Health and Taxes

Published in The New Zealand Herald, 24th. March 2022

It is said that there is nothing certain in life except death and taxes. In our current political moment perhaps that could be amended to “health and taxes” since, within a week, we have had a senior medical leader make headlines by arguing that the health system is drastically underfunded and the leader of the opposition argue for major tax cuts.

Is the health system underfunded and can we afford major tax cuts? The answer to both questions is “no”.

Not a day goes by without some advocacy group or health professional leader arguing for more investment in health, and yet by international standards New Zealand is not underfunded. The proportion of our GDP going on health – both public and private – is about 9%, which is where you would expect us to be given our standing in the OECD. This is not to say that we could not pay for a lot more health care if we wanted and could afford to. But the problem is that, given other calls on the taxpayer, we are forced to make choices.

How about tax cuts? Their quantum is similar to those presented by the outgoing National government in the 2017 election – about $3 billion – and they would need to be paid for by a mix of cutting public services, growing debt, or encouraging private provision. According to Treasury’s future projections, National Superannuation and Health will require by 2061 either an increase in tax rates (from 30% to 38%) or a nearly sixfold increase in debt (from 34% of GDP to over 195%), or extensive privatisation, or some mix. The extensive tax cuts on offer at the moment greatly narrow our policy options for the future.

While it would be nice to have more money in health, and this will in due course come with the demographic ageing of society, perhaps more important would be a greater bipartisanship on the sector and on its long-term funding trajectory. At present the sector oscillates between periods of stringency and periods of plenty as the political pendulum inevitably swings. But it would be nice if we could have something in health like the recent bipartisan consensus on urban densification. Perhaps a common commitment to match an inflation- and demography-proofed target for health?  

For example, in our briefings on the Auckland DHB it is evident that great chunks of the entire IT infrastructure have been at the end of their useful life, in most cases with the original vendor no longer supporting the package. This is a legacy of cost-crimping, where capital and IT infrastructure investment can always be put off to another day.  And this includes key national systems, like the immunisation register.

Now the Health Reform Transition Unit has just announced $385 million on digital infrastructure. And there are moves on capital investment. These will be rarely applauded by the voting public, but they are essential building blocks to an effective health system.

The Covid pandemic adds another dimension of complexity to the debate. Again, tax cuts at a time of global and national health crisis seem hard to justify. But, by the same token, we should not be spending dollops of money preparing the system for the next once-in-a-century health crisis either.

Yes, our hospitals have been under strain, but much more evident is how our non-hospital resources need attention. Family doctors need help with what the Americans call “physician extenders”; that is, physician assistants, nurse practitioners and practice nurses who can help carry the load if we are going to concentrate, as we have been urged by the Health and Disability Review, on keeping people out of hospital with effective community care.

There is also the great potential for extending care in the home, rather than, or in addition to, admission to hospital. It goes without saying that we need IT systems that are seamless and can communicate across sectors. Something like the NHS Gateway and the NHS App might be worthwhile innovations.

The pandemic has also brought to the fore shortcomings in our “business as usual” approach in the New Zealand health system. Isn’t it about time we had more hospital services available on a seven-day-a-week basis? And how about family doctor practices opening on Saturdays, as planned in the UK? We have also had to encourage health occupations to blur their boundaries and concentrate on what they are competent to do rather than their conventional scope of practice, most successfully in the army of vaccinators, but also in hospitals operating under extreme staff shortage and duress.

The pandemic has been a stress test for our health system, and perhaps for our political system too. Let us see if we can forge a new consensus, rather than reverting to the conventional tropes of adversarial partisan contest.

Peter Davis, elected member, Auckland District Health Board.

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