personal Protective Equipment (PPE) reduces disability support services and access to community care – and most of all, the frail, the elderly and the lonely are potentially left isolated and in a state of despair. These difficulties and others make the implementation and maintenance of NPIs over the long term impossible.

When we look at our major trading partners and the respective trade-offs they have made with regard to the economy versus society, these can be clustered into four key types of public policy intervention models, as illustrated below:

Click to enlarge

Click to enlarge



As we recover from the acute phase of our outbreak, New Zealand’s policy must be designed to ensure good health and wellbeing and be sustainable over the necessary periods of time. As has been pointed out by many, including our Prime Minister, we do not want to yo-yo in and out of lockdown.

This approach means picking through a myriad of issues, ranging from comprehensive testing, the advent of home-based self-testing kits and the inevitable flood of vaccinations, medicines and treatments that will eventually be made available. It will hopefully also drive an acceleration of digital investments in our healthcare sector in particular – and the economy as a whole. The inadequacies of manual and fragmented processes have been brought to light not just across public sector entities, but also many commercial and service-based parts of our economy.

Globally, we see governments and health systems transition into risk-based strategies, balancing a relaxation of restrictions in the social and economic environment with continued effective health protection. Work that we are currently conducting for the World Economic Forum and World Bank on analysing the different policy interventions and trade-offs across countries, paints a fascinating picture of the balancing act between economic, healthcare and social consequences.

It is important that these transitions are evidence-based and supported by robust modelling and analysis, as opposed to being driven by ideology. There is an urgent need for good, reliable data, as well as transparent forecasting and modelling analysis, so that all parts of New Zealand can make informed choices around how they move forward.

So where does that leave us with Budget 2020?

  • District Health Boards are getting an additional $3.9 billion over four years and a one-off $282.5 million to catch up on elective surgery after the COVID-19 disruption. Much non-urgent surgery has been suspended during the lockdown and even cancer screening and treatment has had to take a back seat during this time. A more sustainable funding stream for DHBs over multiple years will be welcome, as will funding to play catch-up on the deferred medical care accumulated in recent weeks
  • Disability Support measures costing over $833 million over five years were announced in the Budget. This funding is about ensuring there is access to support for those with high needs. This new funding brings annual funding to $1.7 billion. The sector has been neglected for some time, so seeing a more sustainable funding path will be very welcome by service providers and NGOs in particular.
  • Pharmaceutical spend is getting an increase of $160 million. This comes on top of a $35 million injection for essential medicines and supplies for the COVID-19 crisis. In the past, drug buying agency, Pharmac, has been criticised for New Zealand paucity of cancer drugs in particular. Newer and more expensive drugs are typically beyond the financial reach of ordinary Kiwis. The increased funding will secure medicine supply while at the same time allowing scope for Pharmac to continue expand the range of funded treatments where possible.
  • Mental health has received an additional $40 million of funding for 100 new health practices to provide the mental health and addiction services already available at 22 sites across the country. Last year, Minister David Clark signalled a big investment into primary mental health and addiction services. In this new model, Health Improvement Practitioners, peer support workers and counsellors offer meaningful services to clients who cannot have their needs met within the confines of a short GP consult. This alternative service model provides support services as an adjunct to traditional primary care and makes use of an emerging and alternative workforce.
  • Online tools for mental health and wellbeing have also received increased investment. Needless to say, during a pandemic there are limitations on traditional face-to-face counselling models; however, increased digitisation can help address our workforce capacity issues and improve accessibility of services – particularly in rural areas. Additional funding has provided access to a range of free online tools: Mentemia was downloaded 35,000 times, over 1,000 people signed up for the Staying on Track e-therapy course, nearly 1,200 people signed up to Melon and the Getting Through Together website had almost 35,000 visitors. These numbers show us that there is clearly a need for online tools as an option for some to help maintain their mental health and wellbeing. 


This Government should seriously consider where and how the structure of our healthcare system has hindered, versus helped, our pandemic response. Healthcare workers, social workers and our disability support workforce have borne the brunt of our immediate response to the crisis – in terms of disruption, personal risk and safety as well as workload and stress. This is also evidenced in our relatively high proportion of infectious cases amongst healthcare workers.

We hope the Government examines the lessons learnt and ensures that lasting changes are made to resourcing, governance and fragmented processes and systems. Not only do we need to make future pandemic management easier, but we also need to deliver lasting improvements at a health-system level, by commissioning and leveraging digital technologies properly.

Overall, the healthcare Budget 2020 invests $5.6 billion in operating expenditure and $755 million in capital expenditure – where the operating expenditure tends to be primarily people-driven. Unfortunately, these announcements around funding only solve part of the problem. New Zealand already had chronic workforce shortages in the sector prior to COVID-19. A disproportionately large part of our workforce is engaged in health and human service activities in the New Zealand economy and MBIE productivity research indicates it is not a very productive part of our economy. For decades we have thrown more people at the health system, instead of reengineering it and using digital tools to drive better access, better productivity, better outcomes, and most importantly of all, a better patient experience.

Expecting a worn-out workforce with colleagues on stand-down, under isolation or on sick leave to suddenly catch up on the surge of backlog work is a big ask. It is also highly probable that there will be future flare-ups and surges – as we have seen with the other Coronavirus classes. We need to build our resilience for the times to come and the elasticity across people, processes and digital technology, to deal with future surges that we can and should expect.

Citations and sources: 

Mental Health Data: Ministry of Health Drug & Addiction Update 29 April
Productivity: MBIE Labour Market Dashboard June 2017

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