‘Shocked and outraged’: Dunedin mayor’s reaction to hospital update

Thursday, 26 September 2024

The Dunedin Hospital project is one of the largest infrastructure projects in the country.

Spiralling costs have led to concerns over possible cuts to the project.

A large street march was expected to be held in the city on Saturday.

A high-powered ministerial double act arrived in Dunedin on Thursday, bringing bad news about the hospital project with them.

The Government said that poor planning, coupled with rising costs, meant there were now two options available: revise the current project specification and scope, or carry out a staged development of the old hospital site.

It was an announcement that angered Dunedin Mayor Jules Radich.

“Shocked and outraged, it is quite astonishing … to be honest I was expecting them to come down here with good news because we are having a march on Saturday and instead we’ve got exactly the opposite.”

Thousands are expected to gather for the protest against possible cuts to the project, particularly the inpatient building on the former Cadbury factory site.

“My expectation is that a whole lot more people will turn out as a result of this,” Radich said.

If he was outraged over the announcement, he envisaged the large Otago and Southland community would be “incensed”.

Health Minister Shane Reti arrived in the city flanked by Chris Bishop, Minister of Infrastructure, at a media stand-up across the road from the hospital site on Thursday.

“The people of Dunedin are going to get a hospital,” Bishop told Stuff.

However, the Government could not justify spending up to $3b on the project, which would come at the cost of other centres.

The ministers warned that much-needed upgrades to other regional hospitals could be at risk if budget blowouts at the new Dunedin Hospital weren’t addressed.

“That is the blunt truth, there are trade-offs to spending,” he said.

Bishop would not comment on whether heads had rolled over the project, or at all.

“It is not our intention to do that at the moment, we are a new Government … we are resetting alongside Dr Reti the wider health system.”

The project had approved funding of $1.59b under the previous Government, and in March Cabinet agreed to authorise a further $290m in capital funding due to cost pressures. The current appropriation was $1.88b.

“We now know that the New Dunedin Hospital, as currently designed, can’t be delivered within that appropriation,” Bishop said.

“In fact, despite the project’s original 2017 cost estimates of $1.2 - $1.4b, it’s now possible it could approach $3b, 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 continues to go so far over budget.”

Reti said the uncertainty was due to several factors, and noted that “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 $400m.

“No business cases have been prepared for any of these additional elements of the project.”

The pathology lab was costed at $45m, while the refurbishment/demolition of existing facilities was $325m

A review into the project, known as the Rust report, was commissioned earlier this year and officially released on Thursday.

Bishop acknowledged that the hospital project had been the subject of three consecutive election campaigns, and that it was an example of a proper business case needed for such a large project.

“We need to get out of the mindset of announcing large scale projects with big numbers attached without having clearing thought through exactly what we are building and why,” he said.

“I’m not making a political point, there has been a bit of that from everyone over the last 20 years or so, and the infrastructure system has suffered as a result of that.”

Labour associate health spokeswoman Tracey McLellan said “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.”

Labour’s fully costed project had the budget allocated to pay for it, was bigger, and had additional capacity for mental health and MRI facilities, she said.

“National are potentially content with simply giving the old building a makeover.”

Dunedin-based Green MP Scott Willis said: “Failing to build the Dunedin Hospital to full capacity is a complete betrayal and utter kick in the guts for Dunedin.”

“I share the anger of all Dunedinites. We simply cannot trust this Government one iota.”

A march organised by the Dunedin City Council in opposition to possible cuts was expected to be begin on Saturday, from noon.

That mounting opposition also led the council to produce a rallying cry, in the form of a song.

The hospital is billed as one of the country’s largest infrastructure projects.

The report noted that while the Outpatient building was “in a relatively settled commercial state until completion”, the larger Inpatient building faced challenges, and “there is too much risk and uncertainty” over its cost estimates.

Work on installing the cladding of the 15,000sqm Outpatient building, which is expected to open in 2026, continues.

The design of the Inpatient building, scheduled to open in 2029, was still listed as a “design in progress”.

That building was originally estimated to be around around 73,500sqm.