Note: The privatisation by stealth and privilege of the nz health serviceThis is why we need to ensure public journalism is prominent and to the fore - from Bernard Hickey
āWeāre so stretched itās now not safeā
Decades of underfunding of hospitals relative to population growth has stretched emergency departments to breaking point. RNZ reported last night:
The ED hit nearly 200% occupancy in May and was regularly over 100% through winter.
In my view, this is the culmination of 30 years of under-investment in health infrastructure to ensure Budget surpluses and low public debt, but with low income taxes and no wealth taxes. This coincied with a tipping point in the 30-50% pay gap between Australian and New Zealand health sector wages. Australiaās decision to announce on Anzac Day this year it would welcome any New Zealander as a first class citizen accelerated the exodus, along with significant upfront bonuses and relocation pay offers from Australiaās health system in the wake of covid.
All roads lead to the 30/30/30 fiscal rules. Both National and Labour-led Governments have tried to keep net debt and the size of Government spending well under 30% of GDP by running surpluses whenever possible for 30 years, but without a capital gains or wealth taxes. That was fine when the strategy was set in stone in 1989 when population growth was low with an ageing population. But politicians, planners and ultimately median voters realised in the last 20 years they could generate GDP growth, higher land price inflation for leveraged tax-free capital gains and get lower interest rates by engineering 1.5-2% population growth per year, but without enough infrastructure investment. It worked until it didnāt, which is now.
This accidentally-on-purpose āstrategyā of engineering low taxes with unfunded population growth happened because politicians and ultimately voters decided not to talk about or create population growth or infrastructure investment strategies. That was largely because it would become clear in the conversation that the 30/30/30 rule was unsustainable without higher user-pays charges and taxes on households, especially through wealth or capital gains taxes. That higher tax share of GDP for investment is needed to pay for higher levels of infrastructure spending that goes with this population growth, which was three times faster than officially forecast and still is.
Yet we just had another election, at least the fifth in 15 years, where the same accidentally-on-purpose strategy of unfunded population growth to keep taxes low on todayās home owners was adopted.
So how does this end? Tens of thousands of young renters are opting to leave the country and are being replaced by over 100,000 (net) new workers on temporary work visas. Taxpayers are now somewhat surprised and alarmed that the EDs are full when they need them, largely because politicians from both sides of Parliament assured them they could have it all: low taxes AND a fully publicly-funded hospital system.
Labourās disintegration and reintegration of the DHBs into one national authority was the latest attempt to square an impossible circle by pretending more could be achieved by spending the same amount. Somehow, we are promised, less can be spent in the āback offices and weāll get the same level of service at the front line.
The whistles of the escape valves in our political economy are;
- rising net migration rates of residents, including some of the 200,000 temporary workers awarded residency last year after the covid lockdowns;
- more desperate pleas from nurses, doctors and administrators for help, while administrators and politicians limit spending growth on hospitals, staff and drugs to ensure their Budgets return to supluses; and,
- the richest taxpayers will increasingly opt for private health insurance.1
Note: We can't afford tax cuts for the rich, or any tax cut