Disappointment but no surprise over hospital delays

Photo: RNZ
Photo: RNZ
By Tess Brunton of RNZ

Residents in the lower South Island remain in the dark about the future of the new Dunedin Hospital as costs continue to rise.

In September, the government announced a budget blowout and asked Health New Zealand for urgent advice to find ways to keep costs in line.

Local leaders said they expected a decision would be made before Christmas, but instead they had been met with radio silence.

Pete Hodgson
Pete Hodgson
Pete Hodgson is no stranger to the new Dunedin Hospital - he's the former chair of its governance group, a former health minister and former chair of the Southern DHB.

He was disappointed by the lack of information and progress, but said locals remained fired up about getting the hospital their region needed.

"When those 35,000 people marched, they said build it once, build it right, build it now, and here we are three, four months later with precisely that same slogan."

But he wasn't surprised by the delays because reviews always took longer than expected - and there had been many over the years.

"This last time when the stop was accompanied by two options that needed to be worked up, supposedly within weeks, it was pretty clear that there would be a lot of delay and I'm expecting still more and the costs mount," he said.

Those options include redeveloping part of the old hospital site or changing the scope of the build, which could reduce its size or delay some fitouts.

It would be cheaper to stick with the original plan and get building under way, he said.

"The more that they fiddle with the design or indeed with the name and address of the contractor, the more they do that, the longer the delay will be and the greater the cost will be.

"So they are making a bad decision worse by pretending to make it better."

Infometrics principal economist Brad Olsen said their analysis of Stats NZ capital investment cost data showed the cost to build hospitals and other health buildings had increased by 50 percent since 2017 when planning for the new Dunedin Hospital began.

Costs had continued to increase but at a slower pace in recent months compared to the pandemic, he said.

"But they're still large enough to matter. The latest Infometrics analysis of Stats NZ capital investment cost data suggests that the cost to build a hospital might be increasing by around about 0.5 percent every three months, which for a project like Dunedin Hospital would be equivalent to around $10 million of additional cost every quarter," he said.

He agreed that was a lot of money in three months, and said it was an extremely large project so any increases were costly.

"The work the government is doing to figure out how to ensure Dunedin Hospital is fit for purpose without further blowing the construction budget is important. There are numerous other health investments needed around the country and a limited pool of investment available," Olsen said.

"It's a delicate balancing act, and despite ongoing cost escalation to build, it's better to sort out the cost, funding, and building challenges once and for all, rather than risk any further repeated changes."

The Dunedin City Council said it was preparing to ramp up its Save Our Southern Hospital campaign again later this month and get Cliff the Ambulance back on the road.

A spokesperson for Health Minister Shane Reti and Infrastructure Minister Chris Bishop said the ministers stood by their commitment to make a decision as soon as possible and deliver a great hospital.

"While we have no updates at this time, we understand there is high interest from the community and will be making announcements in due course."

 

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