Let hospital design proceed while the funding decision waits for the budget
A hospital business case finished in August is not assessed sooner for being finished early. It waits for the next budget. Averaged over arrival dates that is about half a year in which the project is complete, reviewed, and waiting for a date in the fiscal calendar.
Steps this would change
Rationale
The hospital delivery process is the one place in this database where the honest finding is smaller than the rhetoric, and that is worth stating before the proposal.
Critical path 2,975 days. Of that, 1,095 days is construction and 180 is
clinical commissioning. Addressable waits -- scheduling plus queue -- total
315 days, about 11 per cent. Building a hospital is slow mostly because building
a hospital is slow. Anyone claiming red tape is why a community is waiting for a
hospital should look at that ratio first.
But 315 days is still the better part of a year, and the largest component of it is a single step: waiting for the annual budget.
The structure of that wait is unusual and worth stating precisely. The project is finished. The business case is written, the gateway review is complete, the independent reviewers have reported. Nobody is assessing anything. The project is waiting for a date. And because delivery is publicly measured from funding announcement, this wait is invisible in every statistic anyone cites about how long hospitals take.
The proposal is not to abolish the budget cycle -- capital rationing has to happen, and an annual cycle is a reasonable way for a government to weigh competing projects against a fixed envelope. It is narrower:
- Fund design continuation separately from capital commitment. A modest allocation lets design proceed to a defined stage while the capital decision waits. If the project is not funded, the state has bought a better-defined project and a more accurate cost estimate for the next round.
- Schedule gateway reviews to land ahead of the budget, not whenever panels are free. Much of the gateway delay is assembling a panel and finding a date. Reviews timed to the budget cycle would convert some of that scheduling wait into ordinary lead time.
Who acts: state treasuries. This is not a Commonwealth process, and the Commonwealth's leverage over hospital capital timing is limited to the National Health Reform Agreement.
What is being traded away
The objection to this proposal is the strongest of any on this site, and it is the reason the arrangement exists.
Design at risk creates commitment. A project with two years of design investment behind it is politically much harder to refuse than a project with a business case. That is exactly why treasuries resist it. This reform would transfer real power from the budget process to project sponsors, and the effect would be to fund projects that would otherwise have been declined -- including some that should be declined. Anyone advocating it should be honest that improving delivery timelines and preserving fiscal discipline are, here, in direct conflict.
Sunk cost is not the only distortion. Advanced design also locks in a solution before the funding decision has tested whether it is the right one. A service problem that could have been solved with an expanded community service becomes a hospital, because the hospital is already drawn.
It spends money on projects that do not proceed. By construction, some design funding is wasted. That is defensible only if the improvement in cost certainty across the portfolio exceeds the waste, and that is an empirical claim this database cannot currently support.
A note on the model. Every duration in the hospital process is estimate
grade, including the 180 day budget wait, which is a modelled average of a
uniform arrival date against an annual cycle rather than an observed figure.
State assurance frameworks publish their requirements but not elapsed times per
gate. Until they do, the 11 per cent figure above is a structure, not a
measurement.
Precedent
Development funding allocations that let design proceed to a defined stage ahead of a full capital commitment are used in several jurisdictions and are standard practice in private capital projects, where design typically proceeds at risk to a defined gate.
Sources
- NSW Treasury, published Infrastructure Investor Assurance Framework
- Infrastructure Partnerships Australia, 'A Healthy Pipeline: Delivering Australia's Hospital Infrastructure'
- Auditor-General for South Australia, 2025 findings on delays commencing construction on major hospital projects