Creative accounting

Written By: - Date published: 10:23 am, December 5th, 2024 - 26 comments
Categories: uncategorized - Tags:

There were firey scenes at the Health Select Committee yesterday as Labour’s Ayesha Verrall accused Health boss Lester Levy of cooking the books.

From Kate Green at Radio New Zealand:

The Health Commissioner will seek an apology from the former Health Minister, after she suggested at Parliament that he had “reputation for cooking the books”.

Professor Lester Levy clashed with Labour’s health spokeswoman Dr Ayesha Verrall at a scrutiny week select committee session today, over the way Health New Zealand (HNZ) has treated some of its expenses, totalling almost $300m.

Statements show HNZ moved the period when it would account for redundancy payments after talks with the Auditor-General, moving from 2023-24 to the current financial year and pushing the forecast deficit 2024-25 to more than $1 billion.

It also changed how much it was allowing for Holidays Act paybacks in this financial year.

It is pretty creative to move this year’s expenses into last year’s accounts to make this year’s figures look better not to mention last year’s figures look worse.

The background is set out in this Newsroom article written by Jonathan Milne. From the article:

Lester Levy and his deputy commissioners have backed down on an attempt to include hundreds of millions of dollars extra in redundancies and holiday pay remediation in the Health NZ deficit.

It’s believed the backdown came after the agency’s former chief financial officer, Rosalie Hughes, went to the Auditor-General John Ryan to blow the whistle. In an emailed statement, Ryan confirms he met with Hughes.

Hughes had quit with a settlement, after taking Health NZ to mediation over a bid to lay her off in a board-led restructuring. Six members of the executive team have now resigned or been laid off.

Health NZ commissioner Lester Levy and his deputy commissioners had attempted to retrospectively include $135 million of anticipated redundancies in the 2023/24 finances – even though the staff wouldn’t actually be laid off until now, in the 2024/25 financial year.

The effect of these smoke and mirrors would be to make the 2023/24 deficit incurred under previous leadership look much bigger – and the 2024/25 deficit run by Levy look smaller. Critics say it was an attempt to justify the minister’s decision to sack the board and put Levy in charge.

The commissioners also sought to include big allowances for holiday pay remediation, and pay equity settlements – again sparking concern from the Auditor-General.

Ryan hints at the extent of the pushback: “It took Health NZ some time to make adjustments after we had made comments on their draft financial statements. This is the main reason why the financial statements could only be signed on 14 November, two weeks after the deadline.”

This is not the only recent revelation of dodginess in Health’s financial reports.

Remember the announcement that Health had gone from a surplus to a billion dollar deficit during the last financial year? A large cause of this was the Crown not paying to Health $529 million of funding tagged for pay equity settlements.

From Rachel Thomas at the Post:

A $529 million pay equity sum for health workers that never arrived contributed to the deficit at Health NZ – Te Whatu Ora, the agency says.

The head of the nursing union at the heart of two of these claims is describing the revelation as an insult to those on the front line.

In a quarterly report released on Thursday, Health NZ shed light on how and why its finances deteriorated from a forecast surplus of almost $300m to an unaudited deficit of $934m by June 30 this year.

In the high-up summary of the 72-page report, chief executive Margie Apa said the deficit was partly due to one-off factors including write-offs to surplus Covid-19 stock ($193m), Holidays Act payments ($172m), cuts to Hauora Māori funding, higher than expected staffing costs and more outsourcing.

But buried on page 53, the April-June report calls out a payment that never came.

“In 2023/24, we expected to receive $529 million of funding to fully offset pay equity payments to allied health, midwifery and nursing staff. This would have contributed to Health NZ achieving a surplus of $583 million.

“Pay equity funding was not received during the year, resulting in the target surplus expectation reducing to $54 million. Health NZ did not achieve this revised target surplus.”

This casts serious doubts on the Government’s claim that there is blowout of health budgets.

Holding back payments and booking this year’s expenses into last year to claim that things are worse than what they actually are is not standard accounting procedure.

Run DMC say it best.

26 comments on “Creative accounting ”

  • Comments are now closed

  1. tWig 1
    5 December 2024 at 11:19 am

    Big Hairy News cover the TVOne news on this issue (from 15 min). Great for a non-tv watcher to see how the media presents this.

    Pat points out that Levy does not say Verrall's claims in Select Committee are untrue, although Levy is 'upset'.

    Big hit for Labour.

  2. dv 2
    5 December 2024 at 11:22 am

    I wonder if I could move money like this with the tax department?

    • Shanreagh 2.1
      6 December 2024 at 8:43 pm

      Yes I am sure that some of those receiving redundancy payments or complicated back pay that often pushes their current earnings (even if they get special tax treatment) into higher brackets would be keen to put some back into earlier years returns of income. Why we could go back 7 years at least adding a bit in here and there.

      'What's that you say…Lester Levy only wants this kind of arrangement for the big bellied Govt funded places to make it look good and not the irks and jerks, oh darn!'

  3. Tiger Mountain 3
    5 December 2024 at 11:23 am

    Mr Levy has a long recorded history of being a loyal lieutenant of the ruling class in the health Sector. A reprehensible type that Ms Verrall did well to call out.

  4. Darien Fenton 4
    5 December 2024 at 11:49 am

    Lester Levy was chair of three Auckland DHBs who ran surpluses according to him, then we found out they were in deficit after he left. I don't know how you describe this other than a reputation for doing something dodgy, if we are not allowed to say a reputation for cooking the books.

    • adam 4.1
      5 December 2024 at 12:11 pm

      Know of many people who mysteriously canceled their own specialist appointments they had been waiting months for, when he controlled the DHB's in Auckland.

      It was also in his time as head of Counties Manukau when Middlemore because know as deathmore. And it was not just because shit was running down the walls.

    • newsense 4.2
      7 December 2024 at 9:04 am

      That’s an interesting quote Darien.

      Funny how the articles I’ve seen focus on unruly behavior, which sounds like a re-run of Luxon v journalism post-the state care inquiry, and Levy calling for an apology.

      It doesn’t seem likely that that kind of information that you have mentioned will be the focus of reporting at this stage?

  5. Drowsy M. Kram 5
    5 December 2024 at 12:03 pm

    yes Informative post. A synonym for 'charlatan' is 'quack' – unfair to ducks?

    Be like a duck. Remain calm on the surface, and paddle like hell underneath.

    That's our Lester – 'paddling' like hell to grow the profits of the private health industry.

    Glazed duck egg blue with matte edging, Lester is also 100% waterproof, dishwasher and oven safe.

    Our CoC govt MPs and their Levy-like lackeys are self-serving scammers – can't trust 'em.

    https://thestandard.org.nz/reti-secrectly-wants-to-privatise-health/

    One of Tories’ biggest ever donors profited from £135m of NHS contracts
    Exclusive: Frank Hester, who gave Rishi Sunak’s party £5m this summer, is thought to have made huge sums from DHSC deals

    The National Wealth Service: Privatisation Profiteers
    This is the first in a series of three articles investigating the accelerated privatisation of our NHS for private healthcare profits.

    Private sector set to milk the NHS

    Privatisation Timeline [NHS]

  6. adam 6
    5 December 2024 at 12:12 pm

    When we have a minister of health this useless, the buck should stop with him, his head should roll.

    • Georgecom 6.1
      6 December 2024 at 2:51 pm

      No one else aside from Reti in the COC to do health. Luxons cupboard is bare, he has gone to the bottom of the barrell. The ineffective weak Dr Reti is the best they have

  7. Barfly 7
    5 December 2024 at 12:25 pm

    To paraphrase Taika Waititi

    New Zealand as corrupt as fuck

  8. Mike the Lefty 8
    5 December 2024 at 7:36 pm

    Levy reckons he will give evidence of his calculations next week.

    Why next week?

    Why not today? Why aren't the figures on hand now?

    The answer is that he needs the time to manufacture the evidence.

    Creative accounting is a polite term for it.

    • Incognito 8.1
      5 December 2024 at 7:46 pm

      Levy only works part-time.

    • Morrissey 8.2
      6 December 2024 at 2:04 pm

      Paul Goulter of the New Zealand Nurses' Association powerfully refuted Levy's managerialist gobbledegook in this interview on October 9th. This is the last minute or so but it's worth listening to all of it.

      Paul Goulter: This is the missing voice in this debate: the patients. Instead we have arcane accountancy debates about budgets, et cetera et cetera. Listen to the people on the front line; they will tell you.

      Kathryn Ryan: The, uh, Commissioner also referred this morning to there being a lot of ANECDOTES around, and wanting to do better than ANECDOTES. Do you beLIEVE there is more than anecdotes available in the question of nurse numbers?

      Paul Goulter: I'd say anecdotes are a more powerful source of information than just talking about productivity and those things. Listen to what the people on the front line say.

      https://www.rnz.co.nz/national/programmes/ninetonoon/audio/2018959031/too-many-nurses-for-the-budget-nurses-org-hits-back

    • Shanreagh 8.3
      6 December 2024 at 8:51 pm

      He's desperately trying to find the calculations he gave to someone within the 14 layers of health staffing…he did this on the advice of Dr Reti. They just have to find an important person at the end of the chain who was last seen with them and a large green round metal tin. wink

  9. SPC 9
    5 December 2024 at 10:23 pm

    Miss America (and the health sector) Pie

    We started singin' Bye, bye Miss American Pie Drove my Chevy to the levee but the levee was dry. Them good ole boys …were drinkin' whiskey and rye Singin', "this'll be the day that I die. "this'll be the …

  10. Patricia Bremner 10
    6 December 2024 at 1:36 pm

    They practice deception, and the mannerisms of innocence, but often their dead eyes mirror a lack of feeling.

    Joyce was pulled up on "Pretty Legal"

    Levy's shuffle the money was audited and changed by John Ryan as "Not allowed" after a show down with Rosalie Hughes, whom they were trying to dismiss. Her challenge to Ryan led to the change. So Levy failed, and the deficit ballooned, hence the letter of comfort from the Government.

    So obviously, as Aeysha said it is a pattern, supported by Janet Wilson's report, Levy has probably done the "shuffle the money from one column to another more flattering column" before. His statement he will prove it is not habitual…..well waiting.

    I think Lester's shell game appears to have been uncovered imo.

    • gsays 10.1
      6 December 2024 at 1:48 pm

      I'm looking forward to the evidence he said he will produce.

      It's very hard to prove something that didn't happen.

      • Morrissey 10.1.1
        6 December 2024 at 2:43 pm

        You can look forward to a barrage of graphs, productivity charts, and egregious management clichés.

        • gsays 10.1.1.1
          6 December 2024 at 3:29 pm

          Verrall should be able to point out where the malfeasance took place.

          Ideally at the same time as Levy does his blustering.