12 | Politics
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.