Option to sell outpatients

A briefing to Health Minister Shane Reti suggested the government could consider "selling the...
A briefing to Health Minister Shane Reti suggested the government could consider "selling the outpatient building to a third party and lease it back under an operating lease". PHOTO: GERARD O’BRIEN/GRAPHIC: MAT PATCHETT
Health officials have investigated selling the outpatients building to help fund the beleaguered new Dunedin hospital project, the Otago Daily Times has learned.

Documents released yesterday under the Official Information Act showed Health New Zealand Te Whatu Ora (HNZ) advisers scrambling to deliver the project within the fiscal envelope.

The top recommendation was "new Crown funding to cover immediate cost pressures".

But a briefing to various ministers, including Health Minister Shane Reti, said they should also consider "selling the outpatient building to a third party and lease it back under an operating lease".

"Third-party financing in whole or in part" of the project was another option canvassed.

The advice also noted there would be "no redesign required" to sell the outpatient building to a third party and lease it back under an operating lease.

Labour Party health infrastructure spokeswoman Tracey McLellan accused the government of openly considering privatising the hospital project.

"These buildings were going to be fully funded by Labour. The government has manufactured a cost crisis with this hospital because they choose not to keep their promise.

"We should be able to afford to build hospitals from the public purse.

"The last thing we want to be is tenants in our own hospitals."

HNZ was unable to comment on the advice yesterday, or whether selling the outpatient building and third-party financing was still under consideration.

Dr Reti’s office has also been contacted for comment, but a spokeswoman deferred the response to HNZ.

In October, Dr Reti said the government was considering all options when it comes to health infrastructure, including public-private partnerships, but later clarified his comments were "in relation to health infrastructure generally, not Dunedin specifically".

The documents also showed shortly before the Budget, HNZ advisers warned ministers of a range of "cost pressures" with the new Dunedin hospital project, which "would need to be managed by reprioritising, rescoping and the rephasing of projects and reallocation of funds".

"Any reprioritisation of funding within the current built infrastructure portfolio can only happen on the assumption that we will be able to seek new investment in future budget cycles, for example through the Infrastructure Investment Plan.

"Otherwise, we will continue to ‘rob Peter to pay Paul’ and never make progress on the significant backlog of capital works needed."

New Crown funding for the new Dunedin hospital project would have the advantage of there being "no delay" to the project if the commitment was made, the advice also said.

HNZ staff also promised from May there would be monthly project reporting, including cost estimates based on the independent quantity surveyor report already commissioned.

"The reports will provide updates on cost, scope, timing, risks and mitigations, whether the current funding is sufficient and progress against key milestones."

In late September, Dr Reti and Infrastructure Minister Chris Bishop announced they were canning the project in favour of either a down-scaled version or a retro-fit of the existing Dunedin hospital amid reports of budget blowouts.

They announced a new budget for the project of $1.88billion. A decision is due in the coming weeks.

matthew.littlewood@odt.co.nz

 

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