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GUEST BLOG: Ian Powell – Farewell to subsidiarity; hello democratic deficit

Every piece of parliamentary legislation has a “purpose” clause describing the legal means or effect of the legislation, usually clause 3 which communicates its intent. The Pae Ora (Healthy Futures) Bill laying the foundations for New Zealand’s healthcare system (Aotearoa) from July 1 is no exception.

The bill is now at select committee stage, and its report to Parliament is expected by the end of this month. Labor has a select committee and a parliamentary majority, so whatever it wants, it will get – unless it fears voter backlash on some of the bill’s provisions.

Assuming the bill is enacted on schedule, it will replace the New Zealand Public Health and Disability Act 2000 (NZPHDA). Comparing the purpose clauses of the current law and the bill currently before Parliament speaks volumes about the government’s approach to the health care system.

Purpose of the New Zealand Public Health and Disability Act

The current law, passed through Parliament by then Labor Health Minister Annette King, established District Health Boards (DHBs). Its explicit purpose is to ensure public funding and provision of personal health services, public health services and disability support services, and to create new public health and disability organizations.

Labor Health Minister Annette King responsible for DHB introduction

Four objectives are established and must be pursued:

  1. Achieve for New Zealanders the improvement, promotion and protection of their health; promoting the inclusion and participation in society and the autonomy of people with disabilities; and the best care or support for those who need services.
  2. Reduce health disparities by improving health outcomes for Maori and other population groups.
  3. To give a voice to the community on matters relating to personal health services, public health services and disability support services. (Means for this include elected members of the DHB board; board meetings and some committee meetings must be open to the public; and require consultation on strategic planning.)
  4. Facilitate access to and disseminate information to “provide appropriate, effective and timely health services, public health services and programs”. (It was about protecting and promoting public health and disability support services.)

The purpose clause includes three key statements. First, it says there must be no “preferential access to services on the basis of race”; the equality required under the Human Rights Act 1993 must be ensured.

Second, to give effect to the purpose of the Act, “the Crown and the DHBs shall endeavor to promote the integration of all health services, particularly primary and secondary services”.

TDB recommends

And thirdly, “The Crown and the DHBs shall endeavor to provide for health services to be organized locally, regionally or nationally according to the optimum arrangement for the most effective delivery of properly co-ordinated health services”.

The second and third observations deserve special attention and are discussed below.

Purpose of the Pae Ora Bill

Bill Pae Ora states that its purpose is to:

  • provide public funding and service delivery to protect, promote and improve the health of all New Zealanders
  • achieve equity by reducing health disparities between New Zealand population groups, particularly for Maori, and
  • building towards pae ora (healthy future) for all New Zealanders.

Pae Ora Bill has a minimalist purpose clause

The purpose clause of the current act is 334 words; but this bill has 60. So what is missing to explain this huge contrast?

The principle of subsidiarity

It is not only the suppression of DHBs that explains this contrast. This is the complete abolition of the principle of subsidiarity, which has been the basis of our public health system since it was first legislated in 1938.

This principle, which was reinforced by the first reformist Labor government of Michael Savage and Peter Fraser, is now applied by the current Labor government.

The executioner is Health Minister Andrew Little (although the architect was Ernst & Young’s senior partner Stephen McKernan in his role as head of the Government’s Transition Unit).

Minister of Health Andrew Little: political executioner of the principle of subsidiarity in the health system of Aotearoa

Subsidiarity is a principle that underpins the relationship between local authorities in many countries, including Aotearoa. In the days when there was a more class-conscious reformist political left, this was often referred to as “municipal socialism”. Subsidiarity also underpins relations between the European Union and its Member States.

The general objective of subsidiarity is to guarantee a certain independence to a lower authority in relation to a higher authority. In the context of governance, this means a guaranteed degree of independence for a local authority (such as a DHB) from central government. Subsidiarity recognizes that social and political issues should be addressed at the most immediate (or local), coherent level for resolution.

For application, certainly in health systems and in relation to local government, this requires procedural provisions established by law. It becomes a “procedural principle” for the fundamental purpose of multilevel governance.

In the case of the current public health system, this “procedural principle” is provided for in the NZPHDA through its purpose clause discussed above and subsequent clauses covering the purposes, roles and functions of DHBs.

For the Aotearoa Public Health System, this means that in areas outside its exclusive jurisdiction, the central government will only act if the objectives of the proposed action cannot be sufficiently achieved by DHBs.

Ultimately, the central government is the superior authority because it controls funding and policy-making, and has great influence over appointments to boards of directors, including presidents and vice-presidents of the DHB.

Positive tension of subsidiarity

Think back to my third observation regarding the purpose clause of the NZPHDA – the duty of the Crown (central government) and DHBs to endeavor to provide health services to be organized at local, regional or national level.

This recognizes that there is a balance to be struck between local and national knowledge, particularly for defined populations.

There is an inherent tension in trying to find that balance. However, tension is not necessarily bad. With the right leadership culture based on interactive engagement and respect, this tension is positive – for patients, healthcare staff and the healthcare system as a whole.

On the other hand, removing the principle of subsidiarity from our public health system means replacing the positive tension with the negative tension of a monolithic bureaucratic centralism.

Integration of community and hospital care

Returning to my second observation above regarding the purpose clause of the NZPHDA – central government and DHBs should endeavor to promote the integration of all health services, especially primary and secondary (hospital) services .

Achieving this integration has been the hardest struggle for DHBs since their inception in 2001. They inherited an unnecessary contractual culture from the failed business market experience of the 1990s, which meant that if anything was not in an agreement or contract, it had not been done.

Over time, this shifted – albeit unevenly – towards a relational culture, which allowed for a more innovative approach. It is this relational culture that has led to the success of the community-to-hospital health pathways initiative at DHB Canterbury, an approach that has been replicated by other DHBs, starting with South Canterbury.

The resulting improved accessibility and quality of care led Canterbury to become the first DHB to ‘bend the curve’ of rising acute demand (the main driver of healthcare costs and deficits of DHB). But the DHB has come into increasing conflict with the top-down bureaucratic leadership culture of the Ministry of Health.

The “democratic deficit”

Removing the principle of subsidiarity by abolishing the DHBs was not included in Labour’s 2020 electoral manifesto. Nor was it in the report of the Health and Disability System Review Committee headed by Heather Simpson, or in earlier public debate.

This exclusion of the right of the public and the health care system to consider and debate DHB abolition constitutes a massive “democratic deficit” in the process. Had it been done by a national government, Labor would have been among the most vocal critics.

The opposite of subsidiarity is the ability to dominate someone or something by controlling through power or domination. The outcome of this predetermined legislative process will also create a new democratic deficit, this time in the functioning of the health system.

Due to the level of control exercised by the “higher authority” (central government), the “lower authorities” (DHB) are not able to discuss differences with the latter on issues such as service provision , funding and rebuilding hospitals in public.

But the DHBs privately could and did. At the forefront of this behind-the-scenes advocacy was Canterbury DHB. Hence the shake-up and the forced departure of its senior management by the Ministry of Health, skilfully supported by the Minister of Health’s Crown Monitor and Ernst & Young. Under Andrew Little’s Bill Pae Ora, this more private advocacy will be stifled.

A sign of the new post-July 1 environment, the DHBs have not been able to challenge the wisdom of abolishing subsidiarity, either in public or in private.

Abolition of DHBs is a roundabout way to dramatically increase the “democratic deficit” in New Zealand’s healthcare system. The quality of decision-making will be the immediate casualty with the public and healthcare personnel the consecutive casualties.

Instead of the “healthy future” promised by Little’s bill, Aotearoa is more likely to have an unhealthy future.

[This is a modified version of my article published by New Zealand Doctor on 13 April 2022]

Ian Powell was executive director of the Association of Salaried Medical Specialists, the professional union representing senior doctors and dentists in New Zealand, for over 30 years until December 2019. He is now a health systems commentator , labor market and political living in the small river estuary community of Otaihanga (the place by the tide). First published at Second opinion of Otaihanga