Health NZ deficit: Government signs off on pay equity funds

The government says it has given Health New Zealand the funding for pay equity that it has been waiting for.

Not getting the funding when it expected was cited by the agency as one of three main drivers behind the large deficit it was now facing.

"Our financial performance during 2023/24 was impacted by a range of factors, including... Crown funding not being received before 30 June, 2024 (and therefore not recognisable in the 2023/24 financial year), including $419 million to reimburse payment of pay equity for allied health and midwives that was settled in October/November 2023," it said on Tuesday when it released a large amount of financial documents.

With nursing pay equity added in, it had expected to get $529m in total to fully offset its payments to staff, according to its quarterly report, released last week.

"Pay equity funding was not received during the year," the report said.

That $529m made up the bulk of the $583m surplus HNZ had said in February it was still on track for, before news came out weeks later that it had crashed into deficit.

Health Minister Shane Reti's office last night told RNZ that the pay equity reimbursement "has now progressed through Cabinet sign-off and been received by HNZ".

This had been held in contingency "for when Health NZ was ready to access it", it said.

"While for the sake of appearance, this funding would have been beneficial for the Health New Zealand financial result, it would not have meant that the agency returned a surplus in that year."

This was because HNZ's full deficit for 2023-24 was more than $900m.

"There were underlying causes of the deficit position at the end of the year that have been clearly described," Reti's office said in a statement.

A "high" risk around pay equity funding had been flagged to Reti in a report in January.

"Workforce issues increase as recruitment continues to be a concern, exacerbated by wage relativities," HNZ said at the time.

The way to address this was to "ensure any new funding arising from future government decisions regarding pay parity and pay equity are implemented quickly and well".