A reluctance to saddle future generations with a multimillion-dollar debt was behind Ngati Hine Health Trust's decision to pull out of a wellness centre project at Kawakawa, chairwoman Gwen Tepania-Palmer says.

Work began in May on a $9.9m Northland District Health Board project to rebuild Bay of Islands Hospital in Kawakawa with a new accident and emergency department and a 20-bed medical ward.

Alongside the upgraded hospital, Ngati Hine Health Trust was to have built an "integrated wellness centre" bringing together the three GP practices in Kawakawa and Moerewa as well as community health, outpatient, pharmacy and dental services.

Read more: Soaring costs scuppered Kawakawa health centre plan
Health board steps in as trust pulls out of $8m Kawakawa project


Earlier this week, however, the Advocate revealed the trust had pulled out of the project.

The district health board said it would build the wellness centre instead, subject to approval at next week's meeting, but it would have to seek extra government funding and would almost certainly opt for a different design.

Mrs Tepania-Palmer said the health trust was saddened to withdraw from the project after putting so much work into it, but soaring building costs meant there was little choice.

"The economy is against us ... time has been our enemy and inflation has hit us hard," she said.

The health trust approved $4.5m for the wellness centre project about five years ago.

By the time the first sod was turned in May this year the estimated cost had risen to $8m; when the tenders came back in June they ranged from $10m to $14m.

Even taking the cheapest tender the total cost was likely to hit $15m by the time the full fit-out was included.

"Our board made it very clear there was no way we could incur a $15 million debt for future generations. That's just not an option," Mrs Tepania-Palmer said.

Theirs was not the only building project in New Zealand that had fallen victim to market forces, she said.

Ngati Hine was still willing to be involved if the health board, and other partners, went ahead with the wellness centre.

"We are happy to work with any organisation to get the best outcome for people of the Mid North."

Ngati Hine Health Trust warned the district health board the design had become unaffordable on July 10. It informed the health board it was pulling out on July 20.

The issue will be discussed at the next health board meeting on August 21.