Luxon defends drug funding's effect on Budget, refuses to share total cost

Prime Minister Christopher Luxon has sought to defend National's approach to funding cancer drugs, and the support needed to roll that out.

Luxon announced the coalition's solution to what had been labelled a broken election promise on Monday, with $604 million in funding from next year's Budget set aside for Pharmac to buy cancer medications, and a further 28 drugs.

Heading into the National caucus meeting on Tuesday, he told reporters that having to use a pre-commitment from next year's Budget was not unusual.

"Quite normal, it's quite normal. We knew that we wanted to provide cancer drugs to New Zealanders, that was part of our commitment to New Zealanders before the election, as you well understand.

"It's quite normal and it's quite okay. We know we've got a challenging operating allowance and that's fine, we've set ourselves that agenda. We know that we've got some contingency monies to spend through the course of this year and we also know that we've got a big savings programme ahead of us too."

Labour's leader Chris Hipkins disagreed, saying it showed the previous Budget process "must have been a total shambles".

"I think spending $150m of a $2.4(billion) new spending allowance literally three weeks after you've just read the Budget is pretty unusual," he said.

"If they'd been working on it all along they would have funded it in this year's Budget. The fact that only three weeks after reading this year's Budget they're raiding next year's Budget shows they've made a mistake here.

"If that's the way they're going to operate, we're in for a very interesting Budget cycle next go round because they will have spent all the money before they even get to it."

He acknowledged Labour did not plan to increase funding for Pharmac by as much as this government has.

"We had increased funding for Pharmac and we'd indicated in our plan before the election that we intended to increase funding for Pharmac outside of cost pressures to fund additional medications as well ... it wasn't to the scale we saw yesterday, but I do welcome the increased investment in Pharmac."

Cost of rollout remains unknown

University of Otago oncology Professor Chris Jackson said it was a "fantastic" announcement, and "huge" news for cancer sufferers, but the need to support the drugs' rollout was a concern.

"It's got the real potential to cause major capacity issues in the cancer sector. We've never had this many drugs funded at once before and we've got to make sure we've got the staff in place to deliver them, otherwise we're going to have a huge waiting list issue."

He said intravenous treatments would require more oncologists, infusion chairs and nurses - and oral treatments would require support too.

"They require cold-chain logistics ... scans for monitoring, many of them still have significant side effects that require management and of course you've got to see an oncologist to get them prescribed.

"When you've got 26 new treatments that's a major increase to the number of treatments that our system has to deliver and that will certainly increase the waiting lists unless we get staff, to go along with this."

National's announcement yesterday outlined $38m had been set aside for Health NZ in "startup" funding, with more available to be drawn on by both Health NZ and Pharmac for the implementation.

Jackson said he had seen no specifics about the total cost of that rollout, which National confirmed would be managed through a contingency fund from Budget 2025 that was on top of the $604m for the medicines.

Luxon on Morning Report on Tuesday said he was not going to get into that total cost.

"Because that's set in the contingency and that's for Health NZ and Pharmac to actually make sure they're doing it in the most effective and efficient way. But rest assured that money's set aside to make sure we get ... the operational side of this thing done well," he said.

"We understand there'll be need for support and supportive resources to get the programme away so we've thought about all of that and .... we want these drugs getting to New Zealanders as quickly as possible, that's our goal here and we're doing everything we can to ensure we do that."

The timing of the rollout of the new drugs was for Health New Zealand and Pharmac to oversee, he said.

"The intention is go as fast as you can."

Any delay would be down to process and getting the drugs into the country, he said, but the access to more cancer medications was more important than the process, he said.

"As we came to government, yes the way we delivered it is very different from what we had proposed but actually I think it's the right decision.

He said they had been working on it for the past few months, "but I just say to you ... it's all very interesting talking about a process story, the great news is that this is a pretty unprecedented ... historic investment".

Health Minister Shane Reti said he was confident the government could deliver the workforce needed.

"Workforce is challenged, it's been challenged for some period of time, but we have confidence we can deliver that."

He said a Health Workforce Plan would be coming out shortly showing the nursing gap had been reduced "substantively", although there were still shortages in mental health, maternity and critical care.

"And there are pockets of gaps through other parts of the health system as well."

Funding concerns for future Budgets

Finance Minister Nicola Willis in May revealed an operating allowance of $2.4 billion in new spending for the remaining Budgets through to 2027.

With $1.4b already allocated in 2025 and 2026 for Health cost pressures, the $604m for Pharmac medicines, $38m for the rollout, and any additional related cost eats into the remainder.

Any new spending next year would have to come from the $358m remaining, be funded through spending cuts, or exceed the operating allowance.

Luxon rejected the suggestion voters should expect a "slash and burn" approach from the government in next year's Budget.

"No, as I said to you, we are running government differently," he said. "When you have massive investments - not just the new money that's added in each and every Budget - I want the total amount of spend to be appraised and to be considered by the CEOs as to whether all of that investment is working or not working.

"Rest assured we understand how tight it is, we understand how difficult the fiscal situations are, we understand what the forecasts look like. We are determined to make sure we've got an ongoing diet of government savings and spending being directed the right way.

"We're committed to that allowance, and we've also got to make sure we actually grow this country as well."

He said it was "absolutely" in line with National's position that it was the party of good economic management.

"We wouldn't have committed to it if we didn't think we could deliver it."