Affordability of hospitals' upgrade a 'major concern' documents show

Affordability is a "major concern" for the regional redevelopment plan that covers five hospitals, according to official documents.

The latest Treasury quarterly investment report to March 2026 said the affordability problem was being addressed "temporarily through rephasing and staging" the work so funding could be secured bit-by-bit rather than all at once - "to allow incremental funding approvals rather than full redevelopment commitments".

Assessors are about to start looking at whether hospitals overall are being built better than in the past, after the government's efforts since 2024 to improve planning and delivery systems that have often got budgets and timing wrong.

Despite these efforts, Health New Zealand still underspent on infrastructure by almost $700 million in the nine months to March 2026 in part due to delays and changing plans.

The regional programme covers Nelson, Whangārei, Tauranga, Palmerston North, and Hawke's Bay hospitals.

RNZ sought several reports on how the regional programme was going - and what recommendations there were to fix problems - but Health New Zealand refused to protect the confidentiality of advice that affects ongoing decision-making.

The Treasury report gives a glimpse of it, saying, "Beyond funding, the programmes lack clarity on how infrastructure, digital services, workforce development, and evolving care models will integrate to deliver health benefits, particularly in regional and community care settings."

The Health Ministry said the new independent assessment of building overall, that it just put out a tender, would look at areas that contributed to health build underspending in the past.

HNZ's underspend hit $690m in the nine months to March; $1.18b against a forecast $1.87b.

"Health NZ advises that this is explained by a mix of decision delays, scope change, optimistic original phasing, procurement and tendering taking longer than planned, vendor delivery and supply chain lead times, interdependencies between projects, and resourcing constraints," Treasury said.

Overall, Crown capital underspend went the right way, dropping from $2.3b to $1.6b. NZTA, Kāinga Ora and Education also had big underspends ranging from $400m-$140m.

Treasury has been calling in chief executives, demanding they get their forecasts more accurate.

Ructions were ahead, said March's report. The Iran war was disrupting supply chains and "agencies have not yet been able to quantify the potential impacts on the infrastructure portfolio".

In health, the government last year shied away from its idea of setting up a separate health infrastructure entity and instead by law this year introduced a requirement to have a dedicated expert infrastructure committee.

It brought in more phased building. In the regional redevelopment for instance, Nelson has three stages: The $73m stage one due for completion in 2031 by March had spent a third of its budget.

The health ministry said the assessment of building would look into structures, oversight, processes and capabilities that the Building Hospitals Better programme has sought to improve.

"This review is important for providing assurance on the work underway to meet the health needs of our growing and ageing population," the ministry told RNZ on Tuesday.

A 10-year infrastructure plan was released in April 2025, five years after the previous government did the country's first nationwide health facilities stocktake.