Missing operating theatres and wards with no ceilings: How NSW’s hospital builds stay under budget

Detailed summary

Under a structured cost-cutting exercise called “value management”, Health Infrastructure NSW and local health districts must then scale back the projects by deleting planned…

The NSW government’s multibillion-dollar hospital-building program is systematically locking in budgets before the true costs are known, forcing them to slash medical services, downgrade facilities, and leave entire hospital floors empty to stay on budget.

An Audit Office report found NSW Health could not demonstrate that its capital investment prioritised what future patients needed most, favouring expensive hospital construction over community care hubs, outpatient clinics, and preventative digital services.

NSW Auditor-General Bola Oyetunji found hospital building budgets are routinely approved long before preliminary or full business cases are developed.

Under a structured cost-cutting exercise called “value management”, Health Infrastructure NSW and local health districts must then scale back the projects by deleting planned inpatient wards, operating theatres, medical imaging and laboratories, or “cold shelling” – leaving hospital spaces without power, plumbing, ceilings, or clinical fitouts.

The NSW government has allocated $11.9 billion to health capital expenditure between 2026-27 and 2029-30, but the audit found recurrent funding for staffing and running hospital expansions was rarely addressed until roughly 12 months before opening, risking hospitals operating at diminished capacity from day one.

In 2025-26, the cost of bridging the operational funding gap for newly opened facilities was $90.5 million, the report, published on Thursday, found.

$2 billion: The estimated total cost of projects managed by Health Infrastructure per year

$11.9 billion: The state budget for health infrastructure from 2026-27 to 2029-30

~50 per cent: The percentage of NSW Health’s annual capital budget allocated to building or upgrading hospitals

Opening of the article, excerpted from The Sydney Morning Herald. To read the rest, open the article on the publisher's site.