"There are lots of issues with this," Nurses Organisation president Anne Daniels told Morning Report.
"The big picture is that the nursing shortage is absolutely reflective of this situation."
Daniels believed this type of situation happened all over New Zealand.
"This happens under the radar, we wouldn't have known about it unless TikTok had gone viral. What else is happening in New Zealand?"
Daniels said healthcare assistants usually do what is known as "patient watches" under the supervision of a registered nurse.
She said the decision to use students would have been made to try to reduce the risk and keep patients safe.
"It's unfortunate that they made this decision because nursing students are just that, students - they don't know the complexities of looking after patients who might be confused [or] combative and the students didn't get a chance to have proper orientation or the school training to enable them to actually look after the patients."
While it may be innovative, decisions were being made on the fly and the risks to the students, patients and registered nurses needed to be really carefully thought through, she said.
"The real issue behind all of this is the lack of nursing resources. It is a major health and safety risk to all concerned."
Daniels said family members could have been called in to keep the patients safe as they understood the complexities of caring for their loved ones.
She wants the Nurses Organisation to sit down with Health Minister Andrew Little to discuss the situation.
"The nursing shortage is not going to go away."
District hospitals could not guarantee the health and safety of staff or patients at the moment because of staff shortages, Daniels said.
A Dunedin Hospital spokesperson said the students were asked to sit with patients and do jobs typically carried out by healthcare assistants.
It said paying with Countdown vouchers was a one-off because there wasn't time to add the students to the payroll.
Southern Director of Nursing for Te Whatu Ora Jenny Hanson said the hospital was grateful to the students for their support.
- RNZ