New Zealand's hospitals need major investment within the next decade, the head of Treasury has warned – and the Government should be prepared to borrow significantly more to pay for it.
In a rare interview, Treasury secretary Iain Rennie told 1News that decades of under-investment have left many of the country’s hospitals in poor condition, with buildings dating back to the 1950s through to the 1980s now reaching the end of their usable life.
"Over several decades, the government probably hasn’t managed those assets really well," Rennie said.
"Many of our hospitals were built in the 1950s, '60s, '70s and '80s. They’re coming up to the point where, over the coming decade, they’ll need to be refashioned or remodelled."
Treasury head issues rare warning over state of NZ hospitals - Watch on TVNZ+
Rennie said the scale of the rebuild required meant the Government should consider increasing Crown debt to fund long-term infrastructure.
"We think there is a case that Government can borrow to finance long-term investments," he said.
"Good quality investment can be financed by debt, and we think that's a legitimate choice by Government."
New Zealand's debt was forecast to rise to almost $200 billion this year, growing to more than $250 billion by 2030.
When measured against the size of the economy, the most common international comparison, New Zealand’s debt sat at around 43% of GDP and was expected to reach 46% as the economy expanded.
Internationally, Japan's debt to GDP ratio was 236%, the United States sat at 120%, the United Kingdom at 101%, while Australia sat at roughly 50%.
"At the moment, debt levels are low by international standards," Rennie said.
Health advocates welcomed his comments.
Association of Salaried Medical Specialists executive director Sarah Dalton said borrowing was essential to prevent the health system falling further behind.
"We absolutely should be borrowing to invest in our core public services," she said.
"Our hospitals are very run down. A lot of those buildings are 60, 70 years old now."
Patient advocate Malcolm Mulholland said Treasury’s intervention reinforced long‑held concerns from the sector.
"This call has been coming for some time from patients and from health workers," he said.
"We now have the words of Treasury. We just need the will of politicians to put money where their mouths are."
ACT leader David Seymour rejected the notion the Government should take on more debt, arguing the public sector has a poor track record in managing major building projects.
"Frankly, the Government’s already got too much debt," he said.
"The history of the Government borrowing money, building and maintaining buildings and hospitals is not flash. I contrast that with this private training facility for surgeons — this is the future."
Rennie said there was still time for the Government to plan a staged, sustainable programme of investment, but only if it acted soon.
"We have a window of opportunity over the next, say, decade, to make choices that are gradual and planned, to avoid that situation."
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