It was pre-election and then Labour leader Jacinda Ardern was in town, in opposition, and shouting through a megaphone about the mega-project.
She promised public money to build a city-centre hospital faster than the dying National government, which had promised it for $1.4 billion by 2027.
"You need a new hospital and you need it now," she said, sounding like a chant at last month’s march.
"Something I love about southerners is that you ... don’t moan.
"But your health needs should not be taken for granted ... What we need is speed."
An outpatient building is now nearly finished, but the in-patient building — like most of the hospital — is behind schedule.
It is a sad, wet paddock of piles on a contested site choice where the city’s Cadbury chocolate factory once stood.
Delays and inflation alone are adding cost daily.
An expert report on the build, published this year, red-flagged the project’s leadership, which had chopped and changed.
The report pointed out that a project of this magnitude needed a competent person at the top, responsible for driving delivery and typically called a "senior responsible officer".
They, in turn, need a bright-eyed boss, or governance committee, to keep them on point.
A senior source, who worked in the new hospital’s planning team and left in disgust, had one word for the build’s leadership — "clowns".
Meanwhile, Dame Jacinda’s view of quiet southerners is way off.
There is outrage about dire hospital conditions, waiting times, patient risk and the hospital being an unfortunate guinea pig for people who are trying to learn, on the job, how to build big in a small country.
National promises, blames and promises again
Dame Jacinda wasn’t the only one making a hospital pledge in 2017.
Sir Bill English, then prime minister, had been in town the week before.
He pinky-promised a "big and exciting" hospital build that was "just as important to people of Tuatapere as it is to people in Dunedin".
The hospital is a life-line across a large region and the new hospital was a project started under his colour of government.
Sir Bill said a city centre new build was "economically efficient" and a public private partnership (PPP) funding model was a consideration.
Then health minister Dr Jonathan Coleman added that a "detailed business case" would be considered by cabinet around the middle of 2018.
It wasn’t.
National was ousted by a Labour landslide, the lead health civil servants were booted out, and a detailed business case took three years, not one.
National is now back in power, with Prime Minister Christopher Luxon claiming a hospital budget blow-out of $3b, that no-one has yet evidenced, and said a reduced build or refurbishment were considerations to protect other projects’ funding.
He visited Dunedin this week, played the political blame game and once again promised the castle in the sky.
His language demonstrated a better understanding than Dame Jacinda of southerners.
They can get angry.
"I get the frustration.
"How frustrated do you think I feel ... The previous government had six years to get this done and nothing happened of any consequence ... We are over it ... For $1.9b we are going to build a good hospital down here in the South, don’t worry about that."
Sacked DHB and northern governance
A decade ago, under Sir John Key’s National government, the magnitude of funding needed for Dunedin’s hospital was thought to be ten-times smaller than the claimed $3b.
A "major projects" report by civil servants to Sir Bill in November 2014 — then the finance minister — mentioned a need for $300 million.
Treasury documents from April and May 2015 revealed Sir Bill was told funding was only needed to rebuild the "deteriorated" outpatient building and money wouldn’t be needed for two to three years, due to a need to plan.
There also needed to be a comprehensive replanning of the South’s health system, which was described as a "very significant undertaking".
It was a warning bell.
A debt-riddled Southern District Health Board (SDHB) was under Cabinet scrutiny.
A month later, Dr Coleman sacked the SDHB members and installed a local commissioner.
There were multimillion-dollar deficits and a "sense of crisis in the community".
The SDHB members had not diligently saved gold coins in a large jam jar for a new hospital. Rebuild money would have to come from government or a PPP.
By September 2015, Dr Coleman announced a small committee would provide "governance oversight" to hospital redevelopment.
It was a model used when building the small Greymouth hospital and the Christchurch acute services building, both opened in 2020.
The Southern Partnership Group (SPG) could have been called the "Northern Partnership Group" as it only had one member based in the South Island, SDHB deputy commissioner Richard Thomson.
The chairman was consultant Andrew Blair, who has a colourful CV.
He has run private hospitals, been private secretary to former prime minister Sir Geoffrey Palmer, sat on several North Island DHBs, including Hutt Valley and ran a lawnmower business when he was a student.
His appointment was perhaps unsurprising. Two top bosses at the Ministry of Health had also served time on Hutt Valley DHB — chief executive Chai Chuah and Michael Hundleby, the man in charge of the Dunedin hospital redevelopment.
Other SPG members had specialist expertise.
Civil engineer Dr Tony Lanigan had led the $370m development of Auckland University of Technology’s new buildings and was a prior chancellor there.
Dr Margaret Wilsher was an Auckland respiratory physician.
Mr Blair was quoted in the ODT saying people needed "patience". A proposal for the outpatient building would go to Cabinet in 2016. It didn’t.
Instead, the scope mushroomed as the Ministry of Health dug into Dunedin’s needs.
Expert reports culminated in an 83-page proposal in mid-2017 called an "Indicative Business Case for Dunedin Hospital Rebuild".
New inpatient and outpatient buildings were needed to eliminate "significant risk of operational failure because of building failure".
Cabinet approved the proposal, which gave only two options.
Rebuild at Wakari, the site of Dunedin’s mental health hospital at the city’s edge, or buy another site and rebuild there.
The unredacted rebuild proposal
The Otago Daily Times has an unredacted copy of the proposal, dated June 8, 2017.
It said the clinical services building (containing outpatient services) had reached the end of its serviceable life.
The ward tower had significant maintenance issues and its standard impeded service provision.
The existing buildings did not comply with earthquake standards for important buildings and there was an unsustainable service demand, due to the ageing population.
"A deteriorating environment is eroding quality of care, creating safety risks and potential harm, and causing distress to patients and staff.
"Neither building is economic to repair," it said.
Refurbishing existing in-patient facilities would be complex, disruptive and likely cost more.
A 93,000sq m rebuild could be achieved for an estimated $1.22b "including allowances for escalation and contingency", but not including IT or parking which were "not in scope".
A new inpatient building would be about 80% of the build, and by far the most challenging and costly.
The report rammed home why the project needed central funds.
"The DHB’s contribution from depreciation provisions [or] cashflow ... is nil."
The X-factor
Speaking to the ODT now, Michael Hundleby was the Ministry of Health boss in charge of the Dunedin rebuild back then.
He is clear about the findings of the reports that underpinned the 2017 proposal.
"They [the hospital buildings] could be refurbished, because it is possible to do anything, but we would end up with a pretty poor result. So the task was to go to the minister and say we have a problem.
"This is going to require a whole new hospital, the first one in more than 50 years to be built from scratch."
He was asked to provide an "overview" report, quickly, to help Cabinet considerations.
The report would consider if refurbishment, referred to as "relifing", was possible.
It was election year and the government needed to know if it was going to be promising a new hospital for the South — or not.
Mr Hundleby commissioned a consultancy, Proj-X Solutions.
By June 1, 2017, Proj-X had reviewed existing reports and concluded, like the indicative business case, that a refurb was not a go-er.
It would mean "disruptive shutdowns", be 5% more expensive and take four years’ longer.
Mr Hundleby says then finance minister Stephen Joyce was "careful with money but appreciated a new hospital was needed".
Mr Hundleby suddenly had the mother of all projects on his desk and had to find his positive mental attitude.
"My view was, it needs to be done, let’s get on and do it. Christchurch had delivered fantastic facilities pretty quickly under trying circumstances post-earthquake ... Let’s get the right people and box on."
Chocolate give-away
The way Mr Hundleby tells it, there was then a stroke of luck as big as a Willy Wonka golden ticket in a chocolate bar: "Mondelez approached us."
Mondelez is the candy giant that ran Dunedin’s Cadbury World and chocolate factory.
It had decided to skip town and get shut of its site, close to the existing hospital in the city centre.
Mr Hundleby says discussions started with Mondelez about site purchase. "Ministers were formally advised these discussions had begun."
Sir Bill and Dame Jacinda both came to Dunedin and promised a centrally-sited, shiny new hospital. It was a dream come true for Dunedin Mayor Dave Cull, who had spearheaded a campaign for the hospital to stay in the centre, near the university’s medical school.
The option of a Wakari hospital was shelved. A source says alternate sites, including the city centre’s New World supermarket — owned by Foodstuffs — were considered against a criteria framework, but unceremoniously kicked into touch.
Mondelez was then given $11m of taxpayers’ money.
The source, who worked within the hospital planning camp, doesn’t wish to be named but says the other sites had merits not fairly considered.
Mr Hundleby "called the shots" and there was Cadbury site fever.
Proper community consultation was lacking.
Technical reports about the Cadbury site had warned of flood risk, contaminated land, and the fact the site was long and narrow, squeezed between two one-way, major roads.
The source says: "The quick choice of the chocolate site was a joke. It made a mockery of careful use of public money.
"With all the risks and challenges, which were just a nightmare, why on earth would you pick it? For Mondelez to walk away with any cents in their pocket they did well. There is the concept of "making good" when leaving a site."
Mr Hundleby says his "personal view" is that it wasn’t a difficult decision.
There was an owner who was leaving town, who didn’t require compensation for loss of earnings, and important stakeholders, including the university, wanted a city centre site.
He was, as he had said, boxing on.
Purge at the top
Mr Hundleby’s next task, delivering the promise of a detailed business case by mid 2018, was short lived and uncompleted by him.
His boss Chai Chuah had resigned in February 2018, shortly after Labour came into power, and Mr Hundleby was sent on "gardening leave" four months later, in odd circumstances.
He was accused of employing Proj-X, the consultancy that wrote the 2017 Dunedin hospital overview report, without a tender process.
Mr Hundleby says he used ministry rules that allowed no tender process when there was urgency. He has forwarded to the ODT a letter from Mr Chuah’s replacement, Dr Ashley Bloomfield, confirming "no conflict of interest or dishonesty" by Mr Hundleby and "valid grounds" for Proj-X’s use.
Regardless, Mr Hundleby was out, and so was Mr Blair, the leader of the SPG.
New health minister, Dunedin MP Dr David Clark, had said he was "frustrated" at delays, sacked Mr Blair at the tail end of 2017 and put Dunedin man Pete Hodgson in charge. It was a blatant political choice.
Mr Hodgson is a former Labour health minister.
For local construction expertise, Dr Clark replaced AUT’s Dr Lanigan with Dunedin’s Stephen Willis, the chief operating officer at the University of Otago, known for his building programmes.
Expertise, not location or political allegiance, was needed.
Mr Hodgson, talking now, says the previous SPG under Mr Blair worked in "appalling" slow ways.
Minutes showed that letters were written to the university, asking questions — and then "a month would go by before an answer was received".
Mr Blair was rung and asked to share his memories with the ODT, but declined.
Action stations?
Mr Hodgson says he got things done. By February 2018, he was recommending back to Cabinet a central Dunedin site, which enabled Dr Clark to make a May announcement of the Cadbury site purchase.
By December 2018, Dr Clark was announcing two builds.
Stage one, an outpatient building by 2024. Stage two, an in-patient building by 2028 or 2029.
Mr Hodgson says hospital staff had been biting at his heels.
"So we said, let’s build the easy part now."
"We asked people if it was suitable to build on different timelines, and the answer was yes."
He had a chat with finance minister Grant Robertson — now University of Otago vice-chancellor — and asked if he had the readies for the outpatient building. Mr Robertson said yes.
Mr Hundleby paints a more prosaic picture.
Civil servant negotiations with Mondelez started in August 2017 and two buildings was always "an obvious plan".
"An out-patient building is basically an office building with good plumbing ... It’s a pretty standard way you do it."
The surprise, in the December announcement, was that it would take two or three years longer to build the big, expensive bit of the hospital.
It had been promised by 2026 or 2027, depending whether you listened to Labour or National politicians, not 2028 or 2029.
The detailed business case, promised by mid-2018, was also delayed.
Dr Clark had said, in his May announcement, that it would be ready mid-2019. He was late handing in his homework, but this was unsurprising.
One top civil servant had gone and the other was going.
The detailed business case was finally published on July 9, 2020, proposing the inpatient building on the Cadbury site and the much-smaller outpatient building on the adjacent former parking lot. Cabinet agreed to the document on 24 August, but had to swallow financial bad news.
A "number of challenges" with the Cadbury site — including mitigating flood impacts and decontamination work — meant costs had "increased the original cost estimates by over $100m".
The budget would likely exceed $1.4bn.
Governance change up
The time it took to produce the detailed business case is a head scratcher for Mr Hundleby, who says Cabinet had definitely asked the Ministry of Health and Southern Partnership Group to complete it by mid-2018.
"Some slippage in timelines was not unusual, but I do not know what caused the delays.
"Obviously there was a change in government and leadership of the project which may have had some impact."
He gracefully suggests the pandemic, and work planning the abolishing of DHBs, could also have reduced available time.
There are only so many civil servants to go round.
Leadership of the project by the Ministry of Health was one thing, governance was another.
It was the SPG’s job to stop any slippage.
In July 2020, Dr Clark resigned as health minister after misdemeanours including driving to a cycle track during the pandemic. Chris Hipkins stepped into his shoes and sent a briefing to Cabinet containing a blunt proposal.
The Dunedin hospital build’s SPG should be disestablished.
The ODT has a copy of the briefing. It is scathing.
A Treasury review of the build identified governance as "the most pressing risk".
There was a need for clear responsibilities, accountabilities, performance monitoring and risk management.
The Ministry of Health had a "historic lack of capability to advise on, manage and deliver health capital projects".
The SPG should be replaced with an Executive Steering Group (ESG) within the Ministry.
The ESG was set up by December 2020, and was clearly piling on commercial expertise.
Evan Davies, chief executive of energy company Todd and former boss of Auckland’s SkyCity, was made chairman.
The Auckland construction guru Dr Lanigan was put back in.
Mr Willis, Otago’s construction guy, was out.
There was talk of appointing an expert with experience in an overseas health infrastructure body, such as Health Infrastructure New South Wales.
Robert Rust, former CEO of that agency, who went on to write the 2024 review of the Dunedin hospital build, was appointed.
Mr Hodgson, Labour’s local man, was no longer in charge.
Six months later, on 22 March 2021, a detailed business case labelled "final" was published, saying both parts of the hospital were in a "parlous state".
It proposed a new hospital that met modern earthquake standards, with 421 beds, 16 theatres (expandable to 20) and 30 intensive care unit or high dependency beds (expandable to 40).
The inpatient building would be achieved through a non-competitive, "early contractor engagement" process resulting in collaborative design and was appropriate given the lack of competitive options in New Zealand. CPB Contractors was appointed. Cost-cutting exercises happened.
Costs went up overall and the budget increased to $1.88b.
Now, the project has found itself under a National government again, which promptly commissioned a review of it, by Mr Rust.
He said the final detailed business case had fallen "well short in its analysis of the costs", the build probably can’t happen for $1.88b and the project had suffered a lack of effective governance.
Health Minister Dr Shane Reti and Infrastructure Minister Chris Bishop issued their September 26 announcement of a re-look at refurbishment or reduced build.
Dr Reti said the Cadbury site choice, which had started under his party’s previous reign, had "extraordinary cost premiums" due to the flood risk, contamination, highways and other factors.
There is noisy wrangling in the media about the truth of their $3b cost blow out claim, and which costs are fair to assign to the build, including refurbishment of emptied buildings.
A quieter topic is the ending of the ESG last year.
Third time lucky?
The ESG was replaced, in May 2023, by a Project Steering Group (PSG). Yet another Treasury review had recommended another governance re-think, leading to a third crack at governance.
Minutes from the PSG’s first meeting note a "lack of a delivery model approach for the in-patient building" and "difficulties" including costs and lack of a competitive environment.
A month later, in June 2023, there was a discussion about the group having "no delegated authority and decisions are required to go through lengthy approval processes via multiple channels".
There were two resignations — oil-man Evan Davies, who had been kept on as chair, and Dr Margaret Wilsher.
Dr Lanigan, Auckland’s construction man, now aged 77, hung in there — and was appointed to the heady positions of both interim chairman and senior responsible officer (SRO) for the build, which he held until at least July this year.
Mr Rust, in his report, went to town on the dual appointment of one person. He attacked the decision as "clearly not tenable".
It could not provide necessary checks and balances. There should be a reinstatement of the Cabinet-approved arrangement of an SRO and separate chair.
The governance task should ensure a "greater focus on operational readiness".
Things changed again.
Dr Lanigan is still on the PSG, but not as chairman.
The person in the governance hot seat is no surprise. It is Rebecca Wark, who this year left Rust’s previous top job, building health infrastructure in New South Wales.
In the delivery driving seat — the SRO role — is the project’s client, Health NZ’s head of infrastructure delivery Blake Lepper.
As Mr Hodgson said in his speech to the march last month, they better work together to "build the bloody thing".
• Former Labour ministers Grant Robertson and David Clark, and and University of Otago’s Steve Willis did not reply to requests for interviews and comments.
