Urgent Debates — Hawke’s Bay District Health Board—Appointment of Commissioner 
Urgent Debates — Hawke’s Bay District Health Board—Appointment of Commissioner 
[Volume:645;Page:14530] 
Urgent Debates 
Hawke’s Bay District Health Board—Appointment of Commissioner 
Madam SPEAKER 
: I have received letters from Heather Roy and the Hon Tony Ryall seeking to debate under Standing Order 380 the decision by the Minister of Health to remove the Hawke’s Bay District Health Board and to appoint a commissioner. This is a particular case of recent occurrence and does involve ministerial responsibility. Given the significance of the decision I consider that it does require the immediate attention of the House. I therefore give priority to the first application I received—that from Heather Roy. Before I call the member I remind members again that there is in place an interim injunction preventing the disclosure of the contents of the first draft of the report of the inquiry into the management of alleged conflicts of interest at the Hawke’s Bay District Health Board. I call on Heather Roy to move that the House take note of this particular case of recent occurrence. 
HEATHER ROY (Deputy Leader—ACT) 
: 
 I move  
That the House take note of a matter of urgent public importance 
. Last week the Minister of Health David Cunliffe sacked unceremoniously the Hawke’s Bay District Health Board or to be fair the seven democratically elected members of the Hawke’s Bay District Health Board. At that time he appointed a commissioner to run the board. The decision has created a prolonged public outcry in Hawke’s Bay. In fact the outcry had begun long before last week. People are understandably feeling aggrieved. They elected the members of the district health board. They know them they trusted them with their health services and now those members have been evicted for reasons that are far from clear and appear to be known only to the Minister himself—and he is making a very poor show of putting them forward in any clear way. 
The issues in Hawke’s Bay have been ongoing for some time. In fact they go back to early 2005. The then health Minister Annette King approached the now famous Peter Hausmann and asked him whether he would be interested in being one of her four Government appointees to the board. At that time the board members themselves and the Ministry of Health raised concerns about his appointment—in particular about possible conflict of interest situations with regard to his company Healthcare New Zealand. But those concerns were overruled by Annette King and Peter Hausmann was in fact appointed to the board. 
Since that time a number of issues have arisen. The Hawke’s Bay District Health Board I would contend is one of the best performing—or it has been—boards in the country if not the best performing. That its members now find themselves in this situation of having been sacked and replaced by a commissioner is unprecedented under the district health board system and has raised many questions that must be answered. The Minister of Health should take his opportunity in this debate to address these questions. 
He wrote to the board on 20 February after some serious issues had been raised in this House. He said that the board had a rapidly deteriorating financial situation. In fact if those figures are looked at today people will find they are at only 1 percent variance with the projected position at this point in time. Not many boards would be able to say that they are as close to their projected positions as this board was so the description “rapidly deteriorating financial performance” is certainly questionable. Alongside that over the past 18 months the district health board had signalled three times to a variety of Ministers of Health that it was concerned about the way that the population-based funding formula was being administered and put in place particularly in relation to itself and it felt that it was being penalised. 
His second concern was the increasing lack of confidence in the board’s integrity. That boils down to one thing: this Minister is feeling that he is being personally attacked. That too is very questionable. If one looks at the media statements it is very hard to see how he could possibly have concluded that. If he is feeling that he cannot take the odd personal attack then perhaps it is time for him to look for not just a new job outside Cabinet but a new job completely come this election. 
The third reason he wrote to the board was what he called the dysfunctional relationships between the board and himself as Minister and between the board and management. A variety of letters have been put forward including some by the Minister himself in which contentions are made that management and the board do not get on. I think there very often are tense relationships between management and governance in any organisation but usually those are worked through. However his evidence has come from two sources it seems: firstly from Peter Hausmann who has some issues with the district health board that are now very well publicised; and secondly from Chris Clarke the chief executive who despite the fact that he was on 2 weeks’ stress leave was not quite so stressed as to not be able to write a letter to clarify his position at that time. 
The fourth concern the Minister raised was about the Auditor-General’s report of 28 January into the district health board. He said that it reflected very poorly upon the board. But having sat on the Health Committee and having seen Auditor-General reports into a wide variety of boards—in fact almost all 21 district health boards—I can say that the board’s results were not out of keeping with those of any of the boards. In fact the board did not receive the worst performance rating on any of the parameters. 
It is often very easy to confuse the roles of governance and management. I do not think that has happened at this board. The governance boards are elected to govern the process and management is meant to deal with the operational matters the day-to-day matters that a board undertakes. 
Two different reports have been talked about in the media of late. The first is the longstanding review into the conflict of interest situation. We eagerly await the second draft being released by the Minister on he said today 17 March. I understand that that process is under way at the moment. However one of the issues surrounding this review is the fact that there have been two drafts. The first and second drafts it now seems to be pretty widely understood are completely different. In fact the second draft takes a position that is almost 180 degrees away from that of the first draft. 
Hon David Cunliffe 
: What would that member know? 
HEATHER ROY 
: The Minister of Health will have his chance in a minute. I have not seen the drafts I say to Mr Cunliffe but neither have I made statements in this House that contradict the fact that I say I have not seen them. We eagerly await that draft but we also eagerly await the process—[ 
Interruption 
] 
Rodney Hide 
: I raise a point of order Mr Speaker. I am sorry to interrupt my colleague Heather Roy but the Minister of Health will get his chance straight after this speech. He has studiously avoided answering questions in the House on this matter and now when the Speaker gives an opportunity for a debate in this Parliament he is yelling out trying to stifle and shut down that debate. I ask you Mr Assistant Speaker to tell him to be quiet and wait his turn. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Thank you for that Mr Hide. The reality is that people are able to interject but one would expect that they would do it in a manner that would not cause undue disruption to the House. 
HEATHER ROY 
: The fact of the matter is that this review is now so severely compromised by accusations of political interference of cover-ups and of questionable testimonies and by widely differing drafts of the review that there can be no confidence by the public by the Ministry of Health or indeed by this current Minister as to the outcome of it. There is only one viable option that should be taken and the Minister should have taken it long ago—and if he had any credibility at all he would have taken it. The Minister should have the review investigating the allegations of a conflict of interest at the Hawke’s Bay District Health Board handed over immediately to the Auditor-General in order to ensure that the truth of the matter is exposed. No matter how well intentioned the 3-man committee conducting the review it is now operating outside its brief and Mr Cunliffe should immediately instruct the Director-General of Health to hand over the entire process to the Auditor-General. 
The reputations of good people are at risk and the Minister can take that any way he likes. The reputations of good people of good well-intentioned and capable people are at risk and have been compromised. That alone is reason enough for an independent review to be taking place. But most important the people of Hawke’s Bay should be assured that their health priorities are paramount and that past mistakes will not be repeated. 
A second report was highlighted at the weekend. It was an Audit Department report into another contract a completely different contract from the Healthcare one that the conflict of interest review is over. This conflict of interest allegation surrounds a Government-appointed board member—namely the same Mr Peter Hausmann. This time though it is in regard to the Wellcare contract. That organisation is a subsidiary of Mr Hausmann’s company Healthcare and the audit report looking into that particular contract listed 11 failings in the process. The board it transpires was unaware of the contract until a month after it had been signed by the chief executive Chris Clarke. If that does not raise alarm bells with the Minister of Health then he is well past his use-by date and should have gone some time ago. 
But I want to go back to the sacking of the board because that after all is what this debate is about. The Minister when he announced the sacking of the board was doing one thing and let us be very clear about it: the Minister was putting saving face over saving lives. He was saving face for himself he was saving face for his colleague Annette King—who sits not many seats along from him—for her wrongdoings as Minister of Health but most of all he was trying to save face for his Government. Well that will not wash in Hawke’s Bay I say to Mr Cunliffe because I doubt that his Government will get one single vote in Hawke’s Bay this election. Actually that is wrong; it will get three votes. It will get one from Russell Fairbrother one from Michael Cullen and there is probably one other person who will vote for it. 
Rodney Hide 
: Chris Clarke. 
HEATHER ROY 
: That is right—it will be Chris Clarke. Mr Hausmann cannot vote there because he does not live in the area. He lives in Wellington. 
The Hawke’s Bay District Health Board warned Mr Cunliffe about its worsening deficit position but he ignored it as had his predecessor Pete Hodgson. So that was not the real issue. What had happened at Hawke’s Bay was that Mr Cunliffe had set the board up to fail. Every other district health board in this country had four Government appointees put in place on 10 December last year. That allowed those newly elected district health boards to put in place the committees they are legally required to have to get on with their planning processes and to give the public confidence that their health services were respected and would move forward so that access to public health care was able to happen in this country. 
However the Hawke’s Bay District Health Board has been made a scapegoat and I suspect that the decision to sack all of its publicly elected members was made well before the public announcement. In fact I know that because the Hon Parekura Horomia is known to have told people in Wairoa on the weekend before the announcement was made that Cabinet had already made that decision. So it was a farce; it was a farce that the Minister wrote to the Hawke’s Bay District Health Board asking it to answer his four questions because Cabinet had already made that decision. 
Hon Parekura Horomia 
: You’re making it up. 
HEATHER ROY 
: I would tell the Minister to think very carefully about whom he spoke to that weekend because he told people that the decision had already been made. This just gets worse and worse. 
Being seen to criticise the Government is a cardinal sin to Minister Cunliffe—a problem that he feels must be nipped in the bud immediately. His fear is that the Hawke’s Bay District Health Board was allowed to speak the truth for far too long. How long would it be if that were allowed to continue before other district health boards—heaven forbid—followed suit? This announcement was a scare tactic. The Minister Mr Cunliffe was using the Hawke’s Bay District Health Board as an example to frighten away other district health boards from speaking out when they have concerns about health care for their patients. He has used his significant ministerial powers as a form of behaviour therapy. 
I tell New Zealanders to watch out because their district health board might be next. The Minister has a large number of questions to answer. He is responsible to the people of Hawke’s Bay and responsible to the people of New Zealand for public health services and those questions must be answered. One thing is for certain: the truth will out. I am certain that before much longer it will come out. As Minister Cunliffe nods his head and stands up to pretend yet again that he does not know what is in the draft I say that he should be very careful. 
Hon DAVID CUNLIFFE (Minister of Health) 
: 
 It is appropriate that the House debates today an important juncture in the life of the Hawke’s Bay District Health Board. It is with sadness that during the last week I concluded after the most careful consideration that I had no feasible alternative but to ask a new commissioner Sir John Anderson who is to be supported by three deputy commissioners to run the affairs of the Hawke’s Bay District Health Board in order to stabilise a volatile situation and to address a range of serious governance financial and relational concerns. Throughout all of this process acting on advice I have done my best to uphold the interests of the people of Hawke’s Bay for the sustainable delivery of health services in that region. As Minister I also have responsibility for the overall well-being of the health care system including the relationship between that Crown entity and the Crown as a whole as vested in the office of the Minister and the ministry. 
All New Zealanders expect that our scarce health dollars are to be spent wisely on the best health services that we can afford not wasted on internal feuding and not allocated via processes that may lack transparency or proper safeguards. At the heart of the removal of the Hawke’s Bay District Health Board is a single simple issue—that is the public are entitled to have confidence in the health system. In terms of Hawke’s Bay this means that the services provided by the board are appropriate timely and of the highest quality possible. 
On 20 February I wrote to the Hawke’s Bay District Health Board expressing my serious dissatisfaction with its performance and I asked for reassurance on a number of issues. I noted that these issues had led me to the consideration of urgent action in the public interest in order to maintain the highest standards of public confidence in the region and that such action could include the appointment of a commissioner under section 31(1) of the New Zealand Public Health and Disability Act 2000. Those issues included financial mismanagement. Whether we like it or not this board is facing a major budget blowout and at the time I made the point that the board had seen a significant deterioration in its financial position. It was among the worst-performing boards in terms of its deficit and it stood out as one that did not have a credible recovery plan. The real issue is about how the board would have addressed that deficit and its reply to me made no credible attempt to show how it could do so. 
This district health board also has a record of not achieving its own plans including those listed in its district annual plan. Indeed the chairman of the board had been quoted in the press as suggesting that the plan submitted had not been done so with the intent of carrying it out. 
Under this board’s watch the deficit had blown out from a projection of near balance to a projection of some $8 million deficit overall but interestingly it was closer to $11 million on its provider account. All of this was in a year when its funding had increased to around $380 million representing an increase of 109 percent since this Government took office. I therefore reject the assertions from the board that the Hawke’s Bay District Health Board is in any way underfunded. Health boards are funded using an objective population-based funding formula. It is precisely because we do not want to see favouritism that that formula applies evenly to all districts. The formula of course takes into account a range of factors such as the age of the population deprivation and ethnicity. I am advised that the Hawke’s Bay District Health Board is funded above average on every part of the formula except one. As I said under this Government the board’s revenue has increased by more than 100 percent. 
I answered in the House questions on Hawke’s Bay District Health Board’s proposed use of the proceeds from the sale of Napier Hospital to fund its deficit. The chairman asserts that there was no intention to use capital funding to fund operations. Indeed to use capital funding in such a way would have been not only contrary to my predecessor’s instruction but contrary to established principles of financial management. [ 
Interruption 
] It is possible that members such as Mr Tremain may not have served the board well in that instance. 
There have been a number of conflicts at the governance level between the board senior management and clinicians. There is a long history of this and a whole range of claims and counterclaims that are themselves the subject of an independent governance review process that my predecessor asked the Director-General of Health to establish. However pending that reporting process—which was itself delayed by the actions of this board which in the week before my decision sought an injunction to delay it—we have a range of significant issues with which the district health board has been left to deal. We have had a board chief executive officer who has been on stress leave. Although it is the responsibility of any board to monitor its chief executive officer I would expect that monitoring and any performance concerns to be dealt with in a productive and appropriate manner. It appears to me that this may not have been the case as it is alleged that the board met with the chief executive officer to discuss his performance only once for 10 minutes in November 2006. 
Without taking a position on matters that may be the subject of the director-general’s independent governance review I was forced to consider a situation where the chief executive officer of a district health board was on stress leave and where there were clearly divisions between the management ranks and the board. There have also clearly been divisions within the board itself that have resulted in the expenditure of significant sums of money on legal fees. A read of the papers attached to my decision of last week—which were released on advice—will show an unsustainable level of conflict between the board members and the chief executive officer and a number of clinicians. 
We have reports and submissions of five of the seven senior managers on the point of leaving the district health board. We have divisions at senior clinical level with at least two of the senior medical officers Dr David Grayson and Dr Richard Tustin both feeling forced to go public with their misgivings about the board’s governance. It is interesting that the surgical senior medical officer said: “What the Minister has done here is to identify the real crux issues of good governance and I agree that it was the right thing to do at this stage.” Although I acknowledge there has also been comment from other clinicians in support of the board the mere fact of highly polarised views further suggests dysfunctional relationships. 
Let me turn to matters surrounding the integrity of the board and its relationship with the Crown. There have been what I consider—after due consideration and after receiving advice—to be consistently inappropriate patterns of behaviour with board members crusading in the media to reinforce their own positions. We have board members such as the Chairman Mr Kevin Atkinson arguing in an opinion piece in  
Hawke’s Bay Today 
 on 10 December last year that his views on governance differed from those of the confidential review panel process. On Monday 18 December Mr Atkinson went on to say again in  
Hawke’s Bay Today 
 that the health of Hawke’s Bay people was being jeopardised by the delay of the review—jeopardised by the delay of the review that only days later he himself sought an injunction to further delay. 
Hon Members 
: Why did he do that? 
Hon DAVID CUNLIFFE 
: “Why did he do that?” my colleagues ask. 
In my letter of 20 February I asked the board to refrain from public comment on the process of submissions in order to depoliticise the situation and to allow for a fair and objective process. There have been many comments by the chair and other board members in the media since that time contrary to that request. 
In arriving at my decision I spent considerable time reviewing the submissions taking advice and yes searching my conscience on all of the options available to me. In the end my concerns for the Hawke’s Bay people and for the sustainable delivery of health services in that region led me to making this decision. I regret that the board’s own submissions did not satisfy my concerns. I repeat that there was no credible plan to fix the issues that have plagued this board. There was no substantive plan to deal with the financial deficit. There was no credible plan to restore or rebuild the key relationships that are essential to a well-functioning organisation. 
The solution was to put in place a commissioner with a fresh start a fresh approach and an ability to get on with the business of delivering high-quality reliable health services to the people of Hawke’s Bay. As the political editor of the  
New Zealand Herald 
 John Armstrong said in the weekend any partial solution would have been worse. He said: “The easy option—but the worst option—would have been some half-baked compromise that kept the existing board in place only for things to turn to custard at some subsequent point.” In addition the provincial newspaper the  
Manawatu Standard 
 noted that although it would have been easy to ignore the problem and throw a bit more money at it the decision made was “the right thing to do for the people of the Bay.” 
Since I have made my decision a considerable amount of new information has come to light and I have to say this has further reinforced my view. Questions have been asked however as to why I did not mediate. Why did we act against a board that had allegedly been in place for only 72 days? The vast majority of the board had been in place for far longer—most of them since 2001. I was appointed Minister of Health only at the beginning of November 2007 and I have attempted to bring to this new role an open and objective approach. I have considered the issue and the submissions provided to me and made my decision based on that information. Any claim that I am supposedly covering up for another Cabinet Minister or any other conflict of interest is just nonsense. All parties in this review process will be treated without fear or favour. I repeat that the director-general’s report will be made public on 17 March. I also make it clear that I have not seen the draft reports or been briefed in any way on their content which as noted by Madam Speaker remains confidential to the parties and subject to an injunction. I have made my decision without regard to that review. 
The member preceding me in speaking Heather Roy has suggested that my comments have undercut the integrity of the review process. I can only repeat that I do not have access to the draft comment and that I am as eager as any member to see the final version. I take it that the member’s comments are disparaging of a highly-respected and independent review panel that includes Mr Ian Wilson and Mr Michael Wigley. I call upon that member to apologise to those independent persons whose integrity she has impugned. The member has called upon the Office of the Auditor-General to mount a further review. Whatever decisions the Auditor-General might make are independent of me and are for the Auditor-General to consider but the Auditor-General has said—and I support this view—that that consideration can take place only once the director-general’s independent report has been tabled.  
Heather Roy 
: Well get on with it. 
Hon DAVID CUNLIFFE 
: Yes—would it not have been helpful if the Hawke’s Bay District Health Board had not attempted to injunct the process and had not attempted to slow down the report thereby requiring me to make a decision without access to its contents? 
Chris Tremain 
: You gave them 3 days. 
Hon DAVID CUNLIFFE 
: That is not true and the member knows it. 
Mr Atkinson the chairman of the board has alleged that I did not reply to correspondence and Ms Roy has said I ignored repeated warnings from the board. I have done a file search and I can confirm that the only letter—the only letter—received from Mr Atkinson by me was duly replied to as has been any correspondence to the Ministry of Health. That assertion does not stack up on the facts. As for the allegation of prejudgment by me or by Cabinet that was simply not possible. This was not a Cabinet decision. It was a ministerial decision of which Cabinet was informed. I told in writing the district health board that I was considering installing a commissioner and I also told them in writing the grounds for that. It can therefore hardly be news but I repeat that no decision was made until the afternoon on which the decision was announced because I had to carefully consider the material and the advice before making my decision. 
Mr Assistant Speaker I thank you for the opportunity to address the House on this serious matter. I seek leave to table my letter of 20 February 2008 to the chairman of the Hawke’s Bay District Health Board setting out my grounds for serious dissatisfaction with the board and my consideration of installing a commissioner. 
Document by leave laid on the Table of the House. 
Hon DAVID CUNLIFFE 
: I seek leave to table my letter to the chairman of the Hawke’s Bay District Health Board dated 22 February 2008 further specifying my grounds for consideration of that decision. 
Document by leave laid on the Table of the House. 
Hon DAVID CUNLIFFE 
: I seek leave to table my letter of 27 February 2008 to the chairman of the Hawke’s Bay District Health Board containing a notice of the decision to dismiss the board. 
Document by leave laid on the Table of the House. 
Hon DAVID CUNLIFFE 
: I seek leave to table an article by Mr John Armstrong in the  
New Zealand Herald 
 commending the decision and warning against half measures. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Is there any objection that course of action being taken? There is. 
Hon DAVID CUNLIFFE 
: I seek leave to table a recent editorial from the  
Manawatu Standard 
 similarly commending the decision. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Is there any objection to that course of action being taken? There is. 
Hon TONY RYALL (National—Bay of Plenty) 
: 
 I invite members to get a copy of the Minister of Health’s speech and swap the words “Director-General of Health inquiry” for the words “Ingram inquiry”. David Cunliffe is the Minister who week on week stood up in this House and defended every word in the Ingram inquiry. He said there was no evidence of foul doing anywhere. He said there were no questions to be asked of the member Taito Phillip Field at all. What came out of the Ingram inquiry is that that member had no idea what he was talking about and unprecedented legal action has been taken against the subject of the Ingram inquiry an inquiry that that member opposite defended week after week. 
Let us be frank here. This Minister manufactured reasons to get rid of the Hawke’s Bay District Health Board. He wants to shut down the people who will criticise the way he his ministry and the people at the district health board have dealt with the smelly and murky goings-on within the management of that district health board. He is clearing away that board so that it is unable to defend itself and put its case to this inquiry. He knows that this board is on to what has been going on behind its back—the murky dealings and Labour cronyism some of which I revealed in the House today. 
Let us go through the sequence of events that brings us to the House today. Annette King was the Minister of Health in early 2005 and her husband was the chief operating officer at the Hawke’s Bay District Health Board. Annette King appointed Mr Hausmann to the board of Hawke’s Bay District Health Board. She was warned about the conflicts arising out of appointing a major player in the health system to a district health board at a time when a contract was being developed for which Mr Hausmann was likely to be a tenderer. No one knew at that time that Mr Hausmann was colluding with the chief executive to amend the specification of the tender process documents to advantage himself and in the end his company proposal was chosen. The tender was for a contract estimated to range between $2 million and $50 million. 
As the months carried on more discussions went on between Mr Hausmann and the executive of the Hawke’s Bay District Health Board. Then eventually a whistleblower discovered that Mr Hausmann was in email discussion with the executive of the Hawke’s Bay District Health Board about a multimillion dollar contract in complete opposition to the view and the parameters that the board had set. So this whistleblower raised these concerns with the chairman. She alleged she was intimidated by the chief operating officer Mr Lind and she was subsequently restructured out of her job. Meanwhile the board discovered what was going on and cancelled this contract and some months later Mr Lind quit and went to work for Mr Hausmann. An inquiry was launched when these matters came to light as the result of a number of Official Information Act requests and this inquiry has dragged on for months. Damaged computer drives have had to be sent to London to be forensically reinstalled. There have been claims that one board member sent the board a bill for $500000 for legal expenses. Then Mr Cunliffe moved to sack the board. 
Let us join the dots. This is all about protecting Annette King and the foolish decision she made against advice to appoint Mr Hausmann to the board of the Hawke’s Bay District Health Board. Annette King has never answered this question: why appoint somebody whose conflict will be so intense? He was going to bid for one of the biggest contracts ever put out by a district health board so why would one insert him right into the middle of a conflict of interest? That is what she did. Annette King needs to explain why against the advice and the absolutely obvious information that he was going to tender for that contract she still recommended to Cabinet his appointment. While she was recommending to Cabinet the appointment of Mr Hausmann to the Hawke’s Bay District Health Board we now know that he was in discussions with the chief executive of the health board in Hawke’s Bay to get a copy of the tender documents. He then amended those tender documents to prefer his company. The specifications have been changed in such a way that his company would be the primary tenderer in that contract. That was going on at the time that Annette King told Cabinet that those conflicts could be managed. There is no way those conflicts could have been managed or were managed. Those conflicts continued in such a way that the whistleblower found those documents. She raised concern. She subsequently was restructured out of a job by the people whose double-dealings she had revealed. 
This is not good. This is bad. This is bad because it goes to the heart of the integrity of the public contracting process in New Zealand. We simply cannot have a health system that has board members with such an interest that they can collude with management to prefer themselves in contracts up to the value maybe of $50 million. We simply cannot allow that to happen in this country. That is why this solitary whistleblower got up and reported what was going on. What a brave woman—to be intimidated to be questioned and to be vilified. She still stood by what she said and what happened to her? She was restructured out of her job by the people she blew the whistle on after they promised her that she would be all right. This is unprecedented it is dreadful it is appalling and it is Labour cronyism at its worst. 
What should happen from here on is this. It is now very well known that the first version of this review which took 7 months to get is reported to be substantially different from the second version. What happened in the intervening 2 weeks? That is what Hawke’s Bay District Health Board members want to know because they are the people who have been trying to hold management to account throughout this whole affair. Instead of dealing with the concerns and the cronyism involved in this case this Minister has fallen into line. He released Mr Hausmann’s letter which contained confidential review panel documents. 
Hon David Cunliffe 
: How would the member know? 
Hon TONY RYALL 
: We know because it has been in the media that they were confidential review documents and we further know that he released a letter from Mr Clarke that was perfectly designed to be released. We can have all the huff and bluff from the members opposite but we know that this is a Minister who in his attempts to front-foot everything has stood in a pile of sharp glass. He is compounding the errors of Pete Hodgson and Annette King. In appointing Peter Hausmann Annette King inserted this man into a conflict of interest that could not be managed and Annette King stands indicted for her involvement in this. She has her colleagues and the full weight of the Ministry of Health and its officials involved in a cover-up to prevent the truth from being made available to the people of New Zealand. 
BARBARA STEWART (NZ First) 
: 
 This is an important issue and it is going to remain so until there is some resolution. We all agree that the sacking of a democratically elected district health board is an absolute last resort. It is to be hoped that this sacking of the Hawke’s Bay District Health Board and its replacement by a commissioner is not an indication of things to come in the health system and not something we will see repeated on a weekly basis. 
Two weeks ago the Capital and Coast District Health Board got into trouble for its perceived financial mismanagement for its failure to run a large and complex organisation while a new hospital was being built and for the running down of specialist services because of staff and funding shortages. Last week we had a report from the Auckland District Health Board about mental health services and those services did not get a very good report at all. Now the Hawke’s Bay District Health Board has been fired and replaced by a commissioner. I think we have to realise that these are very drastic measures and this is very bad news that we are hearing about. In the short term this will result in a lot of upheaval for the medical staff and consequently for the patients. 
When we look at the situation we see that the people of Hawke’s Bay deserve the best possible health care they can get. This daily debacle we hear about means that something has to be done and it has to be done radically. No one is asking when we can expect to see some resolution to this whole mess that we find ourselves in. I can understand why the people of Hawke’s Bay are really aggrieved. It was an elected board it did not have an opportunity to perform to the expected levels and we know that it had been in place for only 72 days—72 days after the board was elected it was sacked. It is a very interesting scenario. 
This afternoon the Minister said that the organisation was dysfunctional and in a rapidly deteriorating financial situation. If we look at that financial situation we see that it is only $7.7 million in the red and within the target range of coming out plus or minus 1 percent of its revenue. The Minister may not have noticed but there is not a district health board in the country that has not had financial problems and the problems of the Hawke’s Bay District Health Board are relatively minor when we compare them with some of the others. 
We will be very interested to read the report which we have heard today will be released on 17 March and the Minister has just emphasised this again. All we can say is that the level of confrontation that has arisen in this debacle has to be resolved as soon as possible and with the absolute minimum of trial by media. The Auditor-General needs to be very heavily involved and basically to lead this review if the Minister will not be involved in a hands-on way because it is only then that we will be able to have any confidence in the report and the investigation that is currently going on. 
We agree that the Minister needs to lead from the front on this particular issue. After all is said and done he is responsible for public health services and in New Zealand First we hold him so. We need some sort of assurance from him that the other district health boards will not have confidence in them eroded as has happened with the Capital and Coast District Health Board and the Hawke’s Bay District Health Board on a continual basis. It is not good enough. We need to trust our health system particularly given the amount of money that is invested in it. We know that other boards are also in dire financial straits and we do not want to see a repeat of this particular performance. 
We know that health service dollars have to be spent wisely in order to get the best possible value and the services must be appropriate and of the very highest quality available. I for one know that the long-winded purchasing procedure delays by years and years the modern equipment that many of our hospitals deserve and need here in New Zealand. 
We believe that Ron Paterson when he came to the Health Committee a few weeks ago had a very valid point when he stated that our district health system was unnecessarily complicated for the size of the population we have here in New Zealand. We have 21 district health boards. Often many of those boards are carrying out the same functions and it is more than likely that quite a few services could be amalgamated so that the best value could be obtained for the people of New Zealand. The health system needs some reorganisation but we do not believe that boards should be routinely castigated publicly because they disagree with the Minister or because they have funding challenges ahead of them. 
I was interested to hear the Minister adding that another reason for sacking the board which is that hospital clinicians were critical of it. When are doctors ever happy with a district health board? Very very rarely I would say. When we looked at it we saw that only two of the 120 clinicians at the district health board had ever publicly had a go at the Hawke’s Bay District Health Board. Ironically one of those clinicians has since left; he marched with his feet. 
We know that the health portfolio is causing this Minister some grief and exposing the board in this particular way is a very interesting way of trying to get the health system back on track again. We also know that we need a well-functioning organisation that will look at the health boards with a lot of interest. We think that concerns need to be dealt with and dealt with quickly so that the people of Hawke’s Bay can get back on track with a minimum of trial by media which achieves absolutely nothing. Thank you. 
SUE KEDGLEY (Green) 
: 
 The Green Party has extreme concerns about the summary sacking of the Hawke’s Bay District Health Board last week and as the days have gone by our concerns have intensified rather than abated. Frankly I am sad to say we find as I suspect the people of Hawke’s Bay find the reasons that the Minister has given for the sacking to be unconvincing. We believe that much of New Zealand including the people of Hawke’s Bay is unconvinced by the reasons the Minister has given for the sacking. We are also concerned that the summary dismissal of the board calls into question the role and purpose of district health boards and particularly publicly elected members. 
The first reason the Minister gave for the sacking was financial governance issues and deficits. The Hawke’s Bay District Health Board has a deficit of $7.7 million. Well the problem is that nearly half of the 21 district health boards in New Zealand have deficits. Ten district health boards have reported deficits for the 11 months to May 2007 and nine of those forecasting deficits were larger than had been anticipated. Can all those district health boards look forward to summary dismissal because of their deficits? That was one of the key reasons that the Minister has given. Can the Capital and Coast District Health Board which now has a deficit of $26 million—far more than that of the Hawke’s Bay District Health Board—look forward to summary dismissal? What about the Auckland District Health Board with a deficit of over $10 million? The Whanganui District Health Board is posting a deficit as are the Otago District Health Board the Southland District Health Board and the Waitemata District Health Board—I could go on. Why would we sack one district health board for having a $7.7 million deficit but leave all those other ones untouched? 
Hon David Cunliffe 
: The member is making it up. 
SUE KEDGLEY 
: I am looking through all the reasons that the Minister has given and sometimes it looks as if he is clutching at straws. 
The Minister has talked of deep divisions and poor relations between the board and the staff with no clear plan for resolving divisions. Well I can assure members that in the Health Committee we became aware that there are deep divisions and poor relations between clinicians and board members in many district health boards around New Zealand not just in the Hawke’s Bay District Health Board but noticeably in recent times in the Capital and Coast District Health Board. It is quite evident that there are poor relations between board and staff in many of these health boards but the Minister has not taken this drastic action and sacked those district health boards. Why has he singled out the Hawke’s Bay District Health Board in this way? 
I cannot help feeling that the real crime of the Hawke’s Bay District Health Board was that the chair spoke publicly and was critical in the media about some of the issues that were taking place in that health board. Just a few minutes ago in the House the Minister said that we had board members “crusading in the media … I asked them to refrain from public comment …”—and they did not. I cannot help but feel that this is the real crime that the Hawke’s Bay District Health Board is being sacked for. In other words the Minister is irritated at the chairman of the district health board for speaking up and speaking up in the media. He found this completely unacceptable and moved to sack him. 
This calls into question the whole purpose of district health boards. Why do we go through the expense and effort every 3 years of electing members onto a district health board? To do so gives the impression that these people are publicly accountable to the people of New Zealand but the moment they criticise the Minister or express themselves in the media they are censored by the Minister. What has become obvious is that the role of district health boards seems to be basically a rubber-stamp for the Minister of the day to take the flack when things go wrong—a convenient scapegoat to blame—but to be summarily dismissed if the district health board members do not toe the party line if they speak their minds and in particular if they challenge the Minister. 
There are even more serious allegations about the district health board and in particular about the role of one board member Mr Hausmann. Mr Ryall and others have today outlined some incredibly serious allegations relating to this board member. I have not been privy to the emails; I know they have already been released to the media. Obviously the National Party has these emails and they apparently show that Mr Hausmann was seeking to intervene in a contract to make it more favourable to his company which then subsequently bid for the contract and was awarded it. These are incredibly serious conflict of interest allegations. I hope the National Party is not right in its claim that the real reason for the sacking of the Hawke’s Bay District Health Board was because of these very serious allegations that are swirling around and a desire to prevent the board from telling what it believes to be the truth. 
This matter raises the following question. Given the fact that this review of the conflict of interest allegations is taking place why would the Minister not have at least waited until this report—which comes out in 2 weeks’ time—came out before he sacked the board? Why did he not wait for the outcome of that conflict of interest before taking what is a very very serious action in summarily dismissing the board? I believe that the Minister’s action in summarily dismissing the board in the way that he has done for reasons that I believe are unconvincing and for reasons that I believe New Zealanders feel are unconvincing is eroding confidence in district health boards and in particular in the role of publicly elected district health board members. I believe that many publicly elected district health board members will be asking themselves why they have gone through this election only for it to be made clear to them that they cannot speak out and they cannot be publicly accountable to the people who have elected them without risking censorship and dismissal. 
I believe that this situation has seriously eroded confidence in the role of district health boards and actually in the whole way they have been set up. The New Zealand Public Health and Disability Act 2000 states that a board may be sacked and replaced by a commissioner if the Minister is seriously dissatisfied with the board of a district health board but there are no criteria. It is completely left up to a Minister. It does not spell out how serious the concerns have to be and it is completely left to a Minister to decide whether he will sack a board. 
The Minister has released some select documents but he keeps referring darkly to other documents that he has not released. I challenge him to release all those documents because the reasons he has given so far are not what I would call hanging offences. They seem almost like excuses or rationalisations for why he has sacked the board. If serious allegations are contained in other documents that he has not released why is he not releasing them? I challenge him to release them all so all of us can make up our own minds. 
I believe that the people of Hawke’s Bay do not find the his reasons convincing and I believe that many people in New Zealand do not find his reasons convincing and the Green Party at this point in time does not find his reasons convincing. We are worried that there are other reasons other hidden agendas and other motives behind the sacking than the ones that have been given. If the reasons were simply the ones that he has given half the district health boards in New Zealand would be sacked. He has not explained why he has singled out one district health board for this drastic action and left in place other district health boards with greater deficits and with all of those problems of dysfunctional relationships. Why has he left them in place and singled out the Hawke’s Bay District Health Board? It seems as they say that something is rotten in the State of Denmark. Thank you. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 I raise a point of order Mr Speaker. Tena koe. It is just a point of clarification. I know that there is a 5-minute allocation to the Maori Party. Can you give me some indication about the time for wrapping up? Is it 1 minute or 2 minutes? 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: You are correct. There is a 5-minute allocation for the Maori Party. For your benefit I will ring the bell with 1 minute remaining. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Kia ora Mr Assistant Speaker. Three days ago a really comical press release was issued under the name of the Director-General of Health. The humour came in the statement from the director-general advising that the inquiry into conflict of interest issues in the Hawke’s Bay District Health Board would be released in just over a fortnight. It said: “it is important to follow due process” and further “I have acted to protect the integrity of the process involved in the report’s release”. 
Due process and integrity are concepts that have been sadly lacking in this saga at the Hawke’s Bay District Health Board. Other members have described the involvement of the former Minister of Health her husband and Mr Peter Hausmann. During the course of events as is now known that Government-appointed member of the board was found to have involved himself in a $50 million district health board tendering process that could have benefited his own company. Following yet another leaked email discussion the chairperson of the board discovered the contractual negotiations that were going on and an embarrassed Government was forced to call for an inquiry. 
One might have thought that things would quieten down give or take the odd employment dispute that ensued from the fiasco. Time rolled on and at the local government elections the people of Hawke’s Bay responded by universally re-electing the board and its chair. In rode the keen new Minister of Health Mr David Cunliffe determined to leave his mark. He sacked the entire board claiming that it was dysfunctional and that the concerns were warranted over the “rapidly deteriorating” financial situation. 
The Maori Party is one of the first parties to say that accountability and transparency are laudable goals—goals that every agent of Government should take seriously. If governance and management issues are at stake we would expect there to be support and investment to get any district health board back on to the right track. But—and it is an important but—such measures should never ride roughshod over the wishes and aspirations of the people. What did the people living in the rohe of Ngati Kahungunu have to say about their district health board? What did Maori health providers in the area think about the way that their district health board responded to the needs of their community? What does this action say about the respect for democracy? 
This was an election process in which the people voted and selected a board. It was extremely significant that all five mayors of the Hawke’s Bay joined in a joint letter supporting the chair of the board as having “the clear confidence of the community as the highest polling candidate in the October 2007 election”. Those members speaking on behalf of 150000 people should have been listened to yet just 72 days after the re-elected board took office the Government intervened and took actions on high against the people of Hawke’s Bay. As the Napier Public Health Action Group stated recently: “It illustrates the arrogant misuse of power and contempt for democracy that has be-deviled public health provision in Hawkes Bay and Napier in particular for years”. 
If it was good enough for the Minister to sack this district health board for financial management and governance issues let us be consistent here. What about the 182 serious mistakes involving patients? They are mistakes like one patient dying as the result of being prescribed another patient’s diabetes medication a baby dying after showing heart-rate irregularities during labour and a psychiatric in-patient committing suicide. Who would have expected such serious and sentinel events to take place? The problem extended across 12 district health boards with particular concern having been expressed about the Auckland Waikato Canterbury and Waitemata boards. Did we hear anything about the sacking of those people? No. What about the study by Professor Peter Davis who surveyed a sample of 6579 patients admitted to 13 hospitals and found that Maori were more likely to receive suboptimal care? What about them? 
Financial debts can be sorted out with the stroke of a pen. If we want to help out an airline or to quickly get some funds pulled out in order to win some votes in an election year the money does not seem to be very much of a problem then. The ongoing serious and sentinel events that have ended in death malpractice and negligence in the largest degree are things that we might consider to be sackable offences. As a Parliament we must insist on safety on quality and on transparency in the way that we run our hospitals. The Maori Party knows that to accept anything less is to compromise on the very quality of life. All of our people deserve to know that when they go to hospital every effort will be made to improve their health and well-being. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Before I call the next speaker I advise the House that the speaker has 5 minutes and I will ring the bell for the member’s benefit when there is 1 minute remaining. 
JUDY TURNER (Deputy Leader—United Future) 
: 
 This debate is underpinned by two concerns: either there is a heap of information unknown to most members of this House that supports the Minister’s decision or he has acted in haste. Uninformed debate is dangerous as are knee-jerk reactions to a few rather common problems. I have tried to track the situation just from media releases in order to see whether I could put together the pieces of the jigsaw. 
In June 2005 Mr Hausmann was appointed by Annette King to the Hawke’s Bay District Health Board despite reservations by elected board members due to potential conflicts of interest on significant contracts he would be seeking through tender with the board—we are talking about $50 million worth. The chairman claims that he asked Ms King to delay the appointment until an upcoming tender was resolved. She denies that this approach ever happened. The ministry itself gave advice to the Minister that his appointment had public perception risks but in August Mr Hausmann attended his first board meeting. Early in 2006 a whistleblower suggested that the tendering process had been compromised by Mr Hausmann and a review was instigated. The whistleblower does not appear to have been given the protection she was promised. Is this the matter that is at the core of this problem or is it just a separate matter? 
In November 2006 the district health board wrote to Minister Hodgson concerned that the formula used to calculate funding did not meet the board’s needs and said that it might need to cut services in order to stay within budget. It received no reply from the Minister but it did get a response some time later from a director of the health ministry who said that the proposed cuts would be unacceptable. In September 2007 the board wrote again to the Minister with concerns about its funding. Then in October 2007 a new board was elected—or rather the old board was re-elected—and a month later a new Minister Minister Cunliffe was appointed. In December the board tried for a third time and wrote to the Minister again about its concerns about funding. The board does not appear to have received a response from him for nearly 2 months; from my understanding it was 30 January before the board heard from him. That appears to have been the last contact the board had with the Minister until nearly the end of February when the board was issued with a week’s notice requiring some clear signals from it that it planned to improve its financial management and to improve relationships between the board the management and the Minister himself. The Minister also wanted a response from the board to the concerns of the Auditor-General. 
Those issues are interesting because like previous speakers I am aware of the track record of lots of district health boards. I am not currently on the Health Committee but in the previous Parliament I did serve on that select committee. Certainly $7.7 million worth of deficit is not a huge concern. We reviewed boards that had substantially higher deficits than that but were still considered to be competent to govern. I have also been aware of other situations where senior staff were on extended stress leave and were extended a huge amount of grace in that situation. Some of those situations concerned relationships between themselves and the board yet the board was allowed to stay intact. So I assume and hope the Minister has some additional information that will justify the step he took. 
Unhappy with the board’s response—of course a week later we know the story—the Minister fired the members of the board. I heard him on TV saying he had taken legal advice on that. Currently local bodies are considering whether to take this matter to judicial review. That is an interesting fact. In Whakatane right now we have a situation where our district council is taking the regional council to judicial review over a decision that the regional council made. I was part of a focus group that helped work towards the decision as to whether to take a judicial review. We considered whether given the ratepayers’ money that would need to be spent on it we could be pretty sure of the outcome. It was decided that yes we had legal advice that there was every reason to believe we could win the judicial review. So I assume that the legal advice currently being received by the local bodies in Hawke’s Bay is such that they will be weighing up the taking of a judicial review very seriously. I hope the Minister’s legal advice holds up for his sake. 
CHRIS TREMAIN (National—Napier) 
: 
 On Friday— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Just before I ask the member to start I advise the House that this is a split call. Both members will have 5 minutes each and I will ring the bell with 1 minute remaining. 
CHRIS TREMAIN 
: On Friday Craig Foss and I held a public meeting at the Taradale Town Hall in relation to the decision made by the Minister of Health to sack the Hawke’s Bay District Health Board. We had over 300 people attend that meeting. The meeting room was stacked with people from all parts of society from all walks of life. Pensioners workers even former Labour MPs were at the meeting. There were health professionals at the meeting and I have to tell the Minister that his concerns over the sustainability and safety of the Hawke’s Bay health system were eradicated when nurses stood up and told us that regardless of what was going on in the upper echelons—at the board and ministerial level—the safety of the Hawke’s Bay health system was just fine thank you. They said they were doing everything they could to make sure that even better health care than normal was delivered. 
These people felt that their democratic rights had been thrown out of the window—just thrown to the wind. They unanimously moved a motion in support of the unprecedented position that the local councils have taken in moving that a judicial review be undertaken. People outside of Hawke’s Bay have said that the councils do not have a mandate to do that. It was clear from the multitude of people who were at that meeting that the councils certainly do have a mandate. Those people wanted transparency in what is being done by this Government. They wanted all of the information to be on the table. Why? Because the people of Hawke’s Bay are unconvinced by the reasons the Minister has given for his sacking their democratically elected board. 
Regardless of who is right or wrong I do not believe that the Minister should have sacked elected board members in favour of appointed people. The Minister has taken a position. He had alternatives. There was a local body election in October of last year. The conflict of interest review was already in the public domain; it had been well canvassed in the media—the whistleblower issue was already in the media. Despite that the people of Hawke’s Bay elected a new board. They went to the polls and elected a new board—including people like Helen Francis who had never been on the board before. They elected Kevin Atkinson who on two separate occasions had been appointed by the Government and had done a good job for it. He was elected again with a huge majority—above that of anyone else. 
The Minister says that one of the key reasons the board was sacked was financial issues. I will refer quickly to a letter from the office of the Hon Pete Hodgson in July of that year just before the elections in which he stated: “I am pleased to note that the Hawke’s Bay District Health Board has maintained the status of standard monitoring on the monitoring and intervention framework.” I ask members to listen to this one: “This is a reflection of your ongoing positive performance and is rewarded by the benefit of receiving early payment.” The board had a history of longstanding financial success but the Minister sacked that publicly elected board. 
On 10 December of last year the Minister said that he would not appoint a chair a deputy or Maori representatives. I talked to the Minister at that stage and said: “Why don’t you appoint the chair and allow governance to take place? If the review turns up negative findings that put the blowtorch on the board then sack it then.” At that point in time the Minister did not allow governance to take place. In the first instance he would not appoint those members because of the lack of a review but as we got closer to the sacking all these spurious reasons came out. 
The first reason was a breakdown in the relationship between the board and clinicians. Well that turned out to be a total red herring. Two gentlemen—just two—publicly came out against the board one of whom has now left the area. That is the first reason. The Minister stood up and told the whole of New Zealand that there was a dysfunctional relationship between the board and clinicians. Well that was patently incorrect. It was a red herring. He was casting aspersions that were purely wrong. It is no wonder Hawke’s Bay people believe that their democratic process has been thrown to the wind. 
CRAIG FOSS (National—Tukituki) 
: 
 What happened today during question time? What did we learn today? The Minister told us—again—in response to questions from the Hon Tony Ryall that he has not received any reports or had any briefings regarding the two draft reports on which there is lots of discussion. Yet the same Minister keeps offering his views on those same draft reports. He keeps hinting at reasons why we should all be worried. He keeps hinting at reasons why the truth will come out. I say to the Minister that he should have a look at his  
Hansard 
 from question time today. In one answer he said he had not seen the draft reports or had any briefings then in answer to the next question he started to try to put fear into the questioner about what was in the reports. I say to the Minister that he cannot have it both ways as he keeps on trying to do. 
We will all agree on this: all of the information is not in the public domain. But the Minister said to trust him that he knows what he is doing that he is running this show and has more information than we have. That is what he said during question time on a previous day yet that same Minister with all the information is using the full force of his ministry and of Crown Law which is funded by taxpayers to silence the truth—or at least to repress information. The way around that is to release all the information. 
He succeeded in one thing: our freely elected district health board members no longer have a united voice and they no longer have united legal representation. So it is hats off to the mayors and representatives of Hawke’s Bay who are going in to bat for them. I say to the Minister that that it is called natural justice—he should look it up in the dictionary. 
The Minister released selected documents last week on his announcement of his sacking the board. Included in those documents was representation from district health board members that had been given in confidence as part of the review yet the Minister released that as a part of that package of information. That same Minister has said he has not seen any part of the review. By the way I say to the Minister that he also probably released documents that legal action now surrounds—apparently there are some defamatory comments in some of those. Let me give notice that the Minister has set the precedent of leaking information that was given to the inquiry under confidentiality agreements. There is no natural justice here. There is natural justice only once all the information comes out. The Minister is being the judge the jury and trying to be the executioner and it is on dubious grounds. He is right. It will be found out; the truth will come out. 
The inquiry has been going on for about 6 or 7 months. It took 6 or 7 months to bring the first draft to the officials. That took 6 months let us say yet apparently it has taken only 6 weeks to show that the second draft is apparently totally at odds with the first. We learnt that today in the House. What has happened in the middle in between? Who has made representation? Whom is the Minister trying to cover up for if anyone? Otherwise he should give out all the information and we will find out. He should treat the voters of Hawke’s Bay who re-elected this board as grown-ups by giving them the information. They will then make up their own minds. 
Yesterday the Prime Minister told Paul Holmes on Newstalk ZB that all the information should be released. She said that all information should be in the public domain and that we cannot have selective leaks. I agree for once with the Prime Minister. I can give the Minister the transcript of that conversation. I tell him to follow the instruction of the Prime Minister and release all the information into the public domain and let us all make an informed decision. 
Hon RICK BARKER (Minister of Internal Affairs) 
: 
 I rise in support of the decision made by the Minister of Health to dismiss the Hawke’s Bay District Health Board. I do so with regret and with sorrow at the lost opportunities for the people of Hawke’s Bay. I recall the time when Kevin Atkinson was made Chair and he appointed a very bright new Chief Executive Chris Clarke. It appeared to be an exciting combination and the prospects for Hawke’s Bay looked very good. The district health board was full of ideas about how it would improve health services. It was looking at innovative ideas and new technologies. Sadly all of that has gone. We now have a board that is mired in disputes and litigation and that has a ballooning deficit. That clearly smells like trouble but despite that we have people who claim that all is rosy. So what is the truth? 
Firstly let us look at the finances. At the beginning of the financial year the board proposed a budget that was to balance. We have subsequently been told that the board never believed that the draft budget was achievable—in other words it was deceptive. We now have a set of accounts that show a $7.7 million deficit. To make matters worse the $7.7 million deficit is predicated on making savings worth $5 million. There is no real prospect of achieving those savings. In actual fact the district health board has a $12.7 million deficit which is proportionally greater than that of Capital and Coast District Health Board. 
The Hawke’s Bay District Health Board claims it is well run the board manages its governance well and there are no significant issues. Those claims are made despite the fact that three reviews of governance and management have been held. One such review of a board would be noteworthy two remarkable and three extraordinary. There would not be a problem if the three reviews had resolved the issues but they have not. One of the critical responsibilities of the board is to govern and manage strategic relationships. One of its critical relationships is with the Minister of Health. The board largely manages that relationship through the media. It is the only district health board to do so and that is no way to manage a critical relationship. Consequently the relationship with the Minister can only be described as difficult. The board and board members have regularly made extraordinarily adverse comments about the Ministry of Health. They have accused the Ministry of Health of bad faith and of deception. The board’s relationship with the Ministry of Health is critical to its ongoing success in managing its responsibilities. That relationship is one of suspicion. 
If the failure of those relationships was the end of the matter it might have been managed. But that is not so. There is a toxic relationship between the board and senior management. There are many examples of that and here are a few. It is alleged that during the current review of the board staff members were offered the opportunity to speak confidentially to the inquiry team. That was hotly opposed by the board. The board did all it could to stop people from speaking with the inquiry—quite extraordinary! Staff members did however exercise their right to tell their stories and in confidence as they were entitled to do. The board was so incensed at this that the chair threatened the chief executive with disciplinary action for allowing staff members to talk to the inquiry team. That was beyond the pale. Not satisfied by having done that the board determined to find out what the staff had said. There were threats to the staff of court action. Whether or not this was intended it was certainly perceived by the staff that they were being threatened and they felt intimidated. I am sure all New Zealanders feel a deep unease about such threats. All people must have the right to speak freely and confidentially to an inquiry. Why was this board so hotly opposed to that? 
It is alleged that the chair of the district health board discussed the performance appraisal of the chief executive with another staff member before the chief executive had seen it in order to white-ant the chief executive. That is utterly unacceptable in any normal circumstance. The chief executive was under enormous pressure. He sought medical advice and his doctor prescribed him 2 weeks’ stress leave. Feeling sick and stressed he advised the board of that—and no doubt expected some sympathy from it. But that was not forthcoming. The news of his pending stress leave was immediately leaked by the board to the news media denying the chief executive the opportunity to tell his story in his own time and in his own way. In other words when a man was down the board kicked him. I am sure I speak for many people when I say that I find that sort of behaviour reprehensible. The board has undermined the effectiveness of the chief executive at every turn. 
But the heat is not only felt by the chief executive; staff members at the hospital have said that they are in fear for their jobs. They feel bullied they feel battered and they feel intimidated. The relationship between the board and its senior management is at a crisis point. The chief executive has revealed that many of the senior management team are considering resignation. Anybody in the employment field today knows how difficult it is to employ competent staff. Why should Hawke’s Bay lose such good people unnecessarily? Sadly and additionally to all of this some months ago doctors at the district health board passed a motion of no confidence in the board. 
To sum matters up we have a district health board whose relationship with the Minister of Health is difficult whose relationship with the Ministry of Health is one of mistrust and hostile accusation and whose relationship with the chief executive and senior staff is toxic. By any definition that is a crisis. But that is not the end of the matter. The district health board has been completely fixated on the allegation that Peter Hausmann had a conflict of interest in a particular contract. One would expect that people who are so intensely aware of conflicts of interest would behave impeccably themselves. That is not the case. 
Recently a contract worth $600000 was awarded by the board’s finance and audit committee to Royston Hospital. That was against the advice of the board’s management who said that work for such significant sums of money should be tendered for. The board’s management provided probity advice to the committee that such work should be tendered for but despite that advice the committee awarded the untendered-for contract to Royston Hospital. One member of the committee has a brother who has an interest in Royston Hospital; a second member of the committee has shares in the company that owns Royston Hospital. They did not excuse themselves from the deliberations or the financial decisions made by the committee. A third member of the committee has allegedly refused to sign a confidentiality agreement in respect of his work on the board presumably because he does not want to be constrained in leaking information. That person cannot even keep a confidence about his own bad intent. I have no problem at all with Royston Hospital being awarded contracts provided the tender process is open transparent and fair. 
The problems with the district health board do not end there unfortunately. Recently on the basis of a LECG report the management put up a proposal to rationalise pharmaceutical dispensing that had the potential to save the board millions of dollars. The board rejected that proposal with the assistance of a board member who has an interest in five pharmacies. The board preferred the more expensive current practice than a new procedure that would have saved costs. The net loss here is to the people of Hawke’s Bay who are on the waiting lists. Every dollar spent on pharmaceuticals from now on means there are fewer dollars available for knee and hip operations and other procedures for the people who need them. 
It is a sad but similar story about the process of rationalising laboratory processes. The chair of the district health board on his own initiative and without the involvement of the management commenced discussions about and drew almost to a conclusion a contract for laboratory services with Medlab. Those discussions about the contract were again not subject to an open tender process contrary to the advice of the management and the board eventually approved the chair’s proposal. Sometime shortly thereafter the chair’s proposal was struck down by the Commerce Commission which required the district health board to let laboratory services on an open tender basis. The tender was eventually awarded to another contractor Southern Community Laboratories. The time taken to run two processes meant that the potential savings available to the board were lost. Those savings again represent lost opportunities for the people on the waiting lists to have their much-needed operations. 
The issue about the district health board is about competence. Some have characterised it as being about democracy but it is about competence. We have a district health board that has a dismal relationship with the Minister of Health has a difficult relationship with the Ministry of Health has a toxic relationship with its senior management team has a ballooning deficit and is focused on litigious adventures. The cost of those litigious adventures is being paid for by the people of Hawke’s Bay in terms of forgone operations. Do I support the Minister’s decision to dismiss the board? I certainly do. The board is required to have a good relationship with all its stakeholders. The board is responsible for its failed relationships with the Minister the ministry senior management and management staff. It can blame no one else. The board is completely responsible for the deficit but more important the board had the opportunity to make significant savings for the benefit of Hawke’s Bay but instead chose to have contracts for more expensive pharmaceuticals that favoured the pharmacies. It chose to award significant works without tender where there are clear and demonstrable conflicts of interest. 
Board members have allegedly leaked information. That is extraordinary. The chief executive told the board that the National Party had 25 confidential papers in its possession. That is a clear breach of trust and integrity. Such behaviour is corrosive and it seriously undermines the board’s ability to do the job on behalf of the people of Hawke’s Bay. The information was leaked to the National Party whose members have used the district health board as a political football to kick around. I am opposed to any political party no matter what its colour using our district health board as a political football simply in order to gain the attention of the media. 
Our district health board has an important part to play: to provide the best-quality services to the people of Hawke’s Bay. Its challenges are significant; we have poor health statistics. In order to achieve a high standard for the people whom a district health board represents the board needs to manage itself well. It has to manage its relationships well and by any measure this board failed to do so. I support the Minister’s decision. The people of Hawke’s Bay deserve a district health board that is focused exclusively on the welfare of the people it is responsible for. It has to be vigilant and financially responsible get best value for money and manage key relationships. The former board failed on all counts; it was dysfunctional. The people of Hawke’s Bay deserve better than that. The Minister in siding with the interests of the people who look to the district health board for health care had no option but to sack the board. 
The debate having concluded the motion lapsed.