Source: Radio New Zealand
The new Dunedin Hospital build site. RNZ/Tess Brunton
The approved budget for the new Dunedin Hospital (NDH) is just over $2 billion, though the government continues to use a figure $174 million less than that.
The newly revealed budget is $2.05b, while the government as recently as Wednesday said it was $1.88b.
The difference was revealed in a report released by Treasury this week. Treasury then pulled the report to check if it had revealed commercially sensitive information. It had not, and it was republished on Friday.
The report gave the ‘approved budget’ at Dunedin as $1.614b for the inpatients block and $440m for outpatients – $2.054b altogether.
This was based on Health NZ data given to Treasury for the latest quarterly investment report (QIR) covering June-September 2025, that it has released.
The QIR also said fragmented oversight and “limited visibility” threatened to undermine the project.
A spokesperson for Health Minister Simeon Brown said the project had an “approved total budget” of $1.88b.
The higher “approved budget” included a contingency for cost overruns, and an option to fully fit out a floor (that might otherwise be empty) that the lower figure does not, Treasury told RNZ.
Such details were “not routinely published”, it said.
But it did publish them, on Tuesday in the QIR. Realising this, Treasury called RNZ midweek asking it to hold off reporting the $2.054b figure. RNZ agreed.
“It was brought to our attention that commercially sensitive information may have been released as part of the QIR documents,” it said.
“In such cases, Treasury’s practice is to remove the document in question from the website while we investigate and ascertain whether the information is commercially sensitive before re-publishing.”
It was not. Treasury republished the QIR on Friday but told RNZ it expected to blank out three other small parts after it turned out these might be commercially sensitive.
“The government has previously announced a cost of $1.88b that related to the NDH Inpatients and Outpatients Building,” it told RNZ on Thursday evening.
“Health NZ has informed us the additional cost of $174m was not included in the $1.88b announcement as it related to costs for project level contingency and preserving future optionality.”
Asked for comment about the difference on Thursday, Brown said only that “the government is committed to delivering the New Dunedin Hospital” and referred RNZ to Treasury’s statement.
The hospital project was bedevilled early on by bad oversight, official reviews showed. The government cut it back in 2026 to hit the newly imposed $1.88b target, sparking public protests, warning otherwise it might escalate to $3b.
Protesters say the lower South Island will pay for any cuts made to the new Dunedin Hospital. RNZ / Tess Brunton
But by September 2025 the project was still fraught, according to the Treasury QIR based on data from Health NZ.
“New Dunedin Hospital (Inpatient Building) has reported an 18-month delay,” the report said.
“The Treasury and the Investment Panel share concerns that the fragmented governance of the whole NDH programme and limited visibility of the NDH Inpatients project has the potential to undermine effective oversight and implementation of the investment.”
It recommended Brown get it looked into. The report gave a December 2029 end date for the inpatients build, but last September Brown said “practical completion” would be in 2030 and it would actually open to patients in 2031.
Brown’s spokesperson told RNZ he had a review done last August of inpatients by an independent panel appointed by Treasury.
“The review made seven recommendations to strengthen delivery, and those recommendations have been accepted and are being actioned.”
RNZ has asked for a copy of the review.
Brown’s office said the government had appointed a Crown manager to “strengthen governance and ensure clear accountability for delivery” and Health NZ reported back regularly to the minister.
The government was focused on delivering the project whereas Labour only announced it, “without a credible delivery plan”.
Professor Robin Gauld, a close observer of the build who has an honorary role at the University of Otago, said, “It’s an unfortunate of affairs and no surprise that Treasury now has this on their radar, with a number of significant risks and high likelihood of a budget blowout.
“It could be comparatively straightforward if our politicians would understand that the public expects them to work together across administrations on multi-year projects such as this.
“Our lot unfortunately just don’t get it. They would rather see hundreds of millions of dollars wasted while blame-shifting.”
Gauld said the country was missing a long-range hospital planning unit like Singapore had, and also missing a joint oversight framework like in Finland that joined key politicians with project managers and construction companies.
The QIR showed for the September 2025 quarter the inpatients project spent only about a third of what had been forecast it would spend in those three months, and had so far spent just 1 percent in total of its $1.6b budget. The further-advanced outpatients, due to open later this year, spent 62 percent of forecast in the quarter.
Brown’s office said the digital programme for outpatients was “on track” while the digital infrastructure phase for inpatients was being prepared for joint ministerial approval.
Simeon Brown. RNZ / Mark Papalii
The QIR also put the Nelson Hospital redevelopment project two in the category “successful delivery in doubt”.
Last month Health NZ shrugged off ‘red’ warning alerts on the Nelson and Dunedin projects contained in the QIR for the previous April-June 2025 quarter.
In Auckland, the Specialised Rehabilitation Centre at Manukau Health Park was way overdue, the QIR said.
Brown’s spokesperson said this project was progressing, with a tender seeking information input completed and a tender for actual proposals to build it coming up.
“Labour announced this project without a clear plan to deliver it, much like the Middlemore Hospital recladding project which was announced in 2018 but never started.
“This government got that project underway last year and we are taking the same approach to ensuring the Manukau rehabilitation centre is delivered.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
