Capital Charge Regime Must Go
21 August 2020
by Chris Leitch, Leader
The crisis at the Canterbury District Health Board highlights the stupidity of health boards being in debt to the government and requiring them to pay a capital charge for the land and buildings hospitals occupy.
While the problem may not be of the Labour Coalition government’s making, it is one that they could solve in a matter of minutes.
Health Minister Chris Hipkins should table a report at next week’s cabinet meeting seeking approval to write off all health board debts and discontinue the practice of imposing a capital charge for hospital board assets.
The capital charge is currently 6 per cent, twenty four times higher than the official cash rate of 0.25 per cent. Taxpayers are being taxed twice – first on their income, then on the funds from taxes which are invested in new hospitals. The cost to the CDHB in 2016 was $6m, increasing to $16m in 2017 and $30m in 2018, and $24m in 2019.
Health boards should be focusing their attention on how to deliver high quality health services for the people in the area, not how they're going to cut services in order to pay back a fictitious debt caused by under-funding in the first place.
Any shortfall in government revenue that writing off those charges might bring about could be easily filled by using some of the $100 billion dollars the Reserve Bank is creating at present.
It should not be money extracted out of what taxpayers remit to the government, which is supposed to be spent on health, education and other services in the first place.
The DHB debts are effectively government owing money to itself so writing them off and getting replacement money from itself at zero interest via the Reserve Bank is an eminently sensible proposition.
Social Credit would dramatically increase health funding by an additional $4 billion every year (See ‘Reclaim Our Future’ financial policy document)