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Public/private partnerships--a pact with the devil? Residential aged care in New Zealand is a prime example of how taxpayers' dollars help fund massive profits for overseas companies--an unholy alliance surely?

A public/private partnership is an arrangement made between the Government, which provides public money, ie taxpayers' dollars, to a privately-owned business to provide a service with those public funds. Two significant examples of public/private partnerships for the provision of health care in Aotearoa/New Zealand are primary health services and residential aged-care services.

The public/private partnership for the provision of primary health services, eg GP visits, is a very Long-standing relationship between private businesses and government. The relationship goes back to the 1930s, when the first Labour Government introduced publicly funded GP visits.

The public/private partnership between government and privately-owned businesses for the provision of residential aged-care services is, ironically, a product of the 1980s Labour Government policies. These policies either directly privatised or led to the privatisation of numerous publicly owned and operated businesses, eg forests, railways, telecommunciations, power generation and geriatric care.

Only one DHB provides geriatric beds

Until the mid 1980s, any New Zealander requiring geriatric hospital care received that care, at no additional cost to them, in a public hospital ward in their local community. Today there is only one DHB--South Canterbury DHB--that stilt has dedicated geriatric beds. Art the rest of New Zealand's geriatric hospital care is now subsidised care only, provided by either large private businesses such as Guardian Health Group, Eldercare, Metlife Care, Qualcare, Radius and Rymans, or a shrinking group of religious and community trust providers.

So, what is wrong with privately-owned businesses providing health care services with New Zealand taxpayers' dollars? There are several things wrong with the current system of tax payers' dollars being given to private businesses to provide a public health service.

The first is that government does not require these private business to prove they actually spend every dollar given to them on the services the money was given to them to provide. When government tries to impose greater accountability requirements on private providers, there is all sorts of resistance. In many cases, the providers have the whip hand, because there are no other service providers, so it becomes a case of compromise with our tax dollars.

Accountablity argument

An example of the two sides of the accountability argument is the recent row between GPs and district health boards (DHB) about the rollout of the next phase of the Government's Primary Health Care (PHC) Strategy, ie cheaper GP visits for 45-64-year-olds. That row was, in part, a wrangle between the Government's agent, the DHBs, and the GPs about accountability for the funding. The GPs argue that they operate "private" businesses. They fiercely resist and resent any "interference" in the management of "their" businesses by government or government agents. The other side of the argument is that it is public money paid to GPs to provide a public health service and, therefore, a high degree of accountability for those public funds is required. Afterall government has collected our taxes specifically for the provision of that service.

The reality is that the GPs have the power to assist or hinder the delivery of the PHC strategy. This means that a deal must be struck which will allow for the maximum delivery of the strategy by those central to its delivery, ie GPs. So, we could well ask: "Who is in charge of the delivery of the PHC strategy?"

This issue comes very sharply into focus in relation to the provision of residential aged-care services. The Government's commitment to us, as citizens, is that when we are old and need care and assistance, the cost of that care will be met, in part at Least, by taxpayers' dollars. ALL of the companies mentioned above, apart from Rymans, are either wholly, or more than 50 percent overseas owned. That means that control of the business and the distribution of any profits made happens outside New Zealand.

The accountability mechanisms are very weak in the residential aged-care sector. A significant amount of Ministry of Health time is taken up by these companies Looking at how they can reduce their ministry and DHB audit obligations. Because of the weak accountability mechanisms, overseas companies are attracted to invest in residential aged care. Another reason for investing in New Zealand, given by the Australian owners of Eldercare and Metlife Care (Macquarie Bank), is "... because of its stable revenues and predictable cash flows". (1) Those "stable revenues" and "predictable cash flows" are our taxes!

These overseas owners of residential aged care in New Zealand make vast profits, most of which go overseas. Metlife Care reported $21.5 million after-tax profit for the year to December 2005 and was forecasting a profit of $24 million for 2006. Rymans made a $23.52 million profit last year. These profits are being made through the taxes paid, in part for the provision of residential aged-care services including hospital and dementia care, by our mums and dads, and now by us, for our mums and dads.

If these companies pulled out of New Zealand, there would a crisis in residential aged care. We have become almost completely dependent on these overseas companies for the provision of an essential service. Again, we have to ask: "Who controls the delivery of residential aged-care services and the use of taxpayers' dollars in the sector?" Getting this accountablity is a central plank of the Fair Share for Aged Care Campaign. We are entitled to know that the money collected from us for a specific purpose is being spent for that purpose and only that purpose. If we can't make the providers of residential aged-care services prove that our taxpayer dollars, given by the Government for those services, are going to those services, then isn't that a pact with the Devil?


(1) Minto, J.B. (2006) For heaven's sake this is somebody's mother. The Press, April 17, Christchurch: Fairfax Media.

By industrial adviser Rob Haultain
COPYRIGHT 2006 New Zealand Nurses' Organisation
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Author:Haultain, Rob
Publication:Kai Tiaki: Nursing New Zealand
Geographic Code:8NEWZ
Date:Jul 1, 2006
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