Integrity Briefing: Would New Zealanders want Serco running the public health system?

The Minister of Health Simeon Brown met with the notorious management outsourcing company Serco last month. The reason for this is entirely unclear, with the Minister refusing to comment on whether Serco might be used in the New Zealand public health system for any sort of management of hospitals, elective surgery or other elements.

This is reported today in the Otago Daily Times by Matthew Littlewood, who reports me calling for clarity and transparency on the topic – see: Concerns raised over minister’s meeting (paywalled)

I’m quoted in the article saying that Brown’s “first and most urgent step must be transparency… The Minister of Health must immediately and fully disclose the nature, purpose, and content of his discussions with Serco… A decision of this magnitude, which could fundamentally reshape public healthcare for a generation, cannot be conceived in secrecy and executed without public consent.”

Littlewood explains in his article that “Serco is a multinational company supplying defence, health, space, justice, migration, customer and transport services” and that “Serco continues to run Auckland South Corrections Facility (Kohuora) and it also delivers healthcare services in Australia, the South Pacific and the United Kingdom.”

The ODT newspaper approached the Minister’s office for further information: “A spokeswoman for Mr Brown did not respond to further questions from the Otago Daily Times, including whether Serco was interested in involvement in the new Dunedin hospital project.”

However, Serco itself provided more information than the Minister about the meeting, saying: “A Serco spokeswoman said the meeting with Mr Brown was an introductory discussion with Serco’s Asia Pacific chief executive Andrew Head, who was in New Zealand at the time to support a charity event.” Serco said: “The meeting provided an opportunity to share information about Serco’s work in New Zealand.”

If we take Serco at its word, then perhaps the whole episode is a lot of nothing, and meeting with the Health Minister doesn’t presage anything about future privatisation of management services in hospitals.

Yet it would be more reassuring if the Minister were also willing to rule this out, and would fully answer journalists questions about the meeting. Otherwise, my other quote used by the ODT in the article still stands: “Before the nation is locked into a long-term contract with a company defined by its failures, the public has a right to know what is being planned in its name.”

The History of Serco in running state services

The Green Party’s Health spokesperson MP Francisco Hernandez is also reported in today’s ODT article saying “Given Serco’s track record of overcharging and under-delivery overseas, it would be deeply concerning if they were to be used as part of the hospital rebuild.” He adds: “Serco is anything but a standard private operator.”

Serco is indeed no ordinary company invited in for a chat – it’s a multinational outsourcing giant with a notorious global track record of failure, fraud, and malpractice.

New Zealanders got a taste of this in the early 2010s, when Serco was contracted to run Auckland’s Mt Eden Prison. The result was a national scandal. In 2015, videos surfaced of “fight clubs” among inmates, filmed on contraband cellphones, highlighting a complete loss of control inside the Serco-run prison. An official investigation found rampant violence, widespread contraband (weapons, drugs, cellphones), and chronic understaffing – all symptoms of a cost-cutting, profit-driven approach. The government had to step in and take back control of Mt Eden, terminating Serco’s management.

Serco’s experiment in New Zealand ended in disgrace, with prisoners running amok, taxpayers footing the bill, and the company effectively admitting failure.

That Mt Eden fiasco is not an isolated incident. Serco’s pattern of underperformance and misconduct extends across multiple countries and sectors.

PPPs – A Trojan horse for privatisation

Why should we worry that a meeting with Serco signals a policy shift? Because the likely vehicle for Serco’s entry into our health system is the Public-Private Partnership (PPP) – a model this government is aggressively pushing.

PPPs are often sold to the public as “innovative financing” or a way to tap private-sector efficiencies in building and running infrastructure. Brown’s National government has openly stated its interest in using PPPs for hospitals and other projects. In fact, internal Health NZ documents from early 2024 show officials were already being urged to consider PPPs to tackle the surgical waitlist crisis.

And just this past March, Serco eagerly attended the Government’s International Investment Summit – an event aimed at drumming up private and foreign involvement in New Zealand infrastructure. The writing is on the wall: PPPs are on the menu, and Serco is at the table.

It’s crucial to see PPPs for what they often are: a political and accounting trick, not a magic wand for better services. Under a PPP, a private consortium typically finances, builds, and sometimes operates a public facility (like a hospital) under a long-term contract, in return for taxpayer-funded payments over decades. Proponents claim this transfers risk and harnesses private efficiency.

The reality, especially in social infrastructure like healthcare, is far grimmer. Multiple analyses in New Zealand have found PPP projects end up more expensive for taxpayers because governments pay a premium for private capital and profit margins

PPPs also notoriously limit public accountability. Once a service is under a 25- or 30-year private contract, crucial details about performance and costs often get shielded behind “commercial confidentiality.” Taxpayers can’t get straight answers, and even the government’s hands are tied by complex contract terms.

Recall the Transmission Gully highway PPP: years of delays, cost overruns, finger-pointing between contractors and the Crown, and difficulty untangling who was accountable. In healthcare, this opacity could prove dangerous. Unlike a publicly run hospital, where issues can be exposed and addressed via democratic oversight, a privately managed facility can hide problems until they explode. As the saying goes, the model privatises the gains and socialises the risks.

The political appeal of PPPs is understandable. Governments can trumpet a shiny new hospital or program without putting the full cost on the books today – kicking the bill down the road. But ultimately, the public pays more, often for lower-quality outcomes. International experience bears this out. Britain’s experiment with private finance initiatives in health saddled its NHS hospitals with debt and maintenance problems. In Australia, multiple states have brought hospital services back into public hands after PPP misadventures.

Dunedin hospital and outsourcing

The new Dunedin Hospital is the largest health infrastructure project in NZ history, with a budget nearing $1.9 billion and a completion date now pushed out to 2031. After years of delays, redesigns, and ballooning costs, the government is under huge pressure to deliver.

This makes Dunedin an attractive target for a PPP arrangement. In fact, back in 2017, the previous National government explored a PPP for the hospital – even identifying potential private investors – but the incoming Labour government scrapped that idea. Now National is back, and the notion of a private consortium to operate the new hospital’s non-clinical services over a 25-year contract is very much alive.

Serco’s speciality is in running what are euphemistically called “soft services” in hospitals – cleaning, catering, security, building maintenance, patient administration, etc. These might sound ancillary, but they are the operational heart of a modern hospital. The likely scenario would see Serco contracted to handle all non-clinical operations at the new Dunedin Hospital, in exchange for fixed payments.

Proponents will argue this leaves doctors and nurses to focus on clinical care. Don’t be fooled. Putting Serco in charge of hospital logistics is inviting the very problems we saw in the UK. To maximise profit, a company like Serco cuts staffing to the bare bones.

NZ Health and outsourcing

The other avenue is on a national scale – using Serco as the middleman to outsource elective surgeries. Minister Brown has repeatedly complained that the current ad hoc outsourcing of public patients to private hospitals is inefficient and costly. He suggests locking in long-term contracts with private providers to clear the massive waitlists.

Imagine this: Serco is hired as a central coordinator for elective surgeries across New Zealand. It wouldn’t be Serco surgeons operating (they have none) – rather, Serco would get a multi-year block contract (likely hundreds of millions of dollars) to manage the process. They would then subcontract actual surgeries to various private hospitals and clinics around the country, acting as the broker and manager of a national outsourced surgery programme.

Public opinion and the mandate for transparency

Before charging ahead with any privatisation agenda, the government should consider whether Kiwis actually want their public services handed to companies like Serco. All evidence suggests they do not.

A 1News-Verian poll in February 2025 asked New Zealanders about privatisation of public services: 56% opposed greater privatisation, with only 32% in support. That’s a clear majority against the very direction Brown seems to be heading.

Likewise, an RNZ poll in May found an overwhelming 83% of New Zealanders – across the political spectrum – want increased public spending on services like health and education, not cuts or sell-offs.

New Zealanders value a public health system that is properly funded and accountable. They are deeply sceptical of the idea that private for-profit operators will deliver better results. This scepticism is well-founded in our history (think of the failed partial asset sales of the 1990s, or the outcry over private water proposals) and in international experience.

Politically, there is little mandate to inject profit-driven multinationals into New Zealand’s healthcare. The National-led government did not campaign on privatising hospital operations or bringing in companies like Serco; doing so by stealth would be a serious breach of trust. That’s why the secrecy surrounding Brown’s meeting is so damaging.

Let’s have a proper public debate before PPPs are introduced

It’s important to acknowledge a counterpoint: perhaps the Serco meeting with the Minister of Health truly was harmless. It’s conceivable the Minister met Serco’s executive out of courtesy or to discuss something unrelated to any contracts.

Maybe the government has no intention of giving Serco a slice of the health system. However, if that’s the case, why not say so? Brown could easily allay concerns by clearly stating Serco will have no role in NZ health services, or at minimum by disclosing what was discussed.

His refusal to comment, and the context of his pro-PPP, pro-outsourcing rhetoric, understandably raises red flags. Good faith transparency would only help the government here. If there’s nothing to hide, hiding nothing should be easy.

New Zealand’s public health system stands at a crossroads. After years of underinvestment, Covid shocks, and workforce shortages, we face real challenges: worn-out hospitals, lengthy waitlists, burned-out staff. These problems are urgent and demand solutions.

We still have a choice. The immediate and non-negotiable first step is transparency. Simeon Brown must front up about the Serco meeting. He should fully disclose the purpose and content of that discussion and whether any further engagement with Serco is planned.

If there are proposals on the table – be it a PPP for Dunedin Hospital or a national outsourcing contract – the public deserves to know now, not after the deal is signed. The future of our healthcare is far too important to be decided in secret meetings or buried in officials’ briefings. It must be debated openly, with evidence and public input. Perhaps there are ways the private sector can assist in health without undermining the public system. If so, let’s hear them transparently and test them against the evidence.

Furthermore, it’s worth pointing out that the engagement with Serco is not an isolated event but part of a coordinated, multi-portfolio approach. Proactively released ministerial diaries reveal that on the same trip, Serco’s Andrew Head also met with Associate Defence Minister Chris Penk and Defence Officials on April 9, 2024, to discuss matters within the defence portfolio.

The Minister’s diaries also show meetings scheduled with Parliamentary Under-Secretary for Infrastructure Simon Court. Given Serco’s extensive operations in defence, justice, transport, and facilities management, this pattern of engagement suggests a sophisticated and well-resourced lobbying effort targeting key areas of potential government outsourcing.

Maybe all this is about nothing. Maybe all the Serco meetings will not lead to taxpayer contracts. But it’s worth some scrutiny, so hopefully more questions will be asked of those ministers, especially Simeon Brown.

Dr Bryce Edwards

Director of The Integrity Institute