Danyl McLauchlan: Critical care now needed for our struggling health sector
Minister of Finance Nicola Willis allocated $16 billion additional spending to health, but, astonishingly, it’s not enough to keep the lights on in the nation’s hospitals. Photo / Getty Images
We probably need a name for the prolonged economic downturn we’ve been stuck in since the final quarter of 2022. The long Covid recession? The latest inflation statistics suggest we may finally be crawling free of it. The Consumer Price Index was down to 3.3% in the March quarter, prompting a flurry of interest rate reductions.
The government congratulated itself for its incredible efforts at turning the economy around and “winning the fight against rampant inflation” but neither this government nor its predecessor lifted a finger to reduce inflation.
Jacinda Ardern, Chris Hipkins and Christopher Luxon all loudly and repeatedly insisted that cost of living was their number one priority, but price stability has been achieved by the Reserve Bank raising the official cash rate and sucking money out of the economy to deepen and sustain the recession.
Ardern and former finance minister Grant Robertson almost certainly worsened our inflationary crisis with their multi-billion dollar cost-of-living payment funded through borrowing. Current Finance Minister Nicola Willis claims her combination of tax cuts, child-care subsidies and increases to the independent earner and in-work tax credits will be deflationary, on the grounds that some households might not spend the money: she hopes they might use it to pay down debt.
Back in reality, most of those cuts will be used to service the savage hikes in council rates and insurances coincidentally(?) imposed at the same time as Willis’s fiscal package.
One of the dark secrets of macroeconomics is that many finance ministers quietly relish a moderate level of inflation. It allows them to impose stealth tax increases on us every year via bracket creep, and Willis has confirmed she will return to this practice for her next two Budgets.
It erodes the real value of the crown’s debt – although it does so by simultaneously reducing the value of your retirement savings, so they really hope you don’t realise this – and it allows governments to limit spending in high-cost areas such as health while pretending to invest more simply by keeping the increases lower than the rate of inflation.
That’s the allegation health economists are levelling at the coalition, which has removed the board of Te Whatu Ora Health New Zealand – most of whom had already stood down – and appointed a single commissioner, Dr Lester Levy, to oversee the entire public health system, citing a financial crisis at the organisation.
New Zealand has a rapidly ageing population, we’ve just experienced a surge in migration and our inflation rate is still above the target band, so healthcare requires significant funding increases every year just to deliver the same level of care.
Keeping the lights on