Health unions warn of $100m data and digital budget cut

NEWS - eHealthNews.nz editor Rebecca McBeth

Health New Zealand Te Whatu Ora is planning on cutting $100 million from the organisation’s data and digital budget, health unions say.

A letter from seven health unions to chief executive Margie Apa says that on October 2 unions received a briefing on six elements of a savings programme at Te Whatu Ora which included a $100 million savings target for data and digital.

“We were informed that within each directorate, leadership teams are drawing up lists of projects, programmes and positions which will be disestablished. The disestablishment of any one of these projects, programmes or positions may well have significant risks or costs elsewhere in the organisation,” the letter says.

“For example, the data and digital team cannot assure us the scale of cuts being asked for, will not increase the risk of another cybersecurity attack similar to Waikato Hospital.”

The letter asks that any further decisions about redundancies, costs and savings be paused until the unions have been provided with relevant information about the budget overspend at Te Whatu Ora.

This year's Budget recalled more than $380 million earmarked for data and digital health initiatives over the next five years, but said funding would be returned pending work to prepare “investment-ready business cases for future investment”.

Health New Zealand Te Whatu Ora is now developing a new 10-year plan setting out the size and scale of investment needed for digital infrastructure which is due to go to the Minister of Health before the end of the year.

The latest financial reports from Health NZ show actual spend on data and digital is already significantly lower than budgeted for.

Health NZ’s financial reporting from FY 2023/2024 identifies a deliberate delay in data and digital work as a contributor to the lower than planned performance in 2022/23 of $1 billion and says this was to ensure alignment with national data and digital strategy.

The report says the year to date spend on data and digital as of May 2024 was $686 million compared to a budget of $813, creating a variance of $127 million.

Under Scenario 1 of the expenditure budget for next year it says funding for ‘enabling functions’ (which includes data and digital) are budgeted at $2.3 billion total, “reflecting commitments to prioritise resources to the frontline”.

Under this scenario, the 2023/34 budget for data and digital is $891m, which would reduce to $765m in the next financial year.

Digital Health Association chief executive Ryl Jensen says further cuts to the data and digital budget could undermine healthcare delivery in New Zealand for years to come.

Jensen says digital technology directly supports clinical and administration operation and is essential for cyber-security throughout the heath sector.

“These cuts will absolutely affect front-line services,” she says.

The recent Government Policy Statement on Health stressed the need for digital initiatives and solutions.

Jensen says New Zealand spends between 2.5 and three percent of the total health budget on digital technologies compared to international averages of between five and eight percent and over 10 per cent by countries at the forefront of this transformation. 

“Cuts like this just exacerbate the problem, pushing us further and further behind as a country,” she says.

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