Dunedin Hospital cuts spark roads v health debate

National’s broken election promise – that it would build back Dunedin Hospital to its original capacity before Labour downscaled plans – has raised issues of the country’s priorities when it comes to infrastructure.
The Government says costs on the project have ballooned to $3 billion, and that’s too much. Infrastructure minister Chris Bishop says the price can’t be justified, and it potentially comes at the cost of other investments in the wider region, and other health infrastructure upgrades.
The 35,000 protestors who marched in Dunedin on Saturday are beyond angry, and they want to see the workings behind the new figure.
RNZ’s Phil Pennington has been looking at the state of our health infrastructure for several years now, and he takes The Detail through the events that led to the decision, as well as the costs involved in yet another revised plan for Dunedin.
He says the first stocktake ever by a government on the state of the nation’s health facilities was delivered in 2020, ordered by then-health minister David Clark.
“It gave them a suitably large shock,” he says. “It sort of translated into thinking ‘we’ve got about $10b here that we need to spend to both build and upgrade things’.”
The dripping walls in hospitals, cramped operating theatres and asbestos issues drew a picture of a run-down system nationwide.
Dunedin Hospital wasn’t even the worst building in the country, with Middlemore, Wellington, some of the Nelson blocks and many more coming in ahead.
“It really didn’t feature much in the thinking,” he says, “although of course for people down there it would have. They knew that they needed a new building.”
In 2015 the Southern Partnership Group got together to that end, and presented a business case in 2017. The costs have been escalating since then.
Pennington connects the cost calculations to the Treasury report earlier this year about business cases across all sorts of infrastructure projects which don’t seem to follow rules and guidelines.
“It just hasn’t been working very well and you see these cost blowouts all over the place.”
Treasury detailed issues including not enough or out-of-date information; poor data; missing descriptions and commentary on what’s being done; and a lack of updates, especially around data and digital issues.
“We see officials telling the Government this year investment decisions have become disconnected from the available revenue and market capacity … and a breakdown between people doing the business case, the decision-makers and the funders.
“You can see at a planning level things aren’t going to go very well if they’re like that.”
As for infrastruture spending, health spending is surprisingly small.
Pennington says a look at Treasury investments from earlier this year, when a chart was released on investment planning, revealed a figure of about $90b, $70b of that was on roads. Only $2b was spent on health.
“That’s just part of the mix but it’s a really touchy part for people I think.”
For The Spinoff’s Hayden Donnell, roads are most definitely the touchy part. He’s written an article about the government’s comparative spending titled, “The things that are unaffordable and the things that aren’t”.
He compares the “unaffordable” $3b of Dunedin Hospital to some road projects that are far larger ticket items, including the guesstimate of $10b for the Wellington long tunnel, and the four lane highway planned from Auckland to Whangarei that the Infrastructure Commission says will eat up 10 percent of New Zealand’s total infrastructure (not just transport) spend.
“I think that politicians often can just bamboozle us when it comes to large numbers,” he tells The Detail. “Our brains just aren’t equipped to deal with large numbers.”
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