Ryall Tony: Questions for Oral Answer — Questions to Ministers 
Ryall Tony: Questions for Oral Answer — Questions to Ministers 
[Volume:638;Page:8176] 
3.  
Hon TONY RYALL (National—Bay of Plenty) 
 to the  
Minister of Health 
: Does he have confidence in the three Auckland regional district health boards’ chairs and why? 
Hon PETE HODGSON (Minister of Health) 
: 
 I said to the House yesterday that my confidence in the three Auckland regional district health boards hinges on their ability to secure reliable community laboratory services for Aucklanders from 1 July 2007 and on their ability to repeat the request for proposals process—this time successfully. Today that is still my position. 
Hon Tony Ryall 
: What plan does the Minister have to ensure that over 1 million Aucklanders can get quality medical tests in 3 months’ time; and is he really going to rely on the people who caused this fiasco to fix it? 
Hon PETE HODGSON 
: Yesterday a contract which was in place from 1 July and covering all Aucklanders was struck down by the High Court as being ultra vires. That is where the situation rests right now. There is no new contract in place now and there is no ink that has dried. I have however spoken with many people as one might expect in the last 24 hours including all of the chairs and the deputy chairs of those district health boards and assorted people within those boards and the Ministry of Health. I can advise the House that there is a strong and urgent commitment from those district health boards to ensure that services from 1 July will continue. 
Maryan Street 
: Can the Minister confirm that the savings to the Auckland region were thought to be in the order of $15 million per year and can he say what difference the reinvestment of such a sum would make to the health of Aucklanders? 
Hon PETE HODGSON 
: It is my understanding that the savings were thought to be around $15 million per year and $15 million is a lot of money. It would for example deliver an extra 20 hip replacements in the Auckland region each week. It is pretty clear that $15 million is also reminiscent of Diagnostic Medlab’s net profit for 2005 which was $16.3 million or 21 percent of its turnover. Value for money in our health system really matters. 
Barbara Stewart 
: Would the Minister agree that there must be a better way of conducting contract negotiations in the health system than relying solely on district health board officials who may be unduly influenced by budget restraints; if so can he assure New Zealanders that this situation will not occur again? 
Hon PETE HODGSON 
: There are roughly 16500 contracts in the New Zealand health system. I must admit that very few of them are as expensive or as large as this contract which is why presumably it has been a closely fought contest including in the courts. My view is that the negotiation of contracts in the New Zealand health system is generally good or better than that. I must say that this court ruling is most unfortunate and will cost a lot of time. 
Sue Kedgley 
: Does the Minister regret the fact that he did not intervene earlier in the Labtests Auckland decision as he received repeated requests to do and does he acknowledge that his failure to intervene has contributed to the present fiasco which will cost taxpayers millions of dollars and potentially put the ability to deliver effective health services to Aucklanders at risk? 
Hon PETE HODGSON 
: Of the 16500 contracts in place in the New Zealand health system I myself am involved in the negotiation of none of them. I say that it is a really important thing for our political system to deliver. The moment when a politician starts to negotiate contracts small medium or large is the time at which the possibility of a corrupt outcome exists. 
Heather Roy 
: In light of that answer just what responsibility does the Minister himself accept for this costly fiasco when he was advised of the clear conflict of interest and the improper process that the district health boards had followed throughout the tender process—or does he refuse to take responsibility for any of the failures of his health system? 
Hon PETE HODGSON 
: The member is correct that assertions of a conflict of interest were made some time ago on a number of occasions by a number of interested parties. The advice I have received from district health boards and from the Ministry of Health is that the conflict of interest was being managed appropriately. The judge of the High Court yesterday found otherwise. 
Hon Tony Ryall 
: Does the Minister agree with the Chairman of the Auckland District Health Board Wayne Brown in his statement of August last year that Dr Bierre “was not privy to any information or participated in any discussion or decisions regarding the tender.” when the High Court judgment raises questions as to how that could possibly be correct? 
Hon PETE HODGSON 
: My understanding of the facts of the matter is that Wayne Brown was correct when he made that point—that Dr Bierre was not involved in the tender process. However— 
Hon Tony Ryall 
: Oh! 
Hon PETE HODGSON 
: Well that is the member’s question. However the judge found that Dr Bierre was mindful of the quantum of money that the Auckland district health boards had hoped to save. He dwelt on that at some length in his judgment and found that it was a contributor to his conflict of interest finding. 
Hon Tony Ryall 
: How can it be that Wayne Brown says that Dr Bierre was not involved when the court judgment shows that Dr Bierre was invited to a meeting with Auckland health bosses in November 2005 to specifically discuss the tendering of laboratory services when minutes show he was openly hostile about his competitor and when as a result of Dr Bierre’s attendance at that meeting a revised draft discussion document was circulated to district health board members including Dr Bierre himself? 
Hon PETE HODGSON 
: The member is correct. He has got that information straight from the judgment that came out yesterday—straight from the judgment. That does not conflict with Wayne Brown’s point that Dr Bierre was involved in the tender. Clearly Dr Bierre was found to be— 
Hon Bill English 
: Nothing went wrong; no one’s to blame—same old story. 
Hon PETE HODGSON 
: If the member would like to put a sock in it ever so briefly— 
Madam SPEAKER 
: A question has been asked. It was heard in silence. Let us hear the answer in silence. 
Hon PETE HODGSON 
: I say to the member that Dr Bierre in a formal sense was not involved in the tender but the judge found clearly that Dr Bierre was involved in a conflict of interest. He found that very clearly; it is a very clear finding. And it is also very strongly worded. He said that the involvement of Dr Bierre as far as the district health boards were concerned was entirely inappropriate. 
Hon Tony Ryall 
: Does the Minister recognise that the High Court declared this contract unlawful because Wayne Brown failed to deal with Dr Bierre’s conflict of interest on numerous occasions and that because of Wayne Brown’s mismanagement the health system in Auckland may face huge disruption and millions of dollars of legal claims? 
Hon PETE HODGSON 
: If we go to paragraph 158 of the judgment I suspect that that is where the key language is to be found. The judge found that the action taken by the three Auckland district health boards to address Dr Bierre’s serious conflict of interest was “entirely inadequate”. I agree with the member. 
Hon Tony Ryall 
: Would the Minister like to confirm that the full context of what he said from paragraph 158 states further: “From the time Mr Brown became aware of Dr Bierre’s serious conflict of interest the ADHB was obliged to address it. The action taken by the regional DHBs was entirely inadequate. Indeed apart from Dr Bierre’s abstention from voting on the 4th August resolution there was no action.”; why cannot the Minister realise that Wayne Brown’s inaction on dealing with Dr Bierre’s conflict of interest on repeated occasions is the reason why this contract is being overturned and is the reason why he should be held accountable? 
Hon PETE HODGSON 
: The sequence of events is that a member of this House Dr Paul Hutchison received a letter from Dr Tony Bierre that invited him to support Dr Tony Bierre’s case to establish a community pathology business. Dr Hutchison in a short and carefully worded letter to Mr Wayne Brown advised him of the possibility of a conflict of interest. I thank Dr Hutchison for his contribution. On receipt of that letter Mr Wayne Brown went to Dr Bierre—it is all in the judgment—and asked what was up. Dr Bierre wrote back saying his business plans were in mothballs. What he did not tell the board or anyone else subsequently was that he was taking them out of mothballs. 
Hon Tony Ryall 
: Has the Minister been told why despite knowing that Dr Bierre was intimately involved in Labtests Auckland’s proposal and that Dr Bierre was a critical player in the thinking behind the whole tender process involving the Auckland District Health Board Wayne Brown and the other district health board chairpersons even tolerated the fact that they had received a bid from a consortium involving one of their own members who had been intimately involved in putting that whole tender out? 
Hon PETE HODGSON 
: For the avoidance of doubt I tell members that I absolutely accept the judge’s findings—absolutely. However within that finding— 
Madam SPEAKER 
: I tell the Hon Tony Ryall that he was accorded the courtesy of asking his question in silence. This is an important matter. I ask the member please to do the same for the Minister. Would the Hon Pete Hodgson please address the question. 
Hon PETE HODGSON 
: A full reading of the judgment—I am sure the member has made one—will detail the steps that the district health boards took to satisfy themselves that they had addressed the conflict of interest. They did satisfy themselves; they did not however satisfy the judge.