MICHAEL BASSETT: THE GOVERNMENT MONEY TREE AND NEW HOSPITALS

Beware of any situation where a government promises to fund the construction of a new hospital. Invariably it results in chaos at the local level as competing interests decide to pluck funds for their particular interest from the government’s money tree. 

There are plenty of earlier cases than Dunedin’s, all of them reflecting poorly on vociferous pressure groups with expensive opinions. I well recall the battle royal over the construction of Auckland’s children’s hospital before I became Minister of Health in 1984. First there was a prolonged debate about its site, just as has gone on in Dunedin. Some so-called experts thought there ought to be two children’s hospitals, one in the south and one in the west because poor kids lived there. Fortunately, the old Auckland Hospital Board and a majority of experts won the day with their argument that what eventually became known as Starship Children’s Hospital needed to be a centre of excellence that was located at the heart of the biggest hospital centre.

But the site issue was just the start of the argy-bargy over Starship. Next came all the medical and related groups that wanted their slices of the action. All the latest gadgets were requested, and demands emerged for more and more beds at the new facility. Some declared that anything less than 400 new beds would indicate that the government didn’t care about children. Extravagant language flashed about. And meantime, the inflation clock kept ticking. The Lange ministry faced a financial crisis not dissimilar to the one inherited by our present Coalition government, and I was beginning to wonder whether any of the “experts” really wanted a new children’s hospital at all, or were they just engaged in some kind of frolic?

Eventually, after discussions with Health officials and with Treasury I won agreement to fund no more than a 188-bed new hospital, construction of which must start quickly. Initially, there was a hullabaloo. The government was “going back on its word” and the minister “should resign”. You know the stuff…. But slowly the noise quietened and people began concentrating on the job in hand. In 1991 Starship Children’s Hospital opened for business.

Anyone following the Dunedin controversy will notice similarities. In 2015 the Ministry of Health set up a partnership group to produce options for a new Dunedin hospital. These were politicised in 2017 when the Labour government ruled out funding construction through a public-private partnership, and Labour’s former minister, Pete Hodgson, chaired the partnership group. The government initially said it would deliver the new hospital in its first term. But debate raged over the location for the new facilities before the central site was agreed. Then came the demolition of the old Cadbury’s factory on the site. That was still underway when Labour was re-elected in 2020. Meantime, appetites for the new structure kept rising. Some argued for more than 400 beds, extra operating theatres, and imaging services. Money is never a problem for interest groups if it is someone else’s. The initial figure of $1.2 billion soon became $1.4 billion and during 2023 extravagant additional facilities were talked about in the run-up to the general election. 

The new Coalition government discovered that minimum costs would be $1.88 billion, while one piece of advice thought the likely total would be $3 billion when parking and further services were included. 

Not surprisingly, the government rebelled as civic authorities, medical and related groups all sought to keep shaking the money tree in today’s indebted and inflationary environment. What is badly needed is a strong message from government that reduces some of the over-blown rhetoric, sets a strict financial limit on the spend, and speeds construction. Nine years is long enough to debate plans and flourish wish lists.

Several things complicate Dunedin’s problem. The first is that the Otago Medical School has for many years had too small a catchment area for patients to provide the wide array of conditions medical students need to encounter in their training. That’s why there are “Otago” clinical schools in Wellington, Christchurch, and in my day, Hamilton as well. Building extra beds in Dunedin won’t solve that demographic short-fall: Otago Hospital serves a population of only 181,000 people, and that portion of New Zealand’s total is in gradual decline. That means that hospitals are needed elsewhere in the country, something that Dunedinites are loath to concede. Closely tied with this issue is the Coalition’s promise – extravagant in my opinion – to erect another medical school at Waikato University when an expansion at Otago and Auckland medical schools could produce sufficient doctors so long as the clinical schools continue to supplement Dunedin’s population shortfall.

There is nothing about these debates over new hospitals that reflects much credit on those who shout and roar. A-Plus appetites coupled with huge senses of entitlement usually mask D-Plus levels of understanding about government and the resources at its disposal. All this suggests New Zealand’s educational standards, even what is taught at our premier universities, aren’t always up to the mark.