Feel-good policy not getting us very far


The scrapping of $5 prescription fees, a big ticket item in Budget 2023, is a good distraction when it is the $2.3 billion allocated to healthcare that deserves our attention

In the words of John Taskinsoy, nothing is free in this world; when you are offered a free lunch, think twice before you accept it, as you may be asked later to do so much more to pay back.

In this case the free lunch is medicine and the price is $175 million a year. By scrapping $5 prescription fees as part of Budget 2023, the government is costing each taxpayer an extra $52 a year – bearing in mind, the maximum someone could spend on prescriptions per year was capped at $100.

Minister of Health Ayesha Verrall argues this move will make it easier and cheaper for New Zealanders to access the medicines they need, particularly those who have multiple prescriptions to fill on a regular basis.

“The $5 charge can be a barrier to some New Zealanders getting the medicines they need. More than 135,000 adults did not collect their prescription because of cost in 2021‑22.”

If the rationale behind the policy is to support those on low-incomes, National Party Leader Christopher Luxon wonders why it would cover everybody, including the wealthy.

He would see free prescriptions only targeted at people with community services cards or super gold cards for example, while those who can pay should pay.

Despite often arguing that the rich should “pay their fair share”, the Green Party disagrees with Luxon – health spokesperson Ricardo Menéndez March says there should be no barriers to anyone accessing the healthcare they need.

“Five dollars may not seem like much, but for many households it is another unavoidable added cost on top of food and rent. Often, prescription costs are a significant barrier to care, and a driver for people not accessing medicines that are critical to their wellbeing.”

But the ACT Party points out that only 3.3 per cent of prescriptions are not picked up and free prescriptions were already available at Australian pharmacy chains, which were eating the $5 cost as a loss leader.

“Altogether, paying $5 for prescriptions is not a major problem for New Zealanders, and if it was they could get them for free at an Aussie chain. Now those Aussie chains will effectively get a tax cut because they don’t need to eat the $5 as part of their strategy. Chemist Warehouse claims it has eaten $42 million over the past five years.”

Making prescriptions free is another example of well-intentioned spending that would have been put to better use elsewhere, ACT says.

“That money could have been used to increase funding for family doctors. We suspect more people miss out on medicine because they don’t get a diagnosis and prescription in the first place, than not affording the $5.

“It could have been used to increase the Pharmac budget so more pharmaceuticals could be funded. You can now get free prescriptions in New Zealand, but the range of medicines actually available is among the worst in the developed world.

“Labour and National are pouring more money into the same model without asking, how could this be more efficient?”

That brings us to the Government’s $2.3 billion investment into healthcare over the next two years, which Centre for Health Systems and Technology Director Robin Gauld says is significant, but inadequate.

“This new funding should account for some of the inflationary pressures but it’s unlikely to be adequate. Too many people are missing out on treatment and there is a significant level of unmet need in the community for secondary healthcare and other health services,” he says.

“There has been no measurement of this in any systematic way and we really don’t know how many people suffering in the community are in need of an elective procedure and have been denied access or are being treated by their GP instead.

“The budget includes $1 billion allocated to health sector staffing and wages. This is very important but it is coming very late in the day. Funding for 500 new nurses has also been provided. This will take time to deliver on.”

Gauld is however supportive of scrapping the $5 prescription fees and says a bold government would also have allocated funds to scrap patient charges to see a GP as well.