Government funding for Health New Zealand and Maori Health Authority

IBISWorld forecasts government funding for Health New Zealand and the Maori Health Authority to increase by 5.9% in 2025-26, to $26.99 billion. Robust investments in Health New Zealand are driving funding growth, with the New Zealand government adopting a multi-year funding strategy for the health sector. To meet intensifying cost pressures across New Zealand's healthcare system, the government launched a $16.68 billion multi-year package. New Zealand's growing and ageing population has increased the incidence of illnesses requiring treatment by primary healthcare services, which has boosted funding requirements.

Health New Zealand and the Maori Health Authority (previously the DHBs) receive individual funding based on the Population-based funding formula (PBFF). The PBFF allocates funding based on factors like the district's share of the population, the average cost of providing medical services and rural adjustments for sparsely populated districts. Other factors, like socioeconomic disadvantage, can also adjust funding for DHBs.

Government funding for DHBs and their replacement organisations has increased over the past few years. This growth is primarily driven by the Central Government's (Te Kawanatanga o Aotearoa) funding spike in 2022-23, as it was the inaugural year these organisations launched. The funding increase has also overturned historic budget deficits among many DHBs. New Zealand's health system has recently faced considerable cost and capital strains because of construction sector inflation and inadequate planning in making investment decisions for several legacy investments. This scenario has necessitated extra funding in the health sector. Also, greater demand for hospitals and other primary healthcare services has stimulated additional financing. Increased visits to GPs over the past few years have placed increasing pressure on DHBs. However, this pressure has been minimal because of the significantly smaller cost of GP services than public hospital services. In its 2025 budget, the New Zealand government has allocated an additional $5.5 billion for hospitals, primary care and other services, along with $447 million to enhance New Zealanders' access to urgent care and after-hours healthcare services. The COVID-19 pandemic necessitated additional funding over earlier years of the period, particularly in ICUs, as DHBs have provided various health services in response to the outbreaks. The government also set aside additional funding for pharmaceutical purchasing to enable Pharmac to fund new medicines or widen access to already funded medicines, further boosting the funds invested. Extra funds were also set aside for drug procurement, allowing Pharmac to finance new drugs or broaden access to previously funded ones. Nonetheless, the healthcare sector reforms have streamlined processes, decreased role duplication and improved efficiency, offsetting further funding increases. IBISWorld forecasts government funding for Health New Zealand and the Maori Health Authority to grow at a compound annual rate of 9.7% over the five years through 2025-26.