GUEST BLOG: Ian Powell – Mental health funding mystery and mischief


One of the difficulties that can occur in parliamentary politics is that the response of the government of the day responds to an opposition party spinning a yarn that makes it look bad is to either behave like a possum in the headlights or defensively spin back. The more sensible and effective response would be empirical; sticking to and better explaining the facts.

This was illustrated by the controversy involving the $1.9 billion funding boost for mental health announced by the New Zealand government in its Budget for the 2019-20 financial year and the claim by the National Party mid this year that so little of it has been used highlighting the low increase in hospital beds (reportedly five).

This keeps being repeated but what is omitted by critics is that the $1.9 billion boost covers five financial years. The controversy has caused much frustration among those working in mental health in both district health boards responsible for delivery and within the Ministry of Health.

What does the $1.9 billion mean

The significant of the $1.9 billion for mental health is that it was one of the cornerstones of Minister of Finance Grant Robertson’s Budget branded as the wellbeing budget. What is less well understood is how this funding has been allocated. Only a little has to date actually found it ways into mental health services. A smoke and mirrors illusion of a big increase in funding comes to mind but, for those on the mental health ground, nothing substantive has really changed.

Of the $1.9 billion, around 47%% ($900 million) went to the Ministry of Social Development, Oranga Tamariki, Ministry of Education and Department of Corrections. This is laudable but the point is it wasn’t funding for district health boards (DHBs) who are responsible for ensuring the provision mental health services to their defined populations.

Of the remaining 53%, only $300 million went to increasing the ‘mental health ringfence’ (what DHBs are expected to spend on mental health from their total government funding envelope). $400 million was for various programmes and $80 million to specialist mental health services (around $800,000 to a DHB serving 10% of the country’s population). Again remember that this is all over five years. Divide the amounts by five if you want a notional per annum average.

Hospital beds

This then leaves mental health hospital beds for which the funding is $200 million over five years. Notionally this would suggest spending on average around $40 million annually. In reality the planning and approval process means that bed expansion would be slow starting (unlikely to be many in the first year or two) and then, if all goes well, increase exponentially.

National Party leader Judith Collins was mischievous when she said after the controversy first broke that she was tempted to go to Bunnings and personally buy a couple of beds. Physical beds are not the big cost issue. To begin with suitable facilities have to be considered. Can new beds be added to existing wards, do existing facilities have to be reconstructed, or should new facilities be built?

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In the first instance a business case has to be put to the DHB’s governance board. If the cost is $10 million or more (a ridiculously low threshold) a board supported business case then goes to the national Capital Investment Committee (via the Health Ministry) which then makes a recommendation to cabinet. This is a slow and arbitrary process with much going back and forth; especially as $10 million these days doesn’t buy much.

Bay of Plenty experience

The experience of the Bay of Plenty District Health Board is revealing. It has come into conflict with the Health Ministry over the number of beds needed in a planned new mental health unit at Whakatāne Hospital. Whereas the Ministry was insisting on a 10-bed build (the same number as the existing unit), the DHB considered the minimum should be 14 based on a needs assessment.

There is no doubt in my mind that in recommending a minimum of four extra beds, the DHB’s recommendation was based on expert clinical advice including from its psychiatrists, psychologists and nurses. This was required if the substandard existing facility was to be fixed. By contrast, the Ministry’s relevant experience was less.

For perspective on how far the Government’s $200 million over five years can go, just to rebuild the existing 10-bed facility with the same number of beds was estimated to cost $18 million.

What characterises this experience is how highly centralised the decision-making process already is and how much this centralisation slows things down. The decision over the unit rebuild, including bed numbers, should have been left to the DHB who, through its frontline health professional workforce, had the greater expertise.

The Government’s unilateral decision to abolish DHBs will increase this already high level of centralised decision-making thereby making the situation worse than it is now and increasing the likelihood of the wrong decisions being made.

Workforce crisis

But capital works isn’t the end of the matter. Beds are plant as are the facilities they are located in. Compounding the situation is the fact that health is highly labour intensive, particularly with health professionals including medical and nursing. Mental health is invariably the largest service that DHBs directly provide.

Beds are useless without health professionals. They don’t even have a bedside manner. Increasing beds requires increasing the number of psychiatrists, psychologists and nurses (among others). But DHBs already face severe shortages and are dependent on international recruitment at least for psychiatrists. The lead-in time is immense and the competitiveness of our remuneration and working conditions poor. This is a crisis.

This will only be addressed if the Government develops a plan to overcome the crisis, which isn’t confined to mental health (its widespread across all DHB services). Unfortunately, to date, its approach to planning has been not to have a plan.

Ian Powell was Executive Director of the Association of Salaried Medical Specialists, the professional union representing senior doctors and dentists in New Zealand, for over 30 years, until December 2019. He is now a health systems, labour market, and political commentator living in the small river estuary community of Otaihanga (the place by the tide). First published at Otaihanga Second Opinion


  1. Upon reading this … I would say that removing the ‘middle-men (the DHB’s) scenario’ would be of some (huge) benefit?
    Regional DHB’s and a Ministry of Health and all the bureaucrats that go with it.
    Get rid of them!

  2. Money reaching therapists does nothing good except usually harms people more. The treatments are unscientific and harmful.
    The problem is the best treatments are diet and lifestyle, and they are free.

    And they work on cancer and cardiovascular disease as well.
    Jah Bless

    • Mental illness is centered on trauma, biochemical and psycho social. Diet and exercise whilst physically healthy offers little for those suffering psychosis.

      • Adventist clinical studies have shown greater efficacy of cardiovascular therapies such as diet and lifestyle, in regards to improved mental health.

        No stimulants, fermented foods or drinks, low to no salt and sugar. Low to no meat or dairy. If it was good enough to impress the old war lord of the worlds first great city, King Nebuchadnezzar, its good enough for me.
        Like the hippies of the 60’s, peace and love ensues.

        The god given endocannabinoid system up regulates and gods peace becomes manifest more easily. If ya struggling gan-jah my show you a glimpse of extreme non psychotic states of mind.

        Jah Bless

  3. Looking at the matter holistically, I would think treatments including diet would be best, not just one size fits all.
    And that seems to be the problem with the Health Dept. Their diet is at fault, too many bean-counters up to their necks in beans, and as we probably all know, beans cause a lot of gas.

  4. DHBs depending on international recruitment for psychiatrists…this is above grim in our head-in-the-sand nation of o’connor loving sycophants. Patients of the ECT enthusiast Dr Selwyn Leeks still given no closure as he now, apparently, practises his gory trade in Melbourne, only a short plane ride away, and has never been charged with the insane cruelty inflicted on hundreds. Him and his ilk had best stay away and leave the healing to the humans currently being persecuted under an antiquated law driven by the religious right which is forcing humans to eat shit (and die, mainly)
    Johnson& Johnson have been sued for billions in the USA for their baby powder causing skin cancer and their widely prescribed anti-psychotic Respiradone/Respiradal which causes men to grow breasts and also causes akathesia, a trembling, shaking, out of control perpetual motion effect, a psychosis in itself, yet Little & co obviously throw a big dollop of cash their way because it’s still being prescribed here, for what I can only say would be a sadistic pleasure akin to Dr Leeks’.
    Some of that huge amount of money which only a royal, a banker or a popstar would entitle themselves to, should be given in compensation to all the survivors of Leeks at Lake Alice etc who have had their lives crushed by the machine.
    One central health bureau? Are you kidding? next thing there’ll be no money left and Vanessa will have to sell off the rights to our thoughts and body parts to Google (Larry Page just got citizenship here) and Facebook, in the form of non-fungible tokens, parts to be collected later by the helicopter on the roof long with vials of wet-ware for the older vampires and other organics wishing to transfuse some beneficial-to-them DNA.
    Money to Corrections? for mental health? are you serious? $900,000,000…”Oh, but, but, new handcuffs are expensive these days, and those tasers and bracelets, same. His Royal Highness prince Ardrew would not like his guests to incur blood poisoning from the rust, it would be useless! The vials are never returned either..those celebrities, ahh…”

    Money to Corrections for mental health??? That’s around $180 per capita, in NZ/Aotearoa, more than a food grant for a whole family.
    Money to Corrections for mental health??? Is this to build more underground holding cells for every Judge Adeane /Baraitiser/Sharp type to throw their victims?
    Money to Corrections for mental health??? that’s like throwing a pack of rabid dogs into a holding paddock full of sheep and waiting for the hand knitted jerseys to appear on the fence.
    $900,000,000..compared to the $600,000 to the pragmatist, that’s fifteen thousand lots of gumboot fridays, Mr Little, and you’re still buying respiridal, the drug that fucks your body and mind in one go, well done.
    Money to Corrections for mental health? Yes ok, but WHOSE mental health?


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