More reductions in health spending - new Dunedin hospital faces downgrade

Adding more fuel to the fire on the health funding issues, the government announced today the new Dunedin hospital is under threat of being built in stages or downgraded to the original design.

The Government has signalled plans to downgrade the Dunedin Hospital redevelopment after an independent review has found it cannot be completed as scoped within the approved budget.

Health Minister Shane Reti and Infrastructure Minister Chris Bishop - who are both in Dunedin to brief stakeholders - are warning that vital upgrades to other hospitals could be at risk if the budget blowout at Dunedin was not addressed.

They said they had instructed Health NZ that the project was to be delivered “within its current appropriated budget of $1.88 billion”.

They provided urgent advice on two options for delivering it:

• 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 until they’re needed, 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 tower.

The project had approved funding of $1.59 billion under the previous government. In March this year, Cabinet agreed to authorise a further $290 million in capital funding due to cost pressures. Bishop said the current appropriation was therefore $1.88 billion.

Government signals downgrade of new Dunedin Hospital