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Report recommendations accepted in full

Posted: 02.08.2017

The Ministry has accepted in full the recommendations from an independent report into its DHB funding allocation error in May.

Director-General of Health Chai Chuah says he fully owns that an error was made and it was made on his watch.

‘I have apologised to the Minister of Health and the health sector for the error and provided an undertaking that we will learn from this and fix it.’

‘We know that the Budget Estimate process is complex, complicated and evolves over time. Within our own organisation it involves many staff from three teams working over many months towards finalising the Budget Estimates. There are other agencies involved as well.’

The report found that the impact of one change, not providing the usual early funding signal to DHBs four months prior to the budget, was not realised nor effectively compensated for.

‘We have brought in an independent agency to look carefully at what happened, identify the lessons to be learned and to give us recommendations to help minimise this happening again.’

‘We now have those recommendations and our focus now is on putting those recommendations in place.’

‘To that end, we have already started with some improvements.'

‘We have brought our finance team together and looked at tightening up our checking process as well as identifying areas where we deal with complex budgeting issues involving a number of teams and strengthening the review processes for those areas.’

‘The planning for Budget estimates 2018 is already underway and we have a governance group now in place and we’re tasking them with a greater degree of scrutiny, oversight and implementing the report’s recommendations.’

An important recommendation in the report is that the Ministry increase its engagement and involvement of DHBs in the funding allocation process and the Ministry is committed to doing that.

‘I know I speak for all my staff in saying they are fully committed to restoring confidence in a critical part of our core business.’


The six lessons learnt and outlined in the report are:

  • Any change to business as usual processes needs to be fully considered for downstream impact
  • Other agencies, like DHBs, affected by any change, should be fully engaged with to understand the flow-on impact
  • The involvement in a number of teams in complex processes requires clear ownership, line of sight and shared understanding
  • Clearer processes around managing exceptions and escalating issues early
  • Standardising checks and balances particularly around any changes to process
  • Earlier engagement with senior management and the Treasury around DHB funding variances.

The four recommendations are:

  • Running earlier the computer generated and then manually adjusted funding model at the earliest opportunity and then monitor and update the model.
  • Project management disciplines are applied to the budget estimates process – including change management.
  • Enhancing the quality improvement process around the budget estimates process
  • Greater engagement and involvement of the DHBs in the budget estimates process.

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