DHBs to get financial help to cover costs of building projects
The Government has set aside a contingency in Budget 2019 to support DHBs with their capital charge costs as a result of building new facilities.Devdiscourse News Desk | Wellington | Updated: 08-07-2019 08:16 IST | Created: 08-07-2019 08:16 IST
Health Minister Dr. David Clark has announced that District Health Boards will get financial help worth potentially tens-of-millions of dollars to cover one of the costs of major new building projects.
"The Wellbeing Budget included $1.7 billion for capital investment in our hospitals and other health facilities over the next two years. That will deliver much-needed new and upgraded facilities at DHBs across New Zealand," David Clark says.
"As it stands, DHBs are required to pay back 6 percent of the cost of any Government capital investment in the form of a capital charge each year. This charge is intended to provide DHBs with the incentive to invest and manage capital assets wisely.
"DHBs fund capital charges from their existing budgets. This can have a significant effect on their operational funding for other services following a major investment.
"To address this, Treasury was asked to review the effectiveness of the capital system settings for DHBs. That work is ongoing.
"In the interim, the Government has decided to directly fund DHBs for their capital charge costs for new facilities. For example, a DHB could receive up to $18 million annually to cover the capital charge related to a new $300 million hospital building.
"This will reduce some of the immediate cost pressures for DHBs and provide more stability for long term asset planning.
"A number of other initiatives are underway which will also improve the way DHBs manage their infrastructure assets.
"In partnership with DHBs, the Ministry of Health is developing a National Asset Management Plan to map out the current state of health facilities. This will mean we can make more informed decisions, better prioritize upgrade work and plan for new facilities.
"Treasury's review of the capital system settings will also support the Health and Disability System Review which aims to future proof health and disability services," said Dr. Clark.
(With Inputs from New Zealand Government Press Release)