A shiny new, state-of-the-art hospital for Dunedin was a promise made by Labour and carried forward by National on the campaign trail. However, the vision has since been dogged by delays, budget overruns, and controversy, leaving the community furious and demanding action. An estimated 35,000 marched
The $3 billion Dunedin Hospital saga: Broken promises, blown budgets and southern outrage
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Around 35,000 people gathered in Dunedin to protest cuts to the new hospital. Photo / Ben Tomsett
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But the $3b figure they cited was absent from the Rust Review - a fact that was not lost on critics. And the documents that may shed light on the escalating costs have not been released by Health New Zealand.
The community’s response was swift and overwhelming.
Just days after the announcement, a reported 35,000 people marched through Dunedin’s streets, the largest protest in Dunedin’s history. They rallied in the city’s landmark Octagon space where community and regional leaders voiced their anger.
There, Reti and Bishop were dubbed the “Hatchet Brothers”.
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In a statement, Reti defended the government’s position, placing the blame squarely on Labour for what he called “inadequate planning”.
He criticised the previous administration for failing to account for $400 million in associated costs, including a pathology lab, refurbishments to existing facilities and car parking.
“To make matters worse, no business cases have been prepared for any of these additional elements of the project,” Reti said.
Bishop warned that budget overruns could jeopardise critical hospital infrastructure projects in Whangārei, Nelson and Palmerston North.
The ministers outlined two cost-cutting options currently under consideration.
One involves reducing the size of the planned inpatient building by cutting floors and retaining some clinical services in the old hospital.
The other proposes a staged development, which includes refurbishing the current ward tower alongside the construction of a smaller new clinical services building.
Both options have drawn criticism for their potential to compromise the quality of care and patient safety.
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The Save Our Southern Hospital campaign, a grassroots effort to fight these proposed cuts, has galvanised widespread support.
Last Monday, a rally at the Dunedin Town Hall brought together voices from across the community.
Dr Mike Hunter dismissed claims that Dunedin’s hospital would be the most expensive in the southern hemisphere as “bullshit”, pointing to South Australia’s $3.5b Women’s and Children’s Hospital as a benchmark.
“Every new hospital costs more than the last, but if we’d invested in our healthcare infrastructure consistently, we wouldn’t be in this mess.”
Former Health Minister Pete Hodgson said that $200m had already been spent on the now-dormant Cadbury factory site, with inflation costs since September alone adding $6m.
Sir Ian Taylor denounced attempts to pit communities against one another over hospital funding.
“The argument that if they build this hospital here for this price, they won’t be able to build [a hospital] in Whangārei needs to be treated for what it is – a cynical attempt for communities to turn against each other,” he said.
Chair of the advisory group for clinicians and consumers Dr Carol Barnett warned that further cutbacks to the project would have lasting consequences.
She pointed out that the design had already been scaled back two years ago, including the removal of a staff facilities building and portions of the pathology lab.
The new proposals, she argued, would create a fragmented facility that would be inefficient to staff, operate, and maintain.
“Every day of delay and re-litigation of all decisions costs money. This erodes the budget and therefore the quality of the hospital we can build by the end of the process,” she said.
Mayor Jules Radich, who has been the prominent face of the campaign to save the hospital, said Reti’s decision to turn down an invitation to Monday’s rally was “unsurprising but disappointing”.
“There is no doubt he would have learnt some valuable information that his officials are probably not telling him. He would have gained both hard facts and public perspectives that are important to inform the decisions he must soon make,” Radich said.
“Here we are seven years along the track with this project and the key decision maker is unable to find the time to listen to our point of view – even though the hospital is for us, the people of the South. Our taxes are paying for this hospital."
Former All Black Paul Miller and Federated Farmers Southland President Jason Herrick also spoke at the rally, speaking on their own personal journeys through patient care.
Health New Zealand (Te Whatu Ora) has also pledged to deliver a modern hospital designed with clinical safety and innovative care models in mind.
A spokesperson for Reti’s office told the Herald that the blame should go on the previous government’s “poor planning”.
“As ministers have reiterated, this government is fully committed to getting on and delivering a new hospital for the people of Dunedin,” the spokesperson said.
“Path labs and car parking were never adequately budgeted for by Labour. We now have to sort out the mess they’ve left behind.”
The three documents that have not been released by Health New Zealand that may shed light on the escalated costs are the quantity surveyor’s estimate, the contractor’s target total cost, and risk assessment.
The documents have been withheld under the following sections of the Official Information Act:
- 9(2)(b)(ii), if released, it would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information.
- 9(2)(g)(i) of the Act to protect the effective conduct of public affairs through the free and frank expression of opinions.
- 9(2)(f)(iv), as it is under active consideration, and its release would harm the orderly and effective conduct of executive government decision-making processes.
- 9(2)(j), to enable a Minister of the Crown or any public service agency or organisation holding the information to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).
“We do not believe that the public interests outweigh the need to withhold, in this instance,” a spokesperson said.
The Rust Review offered 14 recommendations aimed at bringing the project under control, including finalising the project scope urgently and pausing construction contracts to gain stronger cost certainty.
Some of the issues at the construction site include contaminated soil and its location being flanked by state highways, creating limited space.
Soaring construction costs due to inflation and global supply chain pressures have tripled square metre rates from $10,000 to $30,000, compounding delays and adding to the financial strain, the review says.
Yet, critics argue that much of the review merely confirmed what the community already knew: delays and indecision are costing millions, and any further cuts risk undermining the hospital’s ability to serve the region effectively.
Mayor Radich has said the hospital being built as promised is “absolutely critical” for the health and wellbeing of the citizens of Otago, Southland and Waitaki.
“They pay taxes too, so they need a hospital, just as they were promised,” he said.
“We want what was promised. We need all the services and facilities that were agreed on, and there were years of wrangling to get it to where it was. We don’t want to see cutbacks now.”
Ben Tomsett is a multimedia journalist based in Dunedin.
