'Record funding' in education and health questioned

Education and health received extra funding in the Budget - but to say they're at record levels may not tell the whole story. Photo: Lynn Grieveson.

Moving ahead, or falling behind? The Government is touting record spending in education and health - but it's not that clear-cut.

A Government loves almost nothing more than touting record spending - and that goes double in an election year.

So it was perhaps no surprise that Finance Minister Steven Joyce and his ministerial colleagues reached for the superlatives when speaking about their investments in health and education.

Joyce spoke of a “record” $16.7 billion investment in health next year, while Education Minister Nikki Kaye said the $1.5b set aside for education had delivered “the largest injection of new money into education since the Government took office in 2008”.

However, the figures lose some of their lustre once you account for inflation and the growing population - precisely the reason why the funding is needed.

According to a Budget analysis carried out by Victoria University’s School of Government and the New Zealand Institute for Economic Research, health spending was in fact forecast to decrease in real terms by an average of 1.5 per cent each year through to 2021 once adjusted for population growth and the Consumers Price Index.

Education spending was forecast to decrease by 1.6 per cent during the same period.

Health figures inflated by pay equity

In addition, the headline figure for health is somewhat inflated given the inclusion of $1.54b to increase the wages of care and disability support workers, following a landmark pay equity settlement which the Government initially fought but has now embraced.

District health boards have received the bulk of the remaining funding, with an extra $1.76b to help them cover pressures from inflation, wages and a rapidly growing population. The funding boost comes as DHBs have been fighting to save more than $200m in required “efficiencies”.

The education system has received a $1.5b boost, including $1.1b of new operating funding and $392.4m of capital funding.

Schools’ operational grant funding has been increased by $60.5m, or 1.3 per cent, after a freeze in last year’s Budget in favour of “targeted funding”.

That targeted funding for schools with at-risk students has also increased, by 2.67 per cent (bringing their overall increase to four per cent).

Primary and secondary schools, along with early childhood education centres, are getting an extra $767m of operational funding to deal with increasing student numbers, in a week where a Ministry of Education report revealed concerns about the growing number of schools nearing full capacity in Auckland and elsewhere.

That also explains the extra $456.5m investment in school properties ($392.4m in capital and $64.1m in operating funding) to build six new schools, expand two others, and build a number of special units and new classrooms.

The bulk of that money, $277.6m, is going into Auckland, with Education Minister Nikki Kaye saying the extra funding will increase the total number of new student places in the city to more than 21,000 by 2021.

Separately, $31.9m has been set aside to buy land for new schools as demand grows - along with New Zealand’s population.

'Barely covering growth'

NZEI Te Riu Roa president Lynda Stuart said the Budget would barely cover population growth, while the increase in targeting funding would provide about $2 per child each year.

“We were hoping for a major boost for education, but this wasn't even a catch-up...this is a devastating blow to a sector that has been struggling to make ends meet and give our children a quality public education.”

Stuart said the union believed schools needed an extra $50m a year from operational grant funding, a figure which the Government had fallen well short of.

PPTA president Jack Boyle said there was no evidence of long-term planning in the Government’s announcements, dismissing them as “a timid sprinkling of initiatives that don’t even keep up with inflation”.

“When schools aren’t funded to provide the education kids need, it’s the parents and school communities who end up having to pay for things, that the school should pay for, like uniforms, school trips, stationery and more.”

However, Boyle offered some praise for funding to develop Maori curriculum resources, as well as for statutory interventions at struggling schools.
The health sector also raised concerns.

Ian Powell, executive director of the Association of Salaried Medical Specialists, said his organisation estimated there was a funding shortfall of about $163m just “to tread water”.

“This was an opportunity for the Government to respond to the significant challenges facing New Zealand’s health system, and they failed to do so.”

Coleman said delivering better health services was the Government's top funding priority, while Kaye said the education funding was about "ensuring that every child and young person is getting the education they deserve".