Budget 2026: Health spend delivers for hospital upgrades, more beds and new IT system

This year's health budget delivers funding for hospital upgrades, more beds and a new IT system to boost cyber security.

The total health spend for 2025 totalled $31 billion. This year, it's $34.2b - an increase of about 10 percent.

Health minister Simeon Brown said the funding would ensure more New Zealanders had access to timely, quality care.

Capital funding for hospital upgrades

Budget 2026 promises $680 million in capital spending, which will include redevelopments at the hospitals in Palmerston North, Tauranga and Hawke's Bay.

While those redevelopments are underway, there's also money for a temporary intensive care unit at Palmerston North Hospital, and the fit-out of an inpatient unit at Tauranga Hospital "to relieve immediate pressures".

A new tower block at Whangārei Hospital will add 158 beds, alongside an already approved acute services building, which was funded in Budget 2022 and still in the design phase.

Some money will also go towards acquiring land for a new hospital south of Auckland, in Drury.

The specific dollar amounts for each project are not listed in the budget, as they would be commercially sensitive and dependent on a successful business case.

On top of this, $930 million over the next year will go towards new clinical equipment, technology upgrades and hospital facilities.

Cyber security and IT upgrades

There's $153.6m over four years for Health NZ (HNZ) to expand national cyber security monitoring and upgrade IT safety systems across the health system.

Health NZ is also investing $300m of its own budget to help deliver the first three years of the Health Digital Investment Plan, which will replace ageing devices, modernise radiology systems and upgrade core IT platforms.

There have been multiple IT outages in Auckland and Northland in the past year, as well as a number of health portal hacks - most notably, Manage My Health.

A review from the Privacy Commissioner, released this week, was critical of Health NZ for its failure to ensure the security of patients' data.

Simeon Brown said the hacks were "deeply concerning and showed the need for stronger safeguards and tighter oversight of third-party systems".

Over the next year, HNZ would be running a programme to identify and manage risks posed by third-party vendors and systems and would be introducing annual audits for critical systems.

Bowel cancer eligibility age to drop to 56, from 58

The health minister expected the change, which lowers the free bowel screening age from 58 to 56 from September this year, to extend the service to an extra 200,000 people.

The expansion will cost $45.6m - that's $33.1m over four years to deliver the programme, and $12.47m for the required infrastructure and equipment.

"Over the next 25 years, lowering the screening age to 56 is expected to prevent 638 bowel cancers and save 522 lives," Brown said.

Pharmac funding for new medicines

There's a small increase in funding for the national drug buying agency - $13.5m each year for four years, for a total of $54m - to respond to cost pressures and increase access to medicines.

Last year, the boost was significantly higher, to fill a "gaping hole" in its budget which Finance Minister Nicola Willis said was left by the previous Labour government.

In response to questions from media, Associate Finance Minister David Seymour said Pharmac had done "pretty well" out of this government's term, with a quarter of a million people receiving treatment who otherwise would not have.

What's already been announced?

The Budget contains $15m to establish a specialist paediatric palliative care service, and $34m for road ambulance initiatives - including two new Auckland hubs and a digital patient notes system.

Who misses out?

With no extra funding specifically tagged for primary care, community health services like GPs might not get the boost they were hoping for, which would in turn have alleviated pressure on hospitals and emergency care.

However, Simeon Brown said the Budget would support 53,000 additional general practice enrolments and 272,000 additional bed-nights in the residential aged care sector - although this would come out of Health NZ's funding.

Savings

There's $19.2m in savings coming from the Primary Care Tactical Action Plan, which did not manage to fill all its nursing placements, resulting in an underspend.

There's also $18.54 being saved by the delay of the new Dunedin Hospital, in the form of return of depreciated funding from the Southern Health System Digital Transformation Programme.

According to the Budget document: "The outpatients building is expected to open in the second quarter of the 2026/27 financial year. As a result, the depreciation funding set aside for 2025/26 and partial funding for 2026/27 are no longer required."