Dunedin hospital plans balloon to $3b, ministers say they will not pay

Dunedin and Southern Lakes residents were today told plans for a new regional hospital in Dunedin are “unachievable” in their current format.

Health Minister Shane Reti and Infrastructure Minister Chris Bishop fronted in Dunedin to be, as Mr Bishop put it, “transparent” but “blunt”.

“We now know that the New Dunedin Hospital, as currently designed, can’t be delivered within that appropriation,” Mr Bishop said.

“In fact, despite the project’s original 2017 cost estimates of $1.2 to $1.4 billion, it’s now possible it could approach $3 billion, which would make it one of the most expensive hospitals ever built in the southern hemisphere.

“This cost simply cannot be justified when hospitals around New Zealand are crying out for maintenance, upgrades and new facilities. Dr Reti and I are concerned that badly needed infrastructure upgrades to Whangarei, Nelson, Hawke’s Bay, Palmerston North and Tauranga hospitals may be put at risk if Dunedin continues to go so far over budget.”

Following an independent review, which resulted in a report published today, ministers have instructed Health NZ that the project is to be delivered within its current appropriated budget of $1.88 billion, and to provide urgent advice on two options for delivering it.

Option one is a revision of the project’s specification and scope within the existing structural envelope, such as reducing the number of floors, delaying the fit-out of some areas until they’re needed, and/or identifying further services that can be retained on the existing hospital site or in other Health NZ buildings within Dunedin among other possible solutions.

The other option is a staged development on the old hospital site including a new clinical services building and refurbishing the existing ward tower.

Timeframes for both options will be known in “coming weeks”.

“We’re incredibly frustrated by the challenges in delivering these much-needed, modern, fit-for-purpose hospital facilities, just as the people of Dunedin and its surrounding regions are. We remain committed to finding a solution, but we must now take urgent steps to apply the long overdue rigour which all taxpayers would rightly expect,” Mr Bishop said.

Dr Reti said the government was “incredibly frustrated, just as the people of Dunedin and the surrounding region are”.

He said the government’s election promise to deliver the original project was based on “the best evidence available at the time”.

However, he said the business case underpinning the project was now understood to be “significantly flawed”.

“The commitment we made during the campaign was $30 million of refit in six years time, we have just committed $300 million now to keep this project alive.”

Mr Bishop said the people of Dunedin were still getting a new hospital and an investment of $1.9 billion, it would just “take time” to figure out what that would look like.

The announcement comes ahead of a planned protest march in Dunedin on Saturday.

The ‘Hospital Cuts Hurt’ campaign was launched by Mayor Radich and Dunedin City Councillors last week, to fight any clinical cuts to the New Dunedin Hospital project, and has organised a march on Saturday.

Main image: Ministers Chris Bishop and Shane Reti in Dunedin today to talk about plans for Dunedin's new hospital.