Cunliffe David: Urgent Debates — Hawke’s Bay District Health Board—Appointment of Commissioner 
Cunliffe David: Urgent Debates — Hawke’s Bay District Health Board—Appointment of Commissioner 
[Volume:645;Page:14534] 
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.