Health

Over $1 billion to increase pay rates and boost healthcare staff numbers

Last year’s Budget saw a raft of changes to the healthcare system – with the consolidation of New Zealand’s 20 District Health Boards into one health body – Te Whatu Ora - Health New Zealand - and the establishment of a new Māori Health Authority. The intention for these sweeping changes was to overcome the inequitable distribution of health services via the postcode lottery, enabling national planning and more even distribution of resources.  

However, one year on and we are yet to see the efficiencies and consistencies that the reforms promised. The global shortage of healthcare workers is not relenting – and healthcare businesses are increasingly stretched in the face of an ageing population and continued challenges from COVID-19. 

How will the New Zealand Government double down on the changes announced last year and ensure an equitable distribution of healthcare services across Aotearoa?  

Budget overview – policy highlights  

The Government has announced today over $1 billion of funding to increase pay rates and boost staff numbers, including $63 million for progressive safe staffing, which the Government says will allow for an additional 500 new nurses. Other efficiencies include $118 million to reduce waiting lists by freeing up inpatient hospital beds. In an effort to help with the cost of living, the Government is also spending $619 million to remove the $5 co-payment for prescriptions.  

The Government has also said that $10 million of savings have been made through the elimination of duplicated functions of DHBs, including from the disestablishment of executive leadership roles. 

Confirmed new policy areas 

Staffing and efficiencies 

• Over $1 billion to increase pay rates and boost staff numbers, including $63 million for progressing safe staffing – allowing for an additional 500 new nurses  

• $118 million to reduce waiting lists by freeing up inpatient hospital beds 

Māori health 

• $20 million to improve health equity for Māori and Pacific peoples  

• $863.6 million total operating to support tāngata whaikaha Māori and disabled people and their families 

• $20 million for COVID-19 immunisation and screening coverage for Māori and Pacific peoples  

Other

• $619 million operating to remove the $5 co-payment for prescriptions 

• $99 million towards winter 2023 health initiatives 

• $2.2 billion to remediate historical non-compliance with holidays act, remediating current staff by 30 June 2024  

Business impacts and considerations  

Rachel Shoebridge, BDO Healthcare Sector Leader, says: 

“It’s great to see the Government prioritising staffing for the healthcare sector – it is crying out for more skilled labour. The increase in pay rates will help NZ be more competitive for health workers on the global scale. The key to improving efficiencies will be using primary care and pharmacies to help alleviate some of the burden on hospitals.   

Meanwhile, the continued focus on improving Māori health outcomes should help create a more equitable health system for all of Aotearoa.”  

Quick tips & questions 

• Have you investigated options to collaborate with other healthcare providers to see what additional services your business could offer? 

• Have you explored the different funding options available to you? It’s a good idea to put a plan in place in case your funding changes at the next General Election. 

• Have you explored telehealth opportunities to help you reach your patients in different ways?  

More information and help available 

You can read more detail on the health expenditure announced today at the Government Budget website here.  

Healthcare in Aotearoa is changing rapidly. New business models, market disrupters and cost pressures are having a significant impact on how healthcare business operate. BDO’s specialist healthcare business advisory team has the knowledge, expertise and resources to navigate this complex and integrated world. We work across the public and private sectors to advise healthcare, pharmacies and senior living organisations on strategy, performance, compliance, risk and governance. Get in touch to find out how today’s Budget announcements will affect your healthcare business.   

For more information on the key issues facing healthcare businesses as well as practical advice on how to alleviate the challenges, view our BDO Wellbeing & Business Performance Index – April 2023 Healthcare sector report here.