This year's budget allocation for health echoes most past budgets. It implies there is significant investment and earmarks some specific areas that will receive additional support. But in reality, this is a cutback budget signalling continued austerity.
The government is right that health receives the largest share of investment among categories, some NZ$34.2 billion, up from $31 billion in 2025. This represents an increase of about 10% and makes a good sales pitch.
Yet much of this expenditure, as always, is spread over several years. This means the compound annual growth rate of budget funding for health through to 2029-30 is 3.49% per year, basically matching the inflation rate.
In healthcare, the inflation rate tends to exceed what is happening in the general economy. As noted in the budget document itself, the funding will simply "maintain current health settings".
This is not good enough. New Zealand's health system is in dire need of help and already comparatively underfunded .
The argument that health is a backbone of a strong economy and good society is supported by multiple studies .
In this context, building a highly productive, high-quality and accessible health system is fundamental. But this requires significant investment as well as long-term planning.
In an adversarial political system such as New Zealand, focused largely on the short term, it also requires politicians to work across party lines in the best interest of the public - for the current population needing to access high-quality services regardless of income or ability to pay as well as for future generations.
Health requires a growth mindset
Health is unlike any other area of public service in that it requires strong government intervention and support for public services to deliver for people. It requires a development and growth mindset as well as understanding that underinvestment is a losing strategy.
Budget allocations could have been made in key areas, and the health workforce should have been front and centre.
Staff shortages, along with the general working environment, are increasingly challenging in the public hospital system . This includes facilities and a generally negative ethos, driven by successive governments failing to grasp the fundamental need for long-range workforce planning .
Unmet need for specialist assessments in the public hospital system is worsening, highlighted again recently . The budget makes no mention of how maintaining current settings would do anything other than worsen the workforce and service access crises.
Primary care is another area requiring investment and attention. Growing unmet need places mounting pressure on already busy general practitioners (GPs).
For patients referred back to their GP, unable to access a public hospital specialist, this is stressful and unproductive. Improving the ability of GPs to manage unmet need - including through covering patient fees - would have been an important signal.
The budget allocates $80 million for the building of a third medical school , but this will not help, at least not until 2035.
New investments
Some of the earmarked "new spending" initiatives are important and should add value.
Digital and cyber security gets $152 million over five years ($35 million to $39 million per year). This is a small investment in an area where New Zealand once led the world . The recent high-profile data breaches have been an indictment on lazy government policy and poor private provider attention to security basics .
Investments in ambulance services ($35 million over five years), paediatric palliative care (a new site in the South Island in addition to the existing Auckland Starship hospital; $15.5 million over five years) and the national bowel screening program ($12.4 million over five years) to lower eligibility from 58 to 56 years are all important and welcome.
There are also investments in hospitals including additions to Whangārei Hospital and some additional funding for the new Dunedin Hospital construction.
In an election year, a bold government could have laid down a pathway for long-term planning. It could have stated an intention to build genuine all-party consensus on healthcare and acknowledge that an adversarial system is not serving people.
It is also important to consider the cost of ongoing health sector reform. The previous government initiated reforms in 2022 but the coalition government disestablished new agencies (such as the Māori Health Authority ) and repealed new policies and laws (such as legislation that would have created a smoke-free generation ). The cost of these repeated reforms, as well as ongoing structural changes, is likely to be in the hundreds of millions.
The public deserves better. Rather than restructuring, this money should have been invested by all politicians in services and future generations.
The government could also have announced a commission to review healthcare funding as New Zealand's public health system is weakening, with increasing provision by the private sector . In summary, budget 2026 is a short-term plan for continued austerity for the health sector.
Robin Gauld has received funding from the NZ Health Research Council, NZ Ministry of Health, Health Quality and Safety Commission and General Practice NZ.
