It’s a problem that has been around more or less forever, approximately the same timescale as we’ve been ignoring the maintenance and renewal of our collective water pipes.
And likely for the same reasons. The water pipes have been overlooked because they have been able to be.
Water and wastewater pipes are owned by councils, and there have been precious few votes for councillors over the years who have been diligently focused on managing their pipes.
For a start they are underground, and no one can see them. And there are much sexier things councillors can spend ratepayers’ money on – like libraries, swimming pools and in Wellington’s case, convention centres.
Thus the water pipes are ignored until they can’t be. Hastings, for example, proudly now has excellent water infrastructure, likely only because of the Havelock North campylobacter outbreak in 2016.
Auckland finally pulled finger when the public decided not to put up with sewage overflows on their favourite beaches every time there was decent rainfall.
After a massive investment in the 16km “central interceptor”, that problem should be solved soon. And Wellington? I suspect voters will respond well to a focus on water pipes rather than cycleways this year.
You’d think public hospital buildings might be better-managed. But in the health sector too, all the votes are in favour of squeezing out the dollars for the next few hip operations and against repairing, maintaining and renewing hospital buildings.
Right through the public hospital sector, the tradition is that they spend about one-third of the amount they should spend each year on maintaining and renewing their assets.
The Ministry of Health officials know it, the old hospital boards knew it and the new Health New Zealand entity knows it. Whenever you ask officials why they don’t run their building assets properly, as I did once as Finance Minister and again more recently, it is for them to tell you patiently that “health is different”.
What they mean is that health is different in the same way water is different, the defence estate is different, prisons are different and schools are different.
There are votes in building shiny new facilities, and votes in highly visible public services, but no votes in maintaining the buildings (or pipes) you already have. In this case, as sadly in so many, politics gets in the way of sensibly running a major industry, which health is.
Thus, in health, the buildings fall into disrepair and eventually the only answer is to replace the whole hospital.
When that finally happens, it also tends to become hopelessly political. Public hospital rebuilds happen so rarely that every clinician, patient group and community group in (insert city/town name here) wants to take “this one chance” to get it right.
They all see a once-in-a-career opportunity to design the perfect new hospital.
What follows is a huge argy-bargy as the locals bid up the scope of the new facility as high as possible, and eventually the annoying accountant-types at Treasury and the like turn up to try to get the budget under control again. Meanwhile, time ticks past and the cost of building the thing increases every year.
We could call this the “Dunedin phenomenon” but it actually plays out every time the Government builds a new hospital or a substantial part of one.
It doesn’t help that building any new building in health is an expressly political decision. You may be surprised to learn that any investment decisions above $25 million in the government health sector must be agreed to by the Health Minister.
This applied back when the DHBs were around, and it applies now at Health New Zealand. The biggest industry in the land bar none, and it’s run like a large corner dairy.
I recently had a (non-health) minister lamenting that he (or she!) didn’t have that level of capital control in their portfolio, which involved a set of generally well-run entities trusted to make their own capital investment decisions. God forbid we treat the health sector as an example of successful capital management.
There is a further problem at play here, and that’s demographics and the age of both our pipes and buildings, and indeed sometimes the pipes in the buildings.
Once we were a young country, in many senses of the word. Our things were being built for the first time. Initially at least, they didn’t need that much maintenance or repair.
At the same time, our working-age population was growing rapidly. Our tax take was rising quickly and we could afford to pay for the thing we’d built and move on quickly to the next one.
We lived in simpler times as well, without such joys as the Resource Management Act. With respect to the latter, there is a concerted effort now to get back to those simpler times, but that remains to be seen.
What we can’t easily get back to is the youthfulness of our assets and our workforce. On top of that, our ageing population increases the demand on our health services at the exact time as a huge remediation of our existing hospitals is needed.
And that’s before you factor in the pressure on government finances because of the fiscal blowout courtesy of the last Government, a need to strengthen the defence forces given we clearly no longer live in the fabled “benign strategic environment”, and the further economic turmoil courtesy of Trump’s tariffs.
There is clearly only one way to square this circle, and that is to invite private investors to build more of our health facilities. They needn’t operate them, although the evidence is that the private sector’s more efficient in health as in other things. At least partly because they don’t have to see everything through a political lens.
But they could build and maintain the buildings, and lease them to the Government for it to use for, say, 30 or 50 years. We’d get new, fit-for-purpose hospital buildings without needing to borrow the cash upfront to build them.
Helpfully, the maintenance of the buildings would be built into the lease cost, which would resist the temptation to raid the building budget in order to fund operations. And the efficiency savings in modern buildings would be significant.
The Government is clearly sidling up to this approach and so they should. The public are unlikely to care who built their hospital as long as they get their operation, and their post-operative care.
Of course the Opposition plan to oppose it on political grounds, taking the view that somehow it’s okay for the Government to lease office buildings for the public service in Wellington but not okay to lease hospital buildings in New Plymouth or Hamilton.
Their dirty little secret is that they were planning something similar to renew the water pipes, borrowing against the assets to build new ones. They would need to explain how pipes and hospitals are so different, when it is clear the problem is largely the same.
