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  Note: All transcripts are copyright to Front Page Ltd but may be used PROVIDED attribution is made to TVONE and AgendaAGENDA
GUYON ESPINER GUYON Now you said that you were powerless to intervene because Pharmac is an independent agency. DAVID That’s quite true. GUYON` National's been saying look we would fund Herceptin and they believe the government could do so directly and go around Pharmac if you like, is there really nothing you can do? DAVID Well firstly let me say that I have as part of this process tested Pharmac carefully to make sure that the process they’ve gone through is sound and robust and I have confidence that it is. Let me emphasise that it is their decision not mine and for good reason you don’t want politicians pretending to be clinicians. The key question though is let's suppose – let's suppose the government wanted to change the decision could it. Under the Public Health and Disability Act it quite clearly cannot, I am prevented by law from directing Pharmac in terms of any drug or any treatment or any supplier, that is an independent decision and what's more I'm advised that if I gave them another 100 million dollars to play with they could make the choice as to what they spent it on and they’ve advised that they wouldn’t be spending it on a year's worth of Herceptin treatment. The only way to do it would be to change the law first, that would essentially be to bring down the Pharmac model which has served us well. GUYON Thirty countries, more than 30 countries I'm told fund 12 months worth of Herceptin, have they all got it wrong and are wasting their money and New Zealand's the only country that’s got it right? DAVID Well I think to answer that question one's gotta look at history, timing and a little bit of political economy. Some for example the British I'm advised have indicated to Pharmac they think Pharmac's got it right and if they had the opportunity to make the decision Pharmac's made they would. Now that’s pretty interesting, it asks the question why is that not the case. I don’t want to say anything … GUYON So is it just – cos what you're hinting at there intimating at possibly is that there's a bit of hysteria about this being a wonder drug and others have jumped on the bandwagon, is that what you're saying? DAVID It's certainly not a wonder drug and it's extremely dangerous for your heart muscle and there are significant side effects for it which you're much less likely to cop if you take nine weeks versus 12 months. It's a seriously toxic drug and you don’t want to take it for 12 months if you can get away with it. Now medical opinion differs on some aspects of this, it's a hideously complex area of science which again I come back to the point, this is why you don’t want politicians pretending they know the answer, my job is to say am I confident or not that the Pharmac process was robust, independent and scientifically rigorous and I've had it independently tested and I believe it is. GUYON Okay, well regardless of whether this is about money, the budget for pharmaceuticals is pretty tight, I mean if we look at what this would have cost perhaps another 30 million to fund that 12 months worth… DAVID Plus the cost to the public hospital system of transfusing and so forth. GUYON That would have pretty much doubled the amount of money that we spend on cancer drugs. DAVID And knocked out a whole lot of others unless net money were provided… GUYON But doesn’t that really just bring it home how little we're actually putting in to funding pharmaceuticals in this country? DAVID Oh well we're very fortunate that we have a single buyer which means we get some of the world's best deals on pharmaceutical prices and if we didn’t have an independent robust Pharmac we'd be spending another billion dollars a year roughly to buy exactly what we buy now, which is why we have to be carefully. GUYON Okay you're talking about process, I want to talk about money and volume for a second here. When you look at the developed world, the OECD, we are the second lowest in terms of growth in spending on pharmaceuticals, you're simply not putting enough money into pharmaceuticals surely. DAVID And I think you can run that argument at any level of funding. GUYON Do you accept that though? DAVID No no I don’t accept that, I think we make trade off decisions … GUYON Well why are we the second lowest in the developed world? DAVID Having asked the question I will try to answer the question. We make trade off decisions all the time between for example – we've got workforce retention issues in some parts of the medical sector, should we be paying our doctors and nurses more – we want to build more hospitals and provide better primary care clinics to the length and breadth of New Zealand – we want to invest in - actually the biggest gains are not in paying for the next flash innovative cancer treatment the biggest health gains are actually at the other end of the spectrum in public and population health, and for the first time under this government we've got a primary healthcare strategy that says we're gonna get in upstream, we're gonna be the fence at the top of the cliff not just literally the ambulance at the bottom, so we've got less people smoking, got less people abusing alcohol, we've got cardiovascular disease on the way down, which is why cancer's coming up because it used to be our second biggest killer, it's because of our success in some of the other areas that it's now getting bigger. GUYON Well okay you’ve broadened this debate out and let's do that. DAVID The reason I did that is simply to say that the trade off decisions are inevitable at any level of funding. GUYON I accept that and let's do that. You’ve roughly as a government doubled health spending from 1999. DAVID Nominal terms. GUYON Roughly six billion, now it's roughly 12 billion. DAVID A bit over 13. GUYON Our health status is improving but it's not improving as fast as other countries, for example our life expectancy ranking in the developed world has fallen it used to be 7th it's now 11th. DAVID Hang on our life expectancy – our male life expectancy has gone up by 3.3 – now wait for it… GUYON But not as fast … DAVID Well I don’t know about the others but I can tell you ours has gone up 3.3 years in the last eight, that’s incredible, never in our history has that happened. GUYON Relative to other countries … DAVID Give me an example that’s grown fast than that I'll be interested to look at it, but I'm not aware of any, that’s 3.3. out of eight. GUYON According to the Treasury our life expectancy ranking has dropped, it was 7th it's now 11th. DAVID So some others are probably playing …. GUYON My question is are we getting value for money for doubling the spending in the Health budget? DAVID Well I mean let's ask where it's gone, that’s the first question because to answer that question you need to know if the government's spent six billion dollars what it spent it on, and it's spend it roughly a third, third, third, very roughly on improving the sustainability of our workforce, keeping clinicians in New Zealand, building new hospitals and clinics and a whole range of other stuff including lower cost of access to doctors, more electives, hips ops, knee ops, cataracts and everything else, and so it's been well spread across the system, more New Zealanders have benefit, but 3.3 years of life expectancy in eight is an extraordinary result, 2.2 for females, and the gap between pakeha and Maori has been closed significantly and it's not just all about health spend, that’s about the world's lowest unemployment, it's about spending money on retrofitting old cold homes with insulation, it's about investing in clean water and sanitation and a whole wrap around of things that mean we're a more decent more humane better provided for society now than we were eight years ago. GUYON Okay you’ve pumped more money into the health system but that’s gonna tail off now isn't it, we had Michael Cullen saying recently that health spending has increased about 8% a year and that that was now unsustainable, so you're going to reduce the amount of growth in health spending aren’t you? DAVID Ah well it pays when economists talk about money to be very careful about the words. I think what Dr Cullen said is that the rate of growth may moderate somewhat. GUYON Well let's be clear about this and let's use clear and plain English, you are going to reduce the growth in health spending aren’t you? DAVID My current projections are that we will continue to spend at the level we currently are spending in terms of new money, and let me give the public a little bit of background here. Health takes by far and away the largest slice of the cake, almost half of the new money in any given budget and the same in the 2008 budget where we increased it again by three quarters of a billion and we predicted three billion of new money over the next four years, so that was 750, 750, 750, 750. That is still the plan, so we're not going to be cutting the rate of growth we are keeping it where it is. Now you can make an esoteric argument … GUYON But Michael Cullen told us that it goes from 8% growth to about 6%, that’s a reduction. DAVID Well no it's a relative reduction because some other areas may grow at higher growth rates than Health, we're keeping Health at the same amount of new money, other areas may grow faster relatively speaking, the increasing share that Health's gobbling up starts to moderate but let's not give the public the impression that the Labour led government's going to stop investing heavily in healthcare, it's always been a priority for us. GUYON No but you're moderating that. And I'm wondering what sort of Labour government spends 10.6 billion dollars on cutting personal tax rates over the next four years and it's gonna cut back on the growth in spending on Health, are you comfortable with that? DAVID Well very comfortable in that because this is a balance that’s been worked through on the basis of a heck of a lot of careful consideration. We have thanks to growths in productivity and output had more tax take which means we had some surpluses which the overwhelming public call including in the media, has been to return some of to the public as a dividend for hard work, that’s fair enough and there's a competitiveness argument, but hang on how much tax cut's a good idea, one of the things along the line of your question, the public's asked to consider this election year is whether that level of tax cut is appropriate, or whether you want to go for another party which wants to double your tax cuts and borrow to do it. Now you simply cannot borrow to pay for tax cuts and keep Health expenditure going. GUYON I want to stay with Labour. DAVID I know but you can't argue both sides of the street Guyon. I mean we've got a careful balance here between social investment … GUYON Well let's talk about social investment, we had a report this week that said 22% of New Zealand children, 230,000 New Zealand children are in a state – living in a state of unacceptable poverty and you're cutting taxes. DAVID Well I haven’t seen the detail of that report so I can't comment. GUYON Well it's the Children's Commissioner, I mean surely it's a major report and doesn’t this have a big impact on the health system, if you're going to have 230,000 children in poverty. DAVID And one child living in poverty is one too many, and in the last year my understanding is that the government's efforts through Working for Families have cut child poverty by about a third, that is not a bad start. Is there more to do? Yes of course there is. GUYON But did you argue in Cabinet as the Health Minister we can't afford to have hundreds of thousands of New Zealand children in poverty and so why are we cutting taxes? DAVID You may very well think so and I possibly … GUYON Well did you? DAVID … couldn’t comment because you know the rules about Cabinet is we don’t talk about what we say outside the room. GUYON I'm asking whether you advocated as the Minister of Health that tax cuts weren't a good idea when we had so many holes in the health system. DAVID I think where the government's got to on the balance between increasing social investment and some tax cut's good balance, but I can't go into what discussions happen in the Cabinet room – as you know. GUYON I'll leave it there, back to you Rawdon. RAWDON Now it's the turn of myself and the panel to also have a few questions, we'll pick up with you Bernard. BERNARD HICKEY – www.interest.co.nz DAVID If the general question is about how do we improve efficiency and productivity in the health sector I've got tons to say about that and I will, but first on the presumption, you can't argue both ways on higher wages, we have got plenty of people saying we have worked for shortages and recruitment and retention issues and therefore it's totally appropriate that we've rebalanced wages for nurses, doctors and some others in the health system, and that wave of rebalancing is largely complete. So I make no apologies for that it was a very necessary way of keeping people in New Zealand, nor do we apologise for the fact that we've built new hospitals and clinics from Kaitaia to Southland as part of a two and a half billion dollar investment programme, partly because we inherited a deficit in that area. So a lot of good stuff's been done but you're quite right which you know it's a key thing health budget 12 billion dollars a year it's nearly one dollar in five of every taxpayer dollar and it's essential that it's spent well and prudently and I think that there is more that we can do to generate productivity, and it's a culmination of appropriate partnering pressure with District Health Boards, and looking at I think the interfaces between the Boards and what I call the long term factors that help the system grow well, and the big three there are information - technology, work force development and sustainable funding patterns and models, and we've got work going on in all three of those areas that I think are gonna pay dividends. BERNARD So how much of that extra funding has simply gone into lifting up wages to try and stop people from leaving the country? DAVID As I said to Guyon earlier roughly a third third third into investing in the health workforce, investing in bricks and mortar, and then investing in things like lower cost access to GPs, primary healthcare strategy and a whole bunch of other direct interventions, so if you're cutting a long story short… BERNARD So what improvements then have we seen in the productivity of the health sector? DAVID Well if you go to Levin and ask people, what improvements they’ve seen they’ll tell you about the Horowhenua Health Centre which is a beautiful new facility I visited recently. You go to Canterbury and they’ll tell you about the reduction in waiting times for surgery, someone stopped me yesterday evening and said I need a knee op, I said oh well that’s no good, they said guess what I'm getting it in six weeks I couldn’t believe, six weeks from my first appointment to actually getting the operation. RAWDON But you hear the other side of the coin in other parts of the country. DAVID Yeah but the stats are that waiting list times are coming down and particularly in orthopaedics and that’s a direct result of the intervention to fund more in that area, and so look I think there's tons of good news, every day thousands of procedures are done the length and breadth of the country, we don’t hear about them because with respect the media only tends to report the odd one that doesn’t go right, because no one wants to hear good news all the time. That’s okay but let's just take a moment and pause and recognise all the hard work, all the lives that get saved, all the improvements that go on every day. RAWDON You’ve talked about this wage rebalance being almost complete now so you'd be confident that there's no reason for our doctors to strike again, you think that they're now comfortable? DAVID Well we've certainly settled the senior doctors' mecca … RAWDON The junior doctors? DAVID Junior doctors no we haven’t because the junior doctors to be frank I think haven’t been realistic in what they’ve been asking for, they’ve been offered 4.25% for each of the next two years and they’ve hung out for multiples of that and they’ll be hanging out until the cows come home because they're not gonna get multiples of that. CHRIS TROTTER – Columnist DAVID Well let's be careful about what I did and didn’t do. I brought the groups together and I said look I really want you guys to work towards a solution, I did it firstly on a …. CHRIS Yeah and that’s a very important intervention in terms of a major industrial, but with the junior doctors there hasn’t been that same kind of demonstration of public goodwill on the part of the government and I think that has set up this kind of rigid you know firing lines now between the DHBs and the Junior Doctors Union. DAVID Well let me say a couple of things, it was only a week or two ago that I launched the Junior Doctors Workforce Commission which the Director General of Health is running, and that has the support of virtually everybody in the sector, Senior Doctors, Medical Council, Medical Association, Council of Trade Unions, all the other health unions, everybody's saying hey it's a great thing we need to think not just about pay and rations which is part of it, we've gotta think about how we train junior doctors in the clinic, the supervision, how they have a say in how hospitals are run, all those good things, there's only one group that has not yet said they want to be part of that discussion and that’s the Resident Doctors' Association, ask yourself why. I'm not even sure I understand. They’ve had lots of opportunities… CHRIS I think I understand, it's a very old principle in unionism that you're there for your members, you're there for their wages, you're there for their conditions, you're not there for discussion groups … DAVID No absolutely, but let me flip it round and say in the Senior Doctors' case, Senior Doctors and DHBs got together and worked on a thing called Time For Quality which was an agreement around clinician governance that we signed off this week, that provided a platform for trust. Senior Doctors' Union asked for a workforce commission and had a hand in writing the terms of reference. CHRIS So it's not just a let's get Deborah Powell exercise? DAVID No it's not, no if Deborah Powell wants to come in and negotiate constructively with DHBs not only would they welcome it but they'd be bound to be …. RAWDON Alright let's move away from industrial relations, Bernard. BERNARD I'm just wondering how much of a bottomless pit is this? You say you’ve done the rebalancing, you’ve stopped people from leaving the country, but we still have big wage gaps with the rest of the world, there's still a lot of specialist medical staff and trained people leaving for Australia and the likes, surely you could just keep pumping in and with no result? DAVID Welcome to my world Bernard, I mean you’ve asked two questions which take precisely the opposite side of the same coin. First one was you know have you wasted money by pumping it into workforce and the next question is have you pumped enough in to keep them in New Zealand, and the answer is that that’s a judgement call that you have to make from month to month. BERNARD So you're saying you’ve stopped – you’ve stopped pumping that money in? DAVID No I haven’t said that, I imagine that there will be future wage rounds in the health sector and so there should be because we get inflation every year. CHRIS Well can I ask in relation to that – the District Health Board system itself, isn't there a tremendous amount of money to be saved simply by centralising our health system? Why do we bother with these what 24 DHBs? DAVID Twenty one which is a little less than under the previous National government when we had 23 plus a regional apparatus. CHRIS Well indeed but wouldn’t it make much more sense for a nation of four million people to simply centralise the administration of Health? DAVID Can I take the question in two parts Chris cos it's a really important question. If the question is – is there efficiency gain and productivity gain that can be secured in the health system, then my answer is unequivocally yes. I've never seen a system that big and that complex that you couldn’t help get efficiency gain and I'm determined to drive for it, I've got work going through the Cabinet process at the moment that we'll be talking about in public very shortly which will help in that regard and I've given some indication about some of the key enablers you have to get right, the information flows, the workforce planning and the financially sustainability and incentives in the system, those are all some of what I call the underlying enablers of getting it right. It's hugely complex, heaps of vested interests, sub specialised, geographically specialised and how do you get the right balance between a community having a say about its future in the health system and having good national integration. CHRIS Or small sections of a community building up a kind of self interested empire costing the taxpayers lots of money. DAVID Quick answer, don’t start by knocking over the structure, start by getting the process tuned, that’s where we're going. RAWDON Alright, thank you very much indeed David Cunliffe, I do appreciate you coming in.
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