Cabinet has put the new Dunedin hospital project under further oversight amid concerns it could be "downscaled".
It was waiting for "formal confirmation of Cabinet minutes" before it updated the approved capital expenditure attached to the project.
In the report, it highlighted concerns about the delivery of large infrastructure projects in general and revealed the government had increased the number of ministers overseeing the new Dunedin hospital amid concerns about rising costs.
The release of the report comes amid uncertainty after newly appointed Health New Zealand Te Whatu Ora commissioner Dr Lester Levy recently said the hospital could be downscaled "if required".
The project was initially budgeted at $1.59 billion, but the Otago Daily Times understands the costs have ballooned to over $2b.
The expected cost of the project was redacted in the Treasury report.
It noted the hospital has been placed under the monitoring of the Infrastructure and Investment Ministers Group.
Commenting on the Treasury report, Association of Salaried Medical Specialists chief executive Sarah Dalton said the government could "apply any oversight they like", but "they still have to build the hospital to the specifications agreed".
"It feels like we’re back in an environment where we only care about balance sheets.
"The original design was clinically approved and future focused. All the changes since have compromised it."
She had raised her concerns with Dr Levy.
"I was given some reassurance, but nothing to hang your hat on.
"While the commissioner and others may have some ideas of a more efficient way to deliver things in the future, this shouldn’t be at the expense of providing a hospital that meets the community’s needs."
When asked for an update of the project, a spokeswoman for Health Minister Dr Shane Reti said the Cabinet was invited to consider the need for additional budget.
"As a result of this, contingency funding was tagged.
"Ring-fencing money for the future is not approving expenditure — it just sets funds aside for this purpose, if needed.
"This project remains under active consideration, as the government works to deliver an important health facility that represents value for money."
Apart from raising concerns about the risks of costs spiralling, the Treasury report also indicated the government was moving closer to appointing the main contractor for the inpatient building.
It said the Treasury had received a draft interim implementation business case, which are documents that need to be approved before commercial contracts are signed.
The report also revealed Ms Willis and Dr Reti had "agreed to additional assurance requirements" as the project moved forward.
All of the actual requirements, except it being reported to the Infrastructure and Investment Ministers Group, were redacted.
It highlighted the need for improvements in the way the government carried out large capital projects.
"We cannot make good investment decisions without visibility of what agencies are planning and delivering across the government investment portfolio, and strong investment disciplines.
"Business case quality needs to improve, and they need to be provided to us at the appropriate decision points to support their development."
