The Labour Party will be offering local doctors low-interest loans so they can set up new practices or buy into existing ones.
Called the Family Doctor Loan Scheme, the policy was launched at the party’s conference in Auckland on Sunday, with Labour leader Chris Hipkins saying this is a practical, targeted way to boost locally-owned clinics across New Zealand and strengthen the ones we already have.
In a document about this policy, Labour says this is a way to secure the future of New Zealand’s family general practitioner doctors (GPs).
GPs have been in the spotlight for a long time and New Zealand has even been reported as having "a GP crisis."
GP clinics have also been struggling financially with General Practice New Zealand chairman Bryan Betty telling RNZ in 2024 that this was due to rising costs and a failed funding formula.
Staff shortages were also a problem, Betty told RNZ, which meant clinics could not take on new patients and this could put additional pressure on emergency departments and hospitals.
So how will Labour’s policy work?
In a document about this policy, Labour says doctors will be able to apply for loans of up to 90% of the cost of buying a practice and this would be capped at $500,000.
Up to 50 loans would be available each year and would only be for owner-operated general practices.
“Corporate-owned practices are excluded to ensure we’re backing locally run GP clinics that stay closely connected to their communities,” the policy document says.
The loans would be targeted to communities with no GP clinic or where GP books are partially or fully closed.
The loan would be interest-free for the first two years and after two years, monthly repayments would begin on the outstanding balance - from then, an annual interest rate of 3% will apply.
Doctors would have 10 years in total to repay the loan. Each doctor can get only one loan under this scheme.
The loans would be available from July 1, 2027, through the Small Business Cashflow Loan Scheme.
The Small Business Cashflow Loan scheme was first launched in May 2020 to help out businesses affected during the pandemic. Up to $100,000 was potentially available via unsecured loans for businesses with 50 or fewer full-time staff.
The loans were interest free if repaid within a year. Thereafter an interest rate of 3% has been charged for a maximum term of five years, with repayments not required for the first two years.
Kick start
“The number of doctor-owned practices is falling, as is the number of doctors who work in doctor-owned practices,” Hipkins says.
“It’s expensive to start a new practice or buy into an existing one, so our low-interest loans will give doctors the kick start they need to get established."
“Two-thirds of practice owners and partners are intending to retire in the next 10 years, so it’s vital we can support the next generation to keep the doors and books open,” he says.
In its policy document, Labour says doctors have told them owning a practice is not always a sustainable option, especially for younger GPs who still have student loans and may be starting families or trying to buy their first home.
“Providing low-interest loans will back those doctors who want to spend their careers caring for their local communities,” Labour says in the document.
“The loans will help young doctors plan a future for themselves here in New Zealand, create local jobs for nurses and healthcare workers, and support more owner-operated practices that are connected to the communities they serve.”
An example Labour used in its document was someone called Katherine wanting to buy a house and be closer to their family in Cambridge.
"A local doctor in Cambridge is retiring and wants to sell his practice in 2029 ... Katherine would need to borrow $400,000 to buy into the practice and could be paying back upwards of $5000 a month if borrowing through a bank."
"She is reluctant to take on this loan, as she plans to buy her first home in Cambridge when she moves back, with a mortgage of $500,000 with monthly repayments of $2500."
The document goes on to say that with Labour's Family Doctor Loan Scheme, Katherine would be able to borrow $400,000 to buy into the practice.
"If the loan is approved, she would have no repayments and interest until 2031, and then until 2039 to pay off the loan.
"This reduces the risk for Katherine and she's able to spend the first two years focusing on patients and ensuring the clinic runs smoothly, rather than worrying about monthly repayments."
Independent Pricing Authority
Alongside this, Labour says it will “fix GP funding” by introducing independent pricing - “a fair, transparent funding system where an Independent Pricing Authority sets a national GP funding rate based on real costs and patient need.”
“When that rate goes up, Health NZ will fund the increase, instead of leaving practices or patients to carry the cost,” the party says in the document.
“Money that currently comes from patient co-payments will go into general practice funding, so clinics aren’t worse off. This reform will keep care affordable, back local doctors, and shift our health system towards prevention - keeping people well, not just treating them when they’re sick.”
Capital gains tax policy
This announcement comes after the Labour caucus agreed to campaign on a 28% capital gains tax policy on residential and commercial property.
This would be used to fund three visits to a general practitioner doctor for each New Zealander each year.
The capital gains tax excludes family homes, farms, KiwiSaver, business assets, inheritance, and other valuables. The capital gains tax is only on investment or second properties.
It would appear to capture a holiday or second home, even if that property was not held specifically for investment purposes. While the tax excludes “business assets” it appears to include any commercial property they may own.
Labour says the tax rate would be 28% to align with the corporate rate, so that property transactions are taxed like other business activities. It would apply at the sale of an asset and be charged on any gains after July 2027.
An example used by Labour is: two business partners who own 50% of an investment property which is sold with a net gain of $100,000 - each partner would pay 28% on their $50,000 share.
There's detailed information on the Labour policies here and here.
In its document on the proposed tax change, Labour - using a forecast revenue based on a model developed by the 2019 Taxing Working Group with an updated asset base and assumptions - says 2027/2028 would have a forecasted revenue of $100 million.
This is forecasted to rise to $385 million in 2028/2029, $965 million in 2029/2030 and $1.35 billion in 2030 and outyears. It would have an average of $700 million a year across the forecast period.
Every dollar raised by the new tax would be redirected into the healthcare system - including funding three free GP visits through “Medicard” - a physical card and digital system which would be used to track entitlements to subsidised care.
10 Comments
That is a joke. GP's should not be private businesses - it makes no sense, Nationalize and properly fund GP practices as part of the public health system.
The GPs association has opposed nationalising primary care since the the Social Security act of 1938 was proposed...reasons various.
They can't.
Something about the Govt out of cash and an increasing tax burn, while less tax payers remain. Anything that supports GPs is good in my book, but not sure if thats it
We are heading into an era of an open health record. If all medical people can have all access to your full health data, what else is there left for old GPs to sell to the new ones exactly?
Something about the Govt out of cash and an increasing tax burn, while less tax payers remain.
Have you not heard of deficit spending? It solves everything.
Except the part that gets forgotten about Keynes' approach, where you should be posting surpluses outside periods where you need to deficit spend to ride through a contraction.
What happened to the scheme where Drs tuition at University would be paid for by the state and the qualified Dr would then have to remain in NZ for five? years in a placement area decided by the govt. Was this something some politician mused about but not implemented or did something along these lines actually happen and then was withdrawn by a later govt
IIRC currently around 80% average of medical education is paid by the State.
Over 50 years ago that education support came with bonded service for a period (eg nurses).
Not sure about Doctors specifically, but this kind of scheme definitely exists for some medical specialties.
I'm not sure how much sense it makes to give low interest loans to create demand for staff when we aren't paying enough to retain in NZ the too-low numbers we are training.
The core issue of inadequate return can only be masked by artificially cheap money, and it does nothing to fix things in terms of skill supply. The three free GP visits will only distort the market further.
And are there provisions around on-selling a practice built up with cheap public money? The entrepreneurial thing would be to create a practice in a low-served area, work like a maniac to build it up and then sell to a VC firm or one of the corporates.
They fail to address the core issue: Most GP's trained in NZ leave soon after, of which I'm unsure as to how many ever return given the earning potential abroad. This creates a vacuum requiring NZ to import more and more GP's from abroad who are willing to sacrifice earning potential for lifestyle in NZ.
We also have the struggles that current GP's have where many of their referrals are declined by the public health system due to lack of resources, which I would consider likely to contribute to an increase in demand downstream for the likes of full joint replacements, and acute surgeries for things that could have been otherwise sorted with a minor procedure earlier on.
What the whining GPs don't like to mention is that many of them work part time. They make so much money that they don't need to work so much.
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