A $1.4bn turnaround job for Health NZ

Is the mega-agency overspending or just underfunded?

Mōrena, and welcome to The Bulletin for Tuesday, July 23.

In today’s edition: Kamala Harris kicks off her campaign for the White House, the abuse in care inquiry will be made public tomorrow, and a warning after a contestant on a reality show killed and ate a weka. But first, why the government is demanding change at Health NZ.

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‘The strongest ministerial intervention available’

Christopher Luxon likes to talk about turnaround jobs, and this week he’s promised another one. At his post-cabinet press conference last night, the prime minister and health minister Shane Reti announced the board of Health NZ would be sacked and replaced with a commissioner, as The Post reported here. That role will go to professor Lester Levy, who was recently appointed as the agency’s chair. “This is the strongest ministerial intervention available under the Pae Ora Act and not a decision I have taken lightly, however the magnitude of the issue requires such action,” said Reti. The health minister laid the blame squarely at the feet of the former government’s decision to consolidate the country’s district health boards back in 2022, saying this resulted in “an overly centralised operating model, limited oversight of financial and non-financial performance, and fragmented administrative data systems which were unable to identify risks until it was too late”. But how much blame can fairly be levelled at Labour?

How did we end up here?

It’s not a huge surprise the government has taken action to shake up Health NZ. National has been consistently critical of Labour’s moves to overhaul the health system, though much of this furore was targeted at the (now-scrapped) Māori Health Authority. Those working in the health system haven’t been hugely positive, either, as this RNZ report from last year illustrates.

The signs of a major shake-up have been visible for some time. Back in 2022, Luxon, then opposition leader, claimed the creation of Health NZ would lead to a “mega bureaucracy” and not improve the state of our country’s health, views that he reiterated yesterday. Act’s David Seymour hinted at yesterday’s announcement before the weekend while serving as acting prime minister, reported the Herald’s Adam Pearse. In April, Health NZ’s chair Karen Poutasi resigned after less than a year in the role (her tenure had followed that of Rob Campbell, who was sacked by the last government). Lester Levy was soon brought in to replace Poutasi. Ian Powell argued for Newsroom that Levy was “made for” Luxon’s style of business politics, claiming he was backed by Treasury (a suggestion the department disputed). 

In recent weeks, the number of sitting board members at the agency had dwindled down to just two. Some, like former National MP Amy Adams, had opted not to seek reappointment at the end of their term. But others, like Wellington GP Jeff Lowe, left the board more than a year early.

The new commissioner’s challenge

In the months since last year’s election, the government has made a point of tightening its belt across the public sector. Despite this, Reti, at yesterday’s press conference, said Health NZ was heading for a $1.4bn deficit if things didn’t change. As Stuff’s Bridie Witton reported, the health minister claimed the situation at the agency had worsened in recent months, and Health NZ was now “overspending at the rate of approximately $130m a month.” But, questioned Rachel Thomas for The Post, has the agency been overspending or is it just underfunded? Either way, it illustrates the size of the challenge the new commissioner will face, especially given the tight fiscal environment the government has already forecast ahead of the 2025 budget. David Seymour said last week that work was already under way for next year, and it’s fair to assume yesterday’s announcement will have factored heavily into that – as will the recent (high cost) Pharmac boost unveiled at the start of the month. Politik’s Richard Harman, writing after budget day, predicted the next round of spending cuts could be deeper than what we’ve seen already. Perhaps this is just the beginning.

Against the backdrop of all of this has been growing concern over Health NZ’s ability to deliver on its core function: health. Before the weekend, as RNZ reported, the government was accused of shortchanging GPs, while The Press reported on staff shortages leading to patients being turned away. There were also disputed reports over a frontline hiring freeze. Luxon and Reti made it clear this week their concerns were strictly with Health NZ as an agency, but nevertheless, frontline services could feasibly suffer as a result of cost cutting measures.

How has Labour responded?

Considering the last government was blamed for the current mess, it’s worth hearing how Labour has responded. RNZ reported that former health minister Ayesha Verrall said the government’s claims were untrue. "A blowout in the financial year that they are responsible for is their responsibility,” she said. That’s part of the story. As Newsroom Pro’s Marc Daalder (paywalled) argued, both governments can fairly share some of the blame. Health NZ should have had proper financial monitoring systems in place and Labour should have made sure of this while in government. But, says Daalder, Health NZ was running a surplus when Labour was in charge and now it’s not. “It is critical for the government to begin to acknowledge when it has erred, rather than reflexively point the finger elsewhere, or it will rapidly lose the trust of the public that elected it,” he writes.

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Kamala Harris starts her campaign for president

Vice president Kamala Harris has picked up a swag of endorsements after announcing she will run for the Democratic presidential nomination in the wake of Joe Biden’s decision not to seek a second term. The New York Times’ Peter Baker (republished for Herald premium subscribers here) reported that Harris was undoubtedly the frontrunner to score the nomination, with other possible contenders like Gavin Newsom announcing they would not be running. Speaking publicly for the first time since yesterday, Harris thanked Biden for his service and called his legacy over the past three years “unmatched”.

In The Post this morning, Luke Malpass writes that Harris’s campaign will breathe new life into the race for the White House, noting that – until now – many of the questions circling around Biden had nothing to do with policies, platforms or ideas. “It has been entirely about age and everything associated with it: mental acuity, cognitive, physical wellbeing and the ability to serve another term.”

Meanwhile, and this may only be of interest to a handful of readers, I enjoyed this CNN piece suggesting the most important endorsement for Harris may have come from Charli XCX.

• On The Spinoff: Toby Manhire on the “glimmers of inspiration” for Kamala Harris from Jacinda Ardern.

PM to deliver formal apology to victims of abuse in care

After years of work, the 3,000 page inquiry into abuse in state care will be released publicly tomorrow. Prime minister Christopher Luxon says he’s read about half of it so far, reported Stuff’s Glenn McConnell, describing it as “horrific and harrowing”. And, he confirmed, he will lead a formal government apology to victims of abuse in November this year. We’ll have comprehensive coverage of the inquiry’s findings when it’s released tomorrow, along with reactions throughout the week.

Screen therapy: films that can guide us through grief

What can movies provide in the face of death? The first: simple escapism into another world that feels less heavy to hold. The second: the chance to see our own grief and loss held to the light, a reminder that others are holding their own strange and heavy world, too.

For a round up of movies that provide a bit of both, click here. (sponsored)

Click and Collect

• The Herald’s Michael Morrah reports on two women who say they were abused in Oranga Tamariki care calling for the agency to be stripped of its responsibilities.

• Newsroom’s Emma Hatton looks deeper at the results of the Tauranga election after only 30% of the city turned out to vote.

• DOC has issued warnings after a contestant on an American reality show filmed in New Zealand killed and ate a weka.

• Christopher Luxon may have to step in if his ministers keep ignoring cabinet manual guidance about respecting the judiciary, a legal expert says.

• ICYMI: Our first Death Week feature looks at New Zealand’s struggling organ donation system. It’s well worth five minutes of your time.

• For his latest Windbag column (which is now a subscriber newsletter), Joel MacManus looks at the pedestrian crossing problem on Thorndon Quay.

The right to find joy and love in our clothing

"The Industrial Revolution was kicked off through textiles, but what textiles have been for us historically is about ancestry, meaning, who we are, where we come from, how we relate to each other. Clothing was very, very meaningful."

In this piece for Art Work, Sam Brooks speaks with Steven Junil Park (6x4) about his creative practice making functional objects and textiles. Read it, here. (sponsored)

Right now on The Spinoff

Preyanka Gothanayagi profiles favourite Wellington restaurant Little Penang. I consider the evidence that Christopher Luxon is a political grim reaper. Eda Tang examines what climate change could mean for growing crops like bananas and coffee beans in New Zealand. Liam Rātana writes about how the country's oldest Māori trust board is going. Here are all the new movies and TV on streaming services this week.

That’s it for today, thanks for reading. I’ll see you back here tomorrow morning.

Let me know in the comments, or get in touch with me at thebulletin@thespinoff.co.nz, if you have any feedback on today’s issue or anything in the news.

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