Construction at Dunedin Hospital. Photo: RNZ/Tess Brunton
Analysis - Dunedin Hospital will not be the last to break budgets and puncture a community's expectations, and health authorities have been well aware of their weaknesses in building things.
Ministers warned on Thursday: "Upgrades to Whangārei, Nelson, Hawke's Bay, Palmerston North and Tauranga hospitals may be put at risk" by Dunedin's blowout, as the southern project might cop a $3 billion bill if it was not reined in.
The roots of the mess Shane Reti and Chris Bishop referred to extend a long way back - and very widely.
"Projects are expected to be appropriately resourced for planning and delivery and are expected to undertake robust value management as they proceed," Reti's health ministry officials told him in March.
But Te Whatu Ora Health NZ was not keeping up, in a significantly risky portfolio of ageing hospitals and other assets desperately needing upgrades, they said, in documents newly released to RNZ on Wednesday.
By March, the agency had only got the ministers and ministry as far up to speed as October 2023 on how builds were going.
"Current reporting is not timely and is of poor quality, with inconsistent assessment and limited identification of risks" was the diagnosis.
The agency had been told to buck up.
"Previous Letters of Expectations and the ministry's infrastructure monitoring framework identified expected improvements."
Whatever has been done was not in time.
Officials suggested Reti ask HNZ: "As a board, do you consider that all reasonable steps are being taken to progress projects according to approved timeframes and budgets?"
They suggested Finance Minister Nicola Willis ask: "Is there sufficient visibility of the relative priority of investments across and within both the physical infrastructure and data and digital portfolios, so that scarce resources (including financial and construction) are appropriately targeted?"
And: "Do you consider that the business cases and funding requests you have seen are of appropriate quality to support the investment decisions?"
It has been known for a long time that business cases for public projects of many types are not up to scratch, prompting Treasury to step in with an overhaul begun a few months ago.
At Health NZ, with the board at the helm since mid-2022, by March 2024 it still did "not yet have a comprehensive process, or full reporting, in place to monitor key performance issues", not just around finance, but on capital projects, too, the documents said.
The officials in charge of monitoring knew about the gaps; yet only in June 2024 did they decide to step in further, telling Reti they were putting an enhanced and "clear monitoring framework" in place, on the financial side, at least.
On the tools at Dunedin, costs were mounting, visibility was lacking and the external monitoring was late coming.
In the meantime, RNZ had been trying since 1 May to find out what was going on at the project.
A request for the key project documents should have unearthed them by early June. It did not.
Te Whatu Ora promised to deliver them by 1 August. The next day it apologised: "The time taken is not what we aspire to. I can assure you, however, that Health NZ is continuing to work on your request as a priority."
Thursday's media announcement came before RNZ got any of these documents.
Reti had been pleased six months ago to get a draft of health's grand infrastructure investment plan for the next decade.
But worrying signs of patchy planning were evident already: "It is encouraging to see the intention for longer term, service-led planning supported by different ways of working," a ministry monitoring report said.
"However, the draft ... excludes data and digital investments, and all scenarios exceed likely funding and expected market capacity."
As for hospital builds, A December plan, now defunct under the reset underway at Te Whatu Ora, said a six-month-long canvas last year of what health builds were needed in a decade, hit $47 billion and concluded: "Demand for new capital is outpacing our ability to deliver investments ... We cannot build hospital capacity fast enough to meet the forecast demand."
Planners were hoping to make existing assets more productive - except the documents show productivity has been going backwards.
A year ago, RNZ was reporting on hopes for hospital builds hinged on a "new approach [that] aims to deliver more certainty, expertise, standardisation, efficiency, performance and capability", under a new national infrastructure team.
It is unlikely this restructure has been given enough time to see if it would work.
On 27 June, another report by the ministry to Reti raised the spectre around HNZ's finances of what now, he and Bishop and the rest of Cabinet, are having to grapple with over what other hospital projects might pay for Dunedin's blowout.
"Given the scale of the financial issues, significant trade-offs will be necessary to return to financial balance within 12-18 months, and recognition of those choices upfront, as well as monitoring throughout, will be essential."