The Government is seeking advice on two options to deliver the new Dunedin Hospital project amid a cost blowout putting it above its original funding appropriation.
However, Labour’s associate health spokesperson said Health Minister Shane Reti is “adding a new review to a project that has already undergone several”, meaning the “costs go up” and the credibility of National to deliver the hospital “goes down”.
Ministers Chris Bishop and Reti have warned if the cost of the project is not reduced, much-needed upgrades to other regional hospitals such as Whangārei, Nelson, Hawke’s Bay, Palmerston North and Tauranga could be at risk.
The first option to keep the project within budget is to revise the project’s specification and scope within the existing structural envelope.
This would include reducing the number of floors, delaying the fit-out of some areas until they’re needed, and/or identifying further services which can be retained on the existing hosptial site, or in other Health NZ buildings within Dunedin.
The second option proposes a staged development on the old hospital site, including a new clinical services building and refurbishing the existing ward tower.
Minister for Infrastructure Chris Bishop said the project had funding of $1.59 billion under the previous government.
“In March this year, Cabinet agreed to authorise a further $290 million in capital funding due to cost pressures.”
He said the project’s current appropriation is now $1.88 billion.
“We now know that the New Dunedin Hospital, as currently designed, can’t be delivered within that appropriation.
“In fact, despite the project’s original 2017 cost estimates of $1.2 – $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.”
An independent review of the project found it was currently likely not achievable within its current budget, due to the “significant uncertainty” of the inpatients building cost.
Reti said the uncertainty is due to several factors that not only impact its financial achievability but also go to the heart of whether the new hospital can deliver the health outcomes promised.
“Compounding our concerns is the fact that recent project pricing came in several hundred million dollars over the hospital’s appropriation, even without including the pathology lab, refurb of existing facilities or car parking.”
Reti claimed since the initial 2017 business case for the project, the cost per square metre to build the hospital has increased by 200% from $10,000 per square metre to $30,000 per square metre.
Ministers have told Health NZ the project has to be delivered within its current appropriated budget of $1.88 billion, and to provide urgent advice on the two options for delivering it.
Govt’s plans ‘a sterling disappointment’ – Labour
If its cost isn’t reduced, upgrades to other regional hospitals could be at risk. (Source: 1News)
Labour’s associate health spokesperson Tracey McLellan said the Government’s attempt to placate the people of Dunedin “has fallen short”.
“Under National, the Dunedin Hospital plans are a sterling disappointment. The project, which Labour began and funded, has been downgraded despite silver-tongued promises National made to get into Government.”
She claimed Labour’s version of the project was fully costed and had the budget allocated to pay for it.
“[It] was bigger, and had additional capacity for mental health and MRI facilities. National are potentially content with simply giving the old building a makeover.
“Our regions shouldn’t have to compete with each other for decent health services. The choice for the government was measly tax cuts and a $2.9 billion tax break for landlords over health.
“There are 20 projects on a national red list which are without adequate funding according to media reports today. The Dunedin region is the first, but communities, cities and towns nationwide will go without healthcare facilities because of National.”
Meanwhile, Dunedin-based Green List MP Scott Willis also criticised the Government, saying it was a “complete betrayal and an utter kick in the guts”.
“This Government made a promise during the election, pledging to build a new Dunedin Hospital to modern standards – now this looks set to be broken as the Government offers mealy-mouthed excuses. The coalition is clearly trying to worm away from its promise to our community,” he said in a media release.
“I look forward to joining the local community this Saturday as we march for the Dunedin hospital and our health services.”
