A new report says New Zealand’s health spend fell behind that of 16 comparable countries from 2013.
Photo: Unsplash / RNZ
Government used 2018 data and included GST in “misleading” health spending claims – report
New Zealand’s health spend fell behind that of 16 comparable countries from 2013
Senior doctors’ union says underfunding explains staffing shortages and ballooning wait times for patients
Health Ministry says it’s working on improving data reporting
Health Minister Simeon Brown says “record investment” is delivering better health outcomes for patients.
Government claims that New Zealand’s health spending outstripped the OECD average were “misleading” because they were based on old data and included GST, Auckland University research has found.
The health financing and expenditure report – commissioned by the Association of Salaried Medical Specialists – reveals the Health Ministry stopped reporting health spending to the OECD seven years ago.
“Data on New Zealand health expenditure has become increasingly unreliable for comparisons with other countries, as the Ministry of Health has not made submissions to the OECD since 2018 and made provisional returns from 2011 to 2018.”
Professor of Health Policy Tim Tenbensel, who co-authored the paper with Professor Paula Lorgelly, the Chair in Health Economics, said New Zealand was the only country not to have submitted its results to the OECD.
“The OECD estimated the New Zealand government spent 9.15 percent of GDP on health in 2022 and 8.83 percent in 2023.
“However, our research shows when OECD over estimates and the temporary impact of Covid-19 are adjusted for, spending was more likely around 7.5 percent of GDP in 2022 and 8.15 percent in 2023.”
The Covid-19 “bulge” in health expenditure occurred one to two years later in New Zealand than other countries, which meant the figures for 2022 were especially flawed.
“The problem is the Ministry of Health uses the OECD data when it briefs incoming ministers, and in public communication. This is highly misleading.”
At the end of August, the Health Ministry removed the claim from its website that New Zealand’s total health spend (including public and private) was 11 percent of GDP, above the OECD average of 10 percent.
The new research found New Zealand’s health spending as a percentage of GDP shrank compared to 16 other countries between 2013 and the start of the Covid-19 pandemic.
Tim Tenbensel.
Photo: Supplied / University of Auckland
The gap was even worse when they removed Goods and Services Tax (GST) from the equation, Tenbensel said.
“New Zealand is the only country that applies GST to health.
“When the Ministry of Health did provide figures to the OECD on how much the government spent on health, they added the GST component to that, even though it wasn’t real.
“There are good reasons for that – if you want to compare public and private expenditure, it makes sense to do that.
“But unfortunately it has the effect of inflating what the OECD says we spent on health, so that issue goes way back.
“People may ask ‘Does it matter that we spend less of our GDP on health?’ and we say yes, because the government has made that claim and it can’t if it hasn’t provided the data.”
The difference of even half a percent made a massive difference to health spending, he said.
“One percent [of GDP] is a bit over $4 billion at the moment, so it is a lot. Even if the figures are half a percent over-estimated, that’s $2b a year.”
‘Scrimping’ on health leading to staff shortages and wait time blow outs – union
Association of Salaried Medical Specialists senior policy and research advisor Virginia Mills said the report was further proof the health system had been systematically underfunded.
“Those OECD figures didn’t look right to us, we’d been asking the ministry about this for a couple of years, but they continued to use it on the website, and it kept making its way into briefings to the minister and public statements.
“This matters because we need to know how we compare to other countries. It’s just one part of puzzle because obviously we can see the health system underfunded in the staff shortages and ballooning wait lists.”
The union’s own post-Budget analysis found the health system needed at least an extra billion dollars every year for four years to catch up, she said.
“And it looks like we needed to be doing that from 2013, just to keep up with those others countries.
“That was happening in the lead up to the pandemic, so when Covid arrived the system was already depleted.
“The extra investment the government has made in health in recent years is only to cost pressures. It’s not increasing services, in fact it’s barely enough to stand still.”
Health Minister responds
Health Minister Simeon Brown.
Photo: RNZ / Marika Khabazi
Health Minister Simeon Brown did not directly respond to RNZ’s questions about whether he was aware that the Health Ministry had not submitted data to the OECD since 2018, and if he could therefore be confident in how much funding the health system had received in real terms, and whether it was enough.
In a written response, the Minister said Budget 2025 provided a 7.4 percent increase in funding, or 6.2 percent per capita.
“This record investment is delivering better health outcomes for patients as we deliver on the governments five health targets.
“An example of this delivery is our Elective Boost, which has delivered over 16,000 additional procedures meaning faster treatment for life changing surgeries such as hip replacements and cataract removals.”
Since the coalition government took power, Health NZ’s front-line had been boosted by more than 2100 nurses and 600 doctors, he said.
“We are building a stronger health system that delivers more and meets the needs of a growing New Zealand.”
Health Ministry working on better data reporting
Health Ministry’s deputy director-general strategy and policy, Ruth Isaac, said work continued with other organisations and OECD officials to improve data collection and collation.
“We are actively working on completing the System of Health Accounts, which is a specific report requested by the OECD for countries to supply standardised health expenditure to make cross country comparisons.”
It was “a complex undertaking” requiring information about all public and private health services, which was not routinely collated and that was why the ministry had not provided a System of Health Accounts return since 2018, she said.
New Zealand provided other data to the OECD about health outcomes and the use of health system resources, including non-communicable diseases, deaths, hospitals and hospital beds.
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