King Annette: Supplementary Estimates — Imprest Supply DebateText is incorporated into the Bound VolumeKing Annette: Supplementary Estimates — Imprest Supply Debate[Sitting date: 24 June 2014. Volume:699;Page:18804. Text is incorporated into the Bound Volume.]Hon ANNETTE KING (Labour—Rongotai):I am very happy to be speaking in the Appropriation (2013/14 Supplementary Estimates) Bill debate.David Bennett: You don’t even know what a Ponzi scheme is.Hon ANNETTE KING: Yes I know what poncy is and I was talking about the Minister of Health. However in terms of what I want to do today I want to use this opportunity to actually speak about Health Benefits Ltd. I believe—and this has been sent to me in many leaks now—that Health Benefits Ltd is becoming the Novopay of the health system. In fact I have been told that Health Benefits Ltd is going to make Novopay look like it was just a little problem indeed. I believe that the Minister needs to front up on this issue and tell New Zealand what is happening in the Crown organisation that he set up that was supposed to save money in the health sector.Tony Ryall has been pouring money into a scheme that is now being described by those in the district health board sector as a Ponzi scheme. So where did it all start? Tony Ryall launched his flagship project—the centralisation of services and supplies all around reducing back-office costs and duplication—called the Finance Procurement and Supply Chain programme. It was to be run by Health Benefits Ltd. Originally we were told it was going to save $500 million over 10 years. District health boards were required to put $88 million of their health dollars into Health Benefits Ltd towards the cost of running it.By September 2012 Tony Ryall was meeting resistance to the programme from boards throughout New Zealand. They could see their health dollars going into Health Benefits Ltd and saw very few rewards coming out for the money invested. Any rewards that were coming out were coming from their own efforts not from this fast-growing empire which now covers four floors of two buildings in downtown Auckland.Tony Ryall then threatened to use special legal powers to force the hospital bosses to do his bidding. He now wanted them to save $700 million. The threat came after flaws in the plan were exposed in a high-level review that questioned where the savings were coming from. This review came from Ernst and Young. It found that any savings—and this was in 2012 so we are talking 2 years ago—were based on assumptions that were out of date and that the basis on which they were calculated was not clear. Documents obtained under the Official Information Act showed that the path has been very rocky indeed with communication breakdowns between the boards and Health Benefits Ltd. District health boards repeatedly told the Ernst and Young review panel that they felt Health Benefits Ltd was doing it to the district health boards rather than doing it with them. So Tony Ryall then wrote to the boards not contemplating any resistance from them at all and said he would force the boards into a partnership as a last resort if they did not do it voluntarily. He could do that if he wanted to because he had granted himself new powers 2 years before that in a law designed to streamline health board purchasing and administration. So there we have it set up for what has happened over the last 2 years.I have had many reports released to me many leaked letters and the most significant came only a few weeks ago. It is significant because it is a letter written by the chair of the district health board national chief financial officers to the chair of the district health board executives. So in other words the chair of all the chief financial officers of all the district health boards wrote to the chair of the chief executive officers of all the district health boards. This is what they had to say in their letter: “The DHB CFOs as a group are writing to express profound concern at the mounting risk to the delivery of health services brought about by the Finance Procurement and Supply Chain … work programme and the lack of transparent and timely information from Health Benefits Ltd (HBL) to District Health Boards in relation to material changes to the programme including to costs benefits impacts and risks.” They went on to say “we are increasingly concerned at advice we have received from HBL in relation to benefits erosion”. They are unable to qualify what the benefits are at this time.They go on in the very very sobering letter to say that “After careful consideration at our recent national meeting [we] consider it necessary to formally bring to the attention of national [chief executives] our grave and collective concerns about the FPSC work programme its cost escalations implementation delays benefits erosion and escalating risk profile.” They say that “DHBs are well advanced in restructuring processes associated with this programme and are now facing significant risks in relation to the retention of the staff necessary to enable the continuation of current service …”. They say: “The confidence of CFOs in the FPSC programme has been severely diminished.”I brought that to the attention of the Minister of Health. He was not the least bit interested. As usual he batted it away.I have to say there has been a pattern to this because I first started asking questions and putting in Official Information Act requests last year. It has been almost impossible to get any information out of Health Benefits Ltd. It has been almost impossible to get a single answer out of the Minister—smoke and mirrors—and now I believe that what we are seeing is a huge cover-up of a programme that has gone badly awry.The latest document given to me and to Radio New Zealand National on Friday following questioning of the Minister last week was written by a senior manager within district health boards. It is called “Exposing the Myths of Health Benefits Ltd: the Risk to the New Zealand Health System”. It says that the New Zealand health sector is pursuing through Health Benefits Ltd a path of centralisation that is creating the biggest single risk to the delivery of public health services in New Zealand in a generation at a time when the system is under extraordinary cost and service delivery pressure. It says that despite the apparent logic of the centralisation rationale not only does the work programme of Health Benefits Ltd manifest all the hallmarks of large-scale high-profile public and private sector failures but its similarities with Ponzi schemes are striking. The document goes on to say that despite its veneer it is destroying significant value and bringing about extraordinary risks to the health system.That document said that the costs have ballooned from $88 million to $130 million and they are growing. The benefits have been reduced by one-third the payback period of investment has gone from 10 years to more than 60 years there is nothing of substance that has been delivered 2 years into the investment the programme is now running 2 years late and there are close to 400 jobs that are in a state of flux throughout provincial New Zealand as a consequence. The district health boards have been alerted to the prospect that Health Benefits Ltd will not seek re-approval from district health boards for increased commitments. In other words it is going to take the money whether the boards approve or not. It is not going to seek approval for reduced benefits and extended payback periods. This is a travesty. This is a disaster. This is health money that should be going into health services and I believe that there is a cover-up that has to be exposed.