Health Minister Shane Reti said today the main inpatient building could be drastically scaled back or dumped altogether in favour of retrofitting the old hospital.
He was speaking on a flying visit to Dunedin ahead of a planned march on Saturday to protest cuts to the project.
Dunedin Mayor Jule Radich is expected to make a statement this afternoon.
Dr Reti said the government was seeking advice on two options for delivering the "problematic and poorly-managed project" after indications the budget could blow out to $3 billion.
They are:
- 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 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.
- A staged development on the old hospital site including a new clinical services building and refurbishing the existing ward block.
The second one — a staged development on the old hospital site — had been carefully examined and rejected in 2017, he said.
The first was basically saying the hospital would be built not according to the clinical needs of the region ‘‘but according to some predetermined budget cap’’.
‘‘That would be entirely unacceptable and I don't know of any other health system in the world that operates on that basis.’’
The government had undoubtedly faced some difficult cost overruns among other difficulties.
‘‘But at the end of the day, the question is whether or not the southern region will have an adequate clinical facility or will not.
‘‘And if the aim is to build half a hospital then the public response to that will be one of outrage.’’
Labour associate health spokesperson Tracey McLellan said the government had left "broken promises and a likely severely diluted hospital build in their wake".
“The Government’s attempt to placate the people of Dunedin has fallen short.
"Instead of flying down to announce they’d build the planned hospital, they’ve spent a bunch of money on another review that won’t mean any more hospital beds,” she said.
Infrastructure Minister Chris Bishop said in the announcement it was possible the project could cost $3 billion and upgrades to other regional hospitals could be at risk if the Dunedin budget blow-out was not addressed.
The government had now put a $1.88 billion cap on the Dunedin budget.
“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.
“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 new Dunedin hospital continues to go so far over budget."
The outpatient building, currently taking shape, remained on track but a completion date could not be confirmed for in-patient building.
The government today released a report by independent expert Robert Rust, former chief executive of Health Infrastructure New South Wales.
"The people of Dunedin deserve transparency about this problematic and poorly-managed project – and so do all the taxpayers who are funding it,” Dr Reti said.
The Rust Review found that ‘the delivery of the project as currently scoped and planned is probably not achievable within the approved budget and that there remains significant uncertainty as to the cost of the inpatients building.’
“To make matters worse, insufficient money had been set aside for other associated costs such as a pathology lab, refurbishment of the existing facilities and car parking which are collectively estimated at an additional $400 million.
"No business cases have been prepared for any of these additional elements of the project.
“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.
“Health NZ and Infrastructure Commission advice has made it clear that this project was troubled from the moment the site was selected in 2018 and has been trapped by this poor decision making ever since."
