Health Minister David Clark has announced the government is putting right a decade’s worth of underpayment to nurses, doctors and other health workers relating to the Holidays Act, with $550-650 million owed to staff.

“Over 100,000 highly skilled and dedicated health workers, both current and former staff, have been short-changed over many years. But this Government is putting things right,” said Clark.

“We make no apologies for addressing this long-term challenge we have inherited. We have instructed DHBs to work with unions to resolve this issue and ensure workers are fairly recompensed.”

DHBs, the Council of Trade Unions and the Labour Inspectorate have agreed a memorandum of understanding, which sets a national process for DHBs to identify and rectify the historic Holidays Act 2003 non-compliance. The Ministry of Health expects it will take up to two years for the DHBs to review and rectify.

DHBs have included the estimated cost of Holidays Act liabilities in their end of year financial reporting, although a few DHBs are still to make comprehensive cost estimations, said Clark. “A substantial extra one-off cost is therefore included in the end-of-year results, taking the sector-wide deficit for 2018/19 to $1.081 billion.

“More than half of that, $666 million, is due to one-off costs - $590 million for Holidays Act compliance; $32 million as a result of the resident doctor strikes and $44 million for the previous National Oracle Solution project. The underlying deficit result is $415 million, compared to a budgeted result of $340 million – that’s a $75 million or 22% variance which is in line with the year-end results for the last two financial years.”

Dour DHBs - Canterbury, Waikato, Counties Manukau and Southern - account for the majority (65%) of the underlying deficit, with a combined total of $268 million, he added.

“While it will take time for some DHBs to reach a breakeven position, it can be done. Nine DHBs ended the year with a result close to budget or an improved result (excluding one-off costs).”

The DHB sector unaudited financial performance report for the year 2018/19 is available on the Ministry of Health’s website: www.health.govt.nz