Tuesday, September 04, 2007

Looting the state

Parliament is back this week, and the opposition is continuing its attacks on the government's management of the public health system. This is a bit rich coming from a party which drastically cut health services when it was last in power, to the extent that we had third world diseases rampant in Auckland and the gap between Maori and Pakeha life expectancies grew by two years. But apart from that, we're also entitled to ask what National would do about it. Unfortunately, their answer isn't very pleasant.

Firstly, National campaigned last election on a 90's style platform of cutting public access to health care in order to fund tax cuts for the rich. They've also opposed proper pay for health professionals, meaning that they want to see more doctors and nurses crossing the Tasman in search of higher wages, and more staff shortages in our hospitals. Oh, and they support making more use of private hospitals by contracting out - a move which is inherently more expensive than performing operations in-house, as it has to also pay for the provider's profit over and above the costs, and which is aimed primarily at funnelling public money into the private pockets of National's wealthy donors and cronies.

More recently, John Key has been talking about using public private partnerships to fund new infrastructure, including hospitals. For those who don't know, a "public private partnership" (PPP) is the new style of privatisation. Rather than selling an asset, the government contracts out its management to a private company. Alternatively, private companies construct new assets (such as hospitals) and lease them back to the government. In both cases, the fees are exorbitant, and the government typically bears all of the risks if the contractor screws up. The system is widely used in the UK, where it is known as the Private Finance Initiative, and as George Monbiot points out in the Guardian today, it has been a complete disaster. Here's an example of how it has worked in the NHS:

The problem was that much of what the NHS wanted to do was not attractive to private financiers. In Coventry, for example, it had been planning to refurbish its two hospitals at a cost of £30m. But its analysts realised that business would not be interested. The scheme was too small, and there was no scope for the financial innovation that could produce serious profits. As a confidential report by the local health authority showed in 1998, the health service redesigned its scheme to make it more attractive to private capital. Instead of refurbishing the two existing hospitals, it would ask private business to knock them down and build a new one - the University hospital. This would cost not £30m but £174m. The health experts who wrote the confidential report predicted that in order to find this money, the hospital trust would have to cut both beds and services. They have just been proved right.

Did I say £174m? I beg your pardon. By January 2002 the price had risen to £290m. A month later it reached £311m. By the end of that year it had grown to £330m. In 2003 it was estimated at £370m. In March 2007, the Birmingham Post reported that the final cost was £410m. This year the hospital trust must find £56m, covering repayments and service fees, to hand to the private consortium. The annual cost will rise in line with the retail price index for 30 years.

As a result, the hospital has had to slash staff and services, close wards, sack 100 people (with another 200 - 300 on the way), and impose user charges. And all in order to meet the guaranteed payment for their new hospital, which they didn't need to build in the first place. The people of Coventry now have one hospital which is at the bottom of the national league tables, where previously they had two good ones. But the financiers have gotten rich, which is apparently all that matters.

I think its clear from the above that National doesn't have a solution to the problems with our health system. Instead, as with so much else they do, their policy is really all about looting the state and transferring wealth from the poor to the rich - just as it was in the 90's. And on the issue of health, I think the public of New Zealand deserve something better than that.