Budget 2024: Why does primary care miss out on major funding?

Factor in population growth and increased labour costs, and that figure really amounts to treading water. Clearly, primary healthcare advocates are very disappointed and looking to cast blame

Every year, the primary care sector looks to the Budget for the shot in the arm it so desperately needs, and every year, it is disappointed. Why does the case for a significant funding boost always seem to fall on deaf ears?

There is little doubt that primary and community health services are significantly underfunded. As the Wai 2575 process thoroughly showed, the Māori health provider sector gets much less than its fair share. Very few health sector interest groups or commentators are disputing either of these claims, and neither is health minister Shane Reti.

However, it’s clear that the National-led Coalition Government’s first Budget is not the circuit-breaker many in primary healthcare had hoped for. Instead, it marks a broad continuation of the trajectory under the previous government – annual increases in the ballpark of 4–5 per cent. Factor in population growth and increased labour costs, and that figure really amounts to treading water. Clearly, primary healthcare advocates are very disappointed and looking to cast blame.

Some ire has been directed at Te Whatu Ora for underestimating the cost of fixing the problem in their representations to the Treasury. Don’t blame it. In the intricacies of intra-governmental budgetary bids, asking for an extra billion or two would be regarded as a highly ambit claim. It would seriously dent the organisation’s credibility in Wellington, especially under a government looking to restrain public spending.

So, is Treasury the problem, then? It’s the Treasury’s job to play the Grinch, as no one else in the health policy ecosystem is interested in that thankless task. It is not known for supporting billions of dollars of increased expenditure to address specific policy problems, even on a good day.

Perhaps we should sheet responsibility home to Dr Reti? Some in the primary healthcare sector had invested hope in his election promise to “implement” the Sapere report. In fact, the report contained no recommendations to be implemented; it was simply a document that aimed to define the extent of the problem.

Many (including other ministers) might argue that Vote Health should consider itself lucky when most other sectors are getting no increases or going backwards. In the context of the election result and coalition agreement, expecting any health minister to achieve more than 4–5 per cent increases per annum is tough. Under the previous National-led Government, even the influential Tony Ryall didn’t manage that.

Perhaps the circuit breaker could be engineered by reorienting spending priorities within Vote Health? That’s certainly not going to happen in the next three years, if ever.

Budget documents reveal that 49 per cent of Vote Health will be spent on hospital and specialist services, 3 per cent on Hauora Māori health services and 31 per cent on “primary, community, population and public health” services. (Of the rest, 5 per cent goes to pharmaceuticals and less than 1 per cent to the Ministry of Health. The remaining 11 per cent goes to capital costs (ie, hospitals) and remediating the Holidays Act.)

These proportions are the product of history – no more, no less. Within its own budget, Te Whatu Ora has little, if any, scope to shift resources out of hospitals and into primary, community and Hauora Māori services.

That’s because Budget 2024 has set the proportions for hospitals, primary and community, and Hauora Māori in stone within Vote Health for the next three years. It may be that Dr Reti and/or Te Whatu Ora have some scope in boosting funding for the Māori and Pacific provider without sign-off from Cabinet. Any such boost could only come from within the primary and community services funding envelope. No government and no budgetary process ever starts with a blank piece of paper. For policy researcher Frank Baumgartner, who visited our shores recently, the best way to understand public budget changes over time is in terms of “punctuated equilibrium”. In any given year, the overwhelming majority of major government expenditure items only change by small increments. But occasionally a specific policy issue has its time in the spotlight and attracts a significant boost.

The term “punctuated equilibrium” is borrowed from evolutionary biologists such as Stephen Jay Gould. Evolution mostly moves slowly, but occasionally, a meteorite hits Earth and wipes out dinosaurs. Budget punctuations occur a little more frequently than in biological evolution, more like once in a human generation.

Professor Baumgartner and colleagues’ insight was to show the tight link between budgeting and high-level policy agenda change in the US. In Aotearoa, this boils down to the fact that the circuit breaker is only ever going to come from Cabinet.

The last time we saw a nonincremental funding injection to primary healthcare was in the 2002 Budget. Health minister Dame Annette King clearly had the backing of prime minister Dame Helen Clark and finance minister Sir Michael Cullen to fund the Primary Health Care Strategy. Whether governments are expansionary or belt-tightening, there is usually only room for a minimal number of big-ticket items. In Budget 2024, there was only room for tax cuts.

Going through the Budget “line-by-line” only claws back peanuts. This is not to underestimate the pain Budget 2024 will inflict on services such as problem gambling or the serious dent in the ministry’s policy capability caused by an 18 per cent cut. Such savings wouldn’t go close to paying for a fit-for-purpose funding boost for primary and community services.

So, the political challenge for the primary healthcare sector is to convince prime minister Christopher Luxon, finance minister Nicola Willis, and the rest of Cabinet that the primary healthcare funding problem is more important than any other policy problem. That is the size of the mountain to be climbed. I won’t be laying any bets that this will happen this parliamentary term. It will only happen if the perception of a crisis reaches beyond the health sector and becomes a hot-button election issue, more urgent than problems such as climate change mitigation, law and order and social inequality. If or when that point is reached, the problem will be a whole lot worse.

Tim Tenbensel is professor, health systems, in the Faculty of Medical and Health Sciences at the University of Auckland