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BUDGET 2016: DHBs big winner in English’s spend up

Thursday 26th May 2016

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District Health Boards are the big winners in Finance Minister Bill English’s eighth budget, with $1.6 billion coming their way over the next four years after a prolonged period of belt-tightening.

English unveiled the extra funds for DHBs in a $2.2 billion package for health, which includes the $124 million already announced to bolster the drug-buying agency Pharmac’s budget.

“The health sector is a particular priority. Over the next four years, $2.2 billion of additional funding  will be provided for new health initiatives and to meet demand,” English in his speech to Parliament. “District Health Boards will receive $1.6 billion over four years to invest in services, meet population growth and deliver better results.”

DHBs had been facing a future of flat funding, with the December half-year economic and fiscal update projecting payments of $12.77 billion in 2016 sipping to $12.74 billion by 2020. That’s now projected to rise from $12.83 billion to $13.27 billion.

Elective surgery also gets a fillip of $96 million, which Health Minister Jonathan Coleman said would help increase surgery rates.

English also announced $2.1 billion of infrastructure spending of which $883 million will go on building and expanding schools, $857 million on Inland Revenue Department’s new IT system, and $115 million for roads in Gisborne, Marlborough and Taranaki. Some $190 million for KiwiRail was part of last year’s budget decisions.

“Population growth, boosted by Kiwis returning home, is increasing demand for public services, so we are investing infrastructure now to ensure all New Zealanders can continue having access to high quality public services,” English said.

The Reserve Bank has said it would welcome infrastructure spending by the government to generate economic activity and help spur tepid inflation.

The infrastructure programme doesn’t include housing, an area that’s causing the Reserve Bank a number of headaches as a supply shortage and growing population pushes up prices, even as inflation remains low, though English put aside $100 million to free up surplus Crown land for development in Auckland.

English told a briefing that a national policy statement on urban development will soon be put out for consultation, and will direct councils to allow for more development where necessary, and require councils to measure the impact of their decisions on house prices.

The NPS would include ratios to help guide when to require councils to release housing land. English has previously discussed a metric based on the relationship between prevailing house prices and household incomes.

A further $258 million was allocated for social housing, the bulk of which will go to income related rent subsidies, and providing more social housing places in Auckland.

Other big winners include the New Zealand Defence Force with $300.9 million to allow for increase its capability and infrastructure, and $178.7 million for intelligence agencies, most of which will go to upgrading the all-of-government high-grade cryptographic infrastructure that protects classified information.

Another $356 million was allocated for the prison service to help meet the country’s growing prison muster, and $299 million for police, largely to meet wage increases.

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