12 | Pol­i­tics

Jane Clifton

New Zealand Listener - - CONTENTS - JANE CLIFTON

When politi­cians set out to “man­age people’s ex­pec­ta­tions” – or man­u­fac­ture a cri­sis, as it’s known out­side the belt­way – it helps to have a new poster child and an old scape­goat. In the case of the ap­par­ently sup­pu­rat­ing Mid­dle­more Hospi­tal, the Gov­ern­ment has found an ideal “Here’s one we pre­pared ear­lier!” ral­ly­ing­point for its emer­gency sales job on the Bud­get.

The psy­chol­ogy is com­pelling. How can any­one de­cently ex­pect a gen­er­ous Bud­get next month when a vi­tal fa­cil­ity in one of our need­i­est dis­tricts has been newly re­vealed to be run­ning with sewage and black with toxic mould?

Best of all po­lit­i­cally, Mid­dle­more is some­thing the Na­tional Gov­ern­ment pre­pared ear­lier, by over­see­ing nine years in which the age­ing South Auck­land hospi­tal was not ad­e­quately main­tained. And all this through the ex­tra mega­phone of a con­cur­rent nurses’ in­dus­trial ac­tion.

It’s fair to say that the Gov­ern­ment has been most agree­ably dis­ap­pointed by the hor­rors of Mid­dle­more. Min­is­ters can hardly dis­guise their relief that the naughty mould-spread­ing, woodrot­ting, pipe-rust­ing fairies have done their work in the nick of time.

As Na­tional has fairly been able to counter, the health-fund­ing cri­sis mo­tif is such a timely di­ver­sion for the Gov­ern­ment so as to in­vite scep­ti­cism. It’s a bit too per­fect a storm. The in­debt­ed­ness and as­set de­te­ri­o­ra­tion faced by most district health boards are hardly a nov­elty or a se­cret. Labour had the same “nine long years” to study the sys­tem and be ready to leap out of the blocks with bet­ter so­lu­tions than just to blame the pre­vi­ous Gov­ern­ment.

This catas­trophis­ing is surely just a smoke­screen to ex­cuse a lack­lus­tre Bud­get.

The peek-a-boo theatre over whether pre­vi­ous Health Min­is­ter Jonathan Cole­man knew about Mid­dle­more’s de­cay fur­ther mud­dies the pic­ture. He in­sists he was never briefed about it – a shock­ing com­mu­ni­ca­tions over­sight. You’d have thought some of­fi­cial could at least have got their gym gear on and “bumped into him” at As­to­ria for an ac­ci­den­tally sched­uled chat about some­thing so se­ri­ous.

There are even claims that the build­ings’ prob­lems have been over­drama­tised by pro-Labour staff and of­fi­cials to suit the Gov­ern­ment’s agenda. A good plumber and a reg­u­lar slosh of Janola – end of histri­on­ics. But though the Gov­ern­ment’s pre-Bud­get hose-down hom­i­lies have been bla­tantly ma­nip­u­la­tive, the prob­lem with health fund­ing is rather big­ger than mouldy Mid­dle­more. It’s only not tech­ni­cally a cri­sis be­cause it’s so long-term and en­demic as to be hum­drum.

The pre­vi­ous Gov­ern­ment re­joiced in pop­u­la­tion growth, both through re­turn­ing ex­pats and im­mi­gra­tion, be­cause it stoked con­sump

tion-based eco­nomic growth, mak­ing our vi­tal sta­tis­tics look quite good. Un­hap­pily, the Gov­ern­ment de­cided it was too ex­pen­sive to keep health fund­ing grow­ing in line with that handy pop­u­la­tion growth. And since pro­duc­tiv­ity did not keep up with pop­u­la­tion growth and has lately gone back­wards, there prob­a­bly wasn’t enough money to keep health fund­ing steady in real terms, any­way – or at least not in com­pe­ti­tion with

Surely some of­fi­cial could have “bumped into” Jonathan Cole­man at As­to­ria for an ac­ci­den­tally sched­uled chat.

Na­tional’s other po­lit­i­cal pri­or­i­ties.

On that ba­sis alone, the new Gov­ern­ment is right to say that Na­tional presided over a de­cline in health fund­ing. The vault­ing cost of ev­er­im­prov­ing drugs was also a fac­tor, as was our age­ing, longer-liv­ing pop­u­la­tion mak­ing more ex­pen­sive de­mands. But the big­gest fac­tor in the mis­match of health ser­vices with de­mand has been sheer pop­u­la­tion growth, and that was Na­tional’s flag­ship.

NIFTILY PER­VERSE DISINCENTIVE

Com­pound­ing this is the run­ning down of cap­i­tal. Hos­pi­tals need to com­pete with other ur­gent in­fra­struc­ture such as schools, roads, wa­ter and so­cial hous­ing. And there’s been a niftily per­verse disincentive for DHBs

to im­prove their as­sets. Twenty years ago, the Trea­sury thought it would be char­ac­ter-build­ing to dock a per­cent­age of the value of their hos­pi­tals and ma­jor kit as an ac­knowl­edge­ment of the cost to the Crown of fund­ing those as­sets. This 6% has been com­ing not out of hos­pi­tals’ cap­i­tal spend but out of their op­er­at­ing bud­gets.

On Planet Trea­sury, it was thought this cap­i­tal charge would make DHBs more grate­ful for and pru­dent with our money. Here on Earth, it has meant DHBs think twice about up­grad­ing build­ings, as the more valu­able their as­sets, the less they get to spend on sick people.

Time, surely, to aban­don the charge, which has also caused per­ver­si­ties in other state agen­cies – but that’s hun­dreds of mil­lions less for the state’s cof­fers over time, so even this health-har­ried Gov­ern­ment isn’t hur­ry­ing into rash re­forms.

What Na­tional still has over its suc­ces­sor is the quick fix for di­lap­i­dated hos­pi­tals. Its pub­licpri­vate part­ner­ships (PPPs) would have funded new hos­pi­tals, start­ing with Dunedin and doubt­less mov­ing hastily to Mid­dle­more, with vastly less ef­fect on the Crown and prob­a­bly more quickly than solely state-funded builds. The Gov­ern­ment ar­gues that over­seas ex­pe­ri­ence shows PPP hos­pi­tals be­come in­flex­i­ble en­ti­ties. As tech­nol­ogy and treat­ment change, hospi­tal premises need to change, too. But the pri­vate own­ers then drive a hard bar­gain with politi­cians and can even legally re­sist or de­lay the de­sired up­grades and mod­i­fi­ca­tions.

All such ar­gu­ments are moot, how­ever, as even par­tial pri­vatisa- tion brings all the Gov­ern­ment coali­tion part­ners out in boils – and why add to Phar­mac’s an­tibi­otic bill un­nec­es­sar­ily?

IF THE STRAIT­JACKET FITS

A fur­ther self-im­posed strait­jacket is the Gov­ern­ment’s in­sis­tence on get­ting core Crown debt down to 20% in the next five years and keep­ing core spend­ing within 30% of GDP. Fi­nance Min­is­ter Grant Robert­son may now wish he’d been more grasshop­per and less ant about this, or as St Au­gus­tine re­put­edly said, “Lord make me chaste – but not yet.” New gov­ern­ments have ex­tra li­cence to loosen the purse strings – to “fix the shame­ful ne­glect of the last nine years” and sim­i­lar rhetor­i­cal flour­ishes. Mid­dle­more is a glo­ri­ous ex­cuse for a tem­po­rary blowout.

But Robert­son’s old enough to re­mem­ber the pre­vi­ous Labour Gov­ern­ment’s first “win­ter of dis­con­tent” with a sus­pi­cious, hos­tile busi­ness sec­tor. Con­fi­dence sur­veys sug­gest this sea­son is re­cur­ring. An ap­pre­hen­sive busi­ness sec­tor is a drag-an­chor on eco­nomic growth, which means less tax rev­enue and less money for health. Thus the pre-Bud­get brow­beat­ing has been aimed as much at busi­ness as at vot­ers. But it’s been so trans­par­ent as to be self-de­feat­ing. Only on Bud­get day will we know whether the Gov­ern­ment is truly stingy or has been op­por­tunis­ti­cally ham­ming up a handy lit­tle cri­sis.

DHBs think twice about up­grad­ing build­ings, as the more valu­able their as­sets, the less they get to spend on sick people.

Grant Robert­son: too much ant, not enough grasshop­per.

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