Budget 2026 falls $300 to $600 million short of funding the health system to maintain existing services, according to an analysis from researchers at the three large public sector health unions.
In a new report, ‘Budget 2026: A Managed Decline for Health’, the Association of Salaried Medical Specialists, New Zealand Nurses Organisation and Public Service Association argue “the crisis in the health system continues, and nothing is being done to address the historic deficit or acknowledge the decline in the health of the working age population”.
The findings are based on research by advocacy group Kaitiaki Hauora ahead of the delivery of the Budget. In that report, Victoria University of Wellington experts Dr Bill Rosenberg and Dr Jacqueline Cumming estimated the Budget would need to provide $1.405 billion for existing services just for the health system to stand still.
That takes the health system funding for 2025 and adds increased costs due to inflation, wage increases, and a population that is both ageing and growing.
In the union report, provided exclusively to Newsroom, economist Andrea Black of the Association of Salaried Medical Specialists looked at whether Budget 2026 actually met that target.
While the headline figure of a $1.45 billion gross uplift in funding for the health sector suggested the Budget had hit the mark, digging deeper suggested otherwise.
“When we drilled into it, we found that there’s a bunch of old money that’s come out. Bill and Jackie’s number was, ‘this is what you need, absolute bare minimum, in addition to what’s already existing there’ and it doesn’t assume any new services,” Black said.
“So there’s about $300 million of old money [cut from the Budget] and then the Nurses Organisation has found that there’s about $300 million of new services that has been committed to over the last year. So that’s where we’ve got it being between $300 and $600 million short.”
In other words, time-limited funding that expires this year has been booked as savings, meaning the net increase in health spending overall is just $1.1b – that’s $300m short.
In addition, another $300m is going to new services. That’s money that also isn’t meeting cost pressures from inflation or an ageing population for already existing services, leaving the system $600m short overall, she said.
The Ministry of Health disputed aspects of the union analysis. Caleb Johnstone, the group manager for strategy and funding, said the ministry hadn’t been able to fully analyse the union report but “there are a number of financial statements and assumptions made in the report that the Ministry would contest”.
“Annual uplifts are built into Health New Zealand’s baseline funding, meaning that the uplifts across the three Budgets are cumulative. The amount provided is based on a model that accounts for demographic change and price increases. If we re-ran the model now, the cost pressure uplift in 2026/27 would have been lower, which means that additional funding has been provided,” he said.
“The new initiatives mentioned in the report is additional funding in addition to the cost pressure uplift.”
However, the unions pushed back, saying cost pressures were still not being met.
“There’s not enough money going into health to meet patient need. The Government painted the picture that health was the winner of the Budget on the day, but this analysis reveals the reality of those Budget numbers and that inadequate funding is leading to a deterioration of the health system,” said Nathalie Jacques, a senior researcher with the Nurses Organisation.
The Government had undermined its own plan to meet cost pressures by reallocating funds earmarked for that purpose to new initiatives, she added.
In Budget 2024, the Government set aside $1.37b in each of the next two Budgets for cost pressures. That figure would have basically met the $1.405b the unions say is needed to keep delivering existing services.
However, new initiatives have been effectively funded from this pool, Jacques said.
“What we saw tracking the Minister of Health’s announcements for health initiatives and health spending in the last financial year was that, despite no new money coming in, he announced at least $300 million of initiatives that came from somewhere else in the health budget,” she said.
“The upshot is there’s no new money, there’s not enough staff and the deepening impact on patients who are waiting too long or going without essential care because we keep pillaging one part of the health system to plug a hole in another part of the health system.”
Johnstone, from the ministry, said new initiatives were funded on top of the $1.37b in cost pressures funding.
Responding to specific parts of the analysis, he said there had been no cuts or reduced cost pressure funding in Māori health. While the total spend in 2026/27 was set to be lower than in 2025/26, that was because that year had included additional unspent funds carried over from 2024/25.
Newsroom sought comment from the minister’s office on the report, including the expiry of this time-limited funding in areas like child immunisation.
“Funding for Immunising our Tamariki has not been cut – worth fact-checking union claims before putting them straight to the minister, and treating the rest of this report with the same scrutiny,” a spokesperson replied.
Black, who co-authored the union report, said the underfunding shouldn’t be surprising because it’s accompanied by declining tax revenue.
The health system’s primary source of revenue was taxation, and the Government was not collecting as much as ministers had expected before the election. “While the continual degradation of the public health system is alarming, it shouldn’t be surprising,” she said. “This is the public services that we are paying for.”
Note: This article has been updated to add comment from the Ministry of Health.