It is $2.1 billion — the new available budget for the project. It comes after years of the government insisting that it would deliver the project for $1.88b.
The new figure was revealed in Budget documents on Thursday, and it included an extra $174 million approved for the project to cover contingencies.
The extra money was praised by health commentators who said it would inevitably need to be used, but Health Minister Simeon Brown insisted the government would keep its promise of delivering the project for $1.88b.
‘‘To maintain progress and provide certainty for delivery, the required funding was confirmed and allocated. This ensures the project can continue without disruption and be completed as planned.
‘‘The project remains on track and is being managed within the approved budget envelope.’’
Bond Business School executive dean Prof Robin Gauld, who has been following the new Dunedin hospital project since its inception, was not surprised.
He said realistically, the new number was $2.1b because there would always be contingencies in a project of this scale.
‘‘I guess if they’d sat down and done the budget, they’d probably realise that they need to increase the amount of funding going in to continue the proposed scope and timeline.
‘‘I think they were probably trying to hold a line on a particular level of funding and probably trying to wrestle everyone involved in the project to bring the overall cost down.’’
Prof Gauld said the government would have been through a ‘‘value management’’ process, where savings would be sought across the entire proposed structure.
‘‘So they probably would have held multiple value management workshops, looking to see what they can cut back, and probably have come to the point where it’s been found that actually you can’t cut anything more back.
‘‘You can only provide funding now to keep up with the cost of inflation and to ensure that the project delivers a fit-for-purpose outcome.’’
Prof Gauld hoped the government would not be focused on the final number — ‘‘whether it’s $2.1b or $2.2b or more’’.
‘‘I think they’ve just got to get on with it and just put everything into what’s required.’’
Dunedin City councillor and hospital advocate Dr John Chambers said the increase did not surprise him, and he just hoped it would be built to the highest standard possible.
‘‘I mean, the budget for the new hospital was going to be about $1.5 billion, I think, about 10, 12 years ago. And now it’s gone up to $2 billion, so it hasn’t doubled.
‘‘Medical inflation is quite significant, as is building inflation. So the fact that it hasn’t doubled in price means that it’s not that out of the ordinary.
‘‘Whereas some things that the council spends money on have gone up 10 times.’’
Dr Chambers said the outpatient building, which was due to open at the end of this year, needed to have a full staffing budget by now.
‘‘They’re doing lots of training and stuff, and they’re supposed to start working [in the outpatient building] towards the end of the year.
‘‘But have they got a staffing budget so that they can make use of all these new theatres and things and new MRI scanners and new CT scanners and all this?’’
In September 2024, the government paused the new Dunedin hospital project, pending a review of the scale and cost of the project.
At the time, then-infrastructure minister Chris Bishop said it was to prevent costs blowing out to more than $3b.
The government announced in January 2025 that it would build the new hospital to a budget of $1.88b.
The inpatient building is scheduled to open in mid-2031.
