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September 30, 2024 10 mins

Prime Minister Christopher Luxon says the Dunedin Hospital project is frustrating. 

“We are very committed to building a hospital in Dunedin, don’t get me wrong. But we have got to do it within the $1.9 billion fiscal envelope, otherwise that means that we can’t do Whangarei, Tauranga, Palmerston North, Nelson and other regional hospitals,” Luxon told Newstalk ZB's Heather du Plessis-Allan. 

Luxon said the government was receiving advice on how to proceed, with an option to scale back the construction or staging the project. 

“We’ve seen cost creep, scope creep from the Labour Government - whether it’s been ferries, school buildings, and now the hospital.” 

Pressed on the Government’s spending priorities, Luxon said, “we have put almost $30 billion into health, so there’s plenty of money in health”. 

He said the Government needed to get better at spending on infrastructure. 

Pressed again on the Government’s proposal to spend several billion dollars on a single road in Wellington and whether spending had been appropriately prioritised, Luxon said “you just can’t have a project [the hospital] go from $1.2b when it started and heading out to $3b”. 

Luxon said he was aware of Treasury’s warning of a structural deficit: “We’ve got to get back to financial discipline. We’ve got to make sure we then set up for growth.” 

He said it was possible to “do more with less”. 

He also said his Government’s spending cuts were being done “in a sensible, balanced kind of way - we’re not throwing the country into austerity”. 

On his push for civil servants to return to the office, Luxon said he was not surprised at the level of flak from the workforce. 

“We want everyone in the office. It’s not an entitlement that you get to work from home.” 

He said he had moved into Premier House over the weekend. 

“We finally managed to get new paint, new curtains and new carpet.” 

Responding to a question about whether it was a cold house, Luxon said: “Well, I’ve got a jumper”. 

Regarding the capital gains on his apartment and media attention on it, Luxon said he had come to expect it. 

“If we’re going to criticise people for being successful, let’s be clear - I’m wealthy, I’m sorted.” 

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Episode Transcript

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Speaker 1 (00:00):
In studio with us. We have Christopher luxon the Prime Minister. Chris, Hello,
how are you well? Congratulations to you first and foremost,
Thank you very much. I feel like you're more used
to what's happening right now than I am. So do
you want to take charge?

Speaker 2 (00:13):
You're doing a great job to figureate your button? Just then?

Speaker 1 (00:16):
Did you notice that?

Speaker 2 (00:17):
Notice it? I don't know, So just make it, just
fake it to you? Make it? Yeah? Is that what
I've built a whole career on that?

Speaker 1 (00:24):
There comes the honest are you're already getting a good
stuff out of here? Chris? Thanks for coming in. We've
got to talk about the Dunedin Hospital. Why can you
guys not find one point one billion bucks just to
get these guys what they want? Yeah?

Speaker 2 (00:35):
Look, I mean, look, this is a project. I mean
it's frustrating for people, and I get it's frustrating for
us as a new government inheriting the project. It started
off at one point two billion, it ended up going
up to one point six. We put another three hundred
million into it to one point nine and then we've
got the latest review suggesting it's going to be approaching
three billion dollars, which would be without doubt the most
expensive hospital in the history of the Southern Hemisphere. So

(00:56):
the challenge we've got is that we are very committed
to building in new hospital, don't get me wrong, but
we've got to do it within the one point nine
billion dollar fiscal envelope. Otherwise that means that we can't
do from Tarrong, you know, Palmerstan, North Nelson, other regional
hospitals we're going to have to deal with.

Speaker 1 (01:11):
Problem is it the election you guys had to crack
at the Labor Party for dicking around on this and you.

Speaker 2 (01:16):
Yeah, well it took six years and did nothing right.

Speaker 1 (01:18):
So I mean, aren't you in the same position.

Speaker 2 (01:19):
Well, we're taking advice really quickly on the two options
that we've got, which is essentially stage at the old
site or scale back at the new site. But we
will deliver a new hospital, but we have to do
it within the one point nine billion And what we've
seen is cost creep and you know scope creep from
a labor government where it's whether it's been school buildings

(01:39):
and now the hospital.

Speaker 1 (01:40):
How much smaller is it going to be.

Speaker 2 (01:42):
That'll be up to the advice that we can see.
You know, like as I said, Shane Ready and Chris
Bishop are all over it. They've asked for urgent advice
on the two options. As I said, whether it's staged
or whether it's scale back, we have to make those choices.

Speaker 1 (01:53):
See, the difficulty I think you guys have got is
that you are making some choices about what to spend
money on, and it's all kinds of other stuff. It's codes,
it's tobacco, tax cards, it's stuff for landlords. And when
it comes to something that Key Wes fundamentally care about,
which is.

Speaker 2 (02:07):
Disagree, I disagree. We put almost thirty billion dollars a
year into health. We put sixteen or seventeen billion dollars
extra in the most spent ever going into help. So
there's plenty of money in health. We're not managing infrastructure
projects across the country, whether it's hospitals, whether it's schools,
whether it's ferries well at all. That's been a legacy.
We've got to get better at that, and we've got

(02:28):
to manage the capital spending that we've got. So I'm
just said there's plenty of money going in. We've got there's.

Speaker 1 (02:33):
Plenty of money money going in, But you can find
two billion bucks for a road in Wellington.

Speaker 2 (02:38):
Well, we've got a lot to do in terms of
building out that infrastructure. Hospital infrastructures are part of that.
We've also got good money coming in. But you just
can't have a project go from one point two billion
when it started. It would have been good if it
had actually been built in the last six years, would
have been cheaper than what it would have been now,
But you can't have it heading out to three billion
dollars and even at one point nine I'll be amongst

(03:01):
one of the most successive hospitals.

Speaker 1 (03:02):
Are you sure the contract is not taking the mickey here?

Speaker 2 (03:04):
Well, that's what the review will identify, right, it's just
what options have we got?

Speaker 1 (03:08):
Are you looking into that specific We're looking.

Speaker 2 (03:10):
Into all of that. And there's bigger questions I think
fundamentally around how we deliver infrastructure in government. Do we
think the Ministry of Education is the best place to
make decisions about school buildings? We had four hundred and
fifty school projects from memory that were underfunded to the
tune of a couple of billion dollars.

Speaker 1 (03:26):
And what are you talking about, like a Ministry of
Works or something?

Speaker 2 (03:29):
Well, just yah, is there a different way of actually
managing instruct where you got real competency, real expertise, because
in fairness, running a health system, running an education system
is often different from managing infrastructure and asset management.

Speaker 1 (03:39):
Do you see treasuries warning last week? Yeah?

Speaker 2 (03:42):
I did, Yeah, I did.

Speaker 1 (03:43):
Okay, how are you going to get us out of
the structural deficit?

Speaker 2 (03:45):
Well, I just say, we have to get out of
the structural deficit. We've been on a massive binge and
we have to have a little bit of a diet
to get the box back in order because at the
moment we're actually borrowing more than we're spending.

Speaker 1 (03:56):
You know, well, how are you going to do it?

Speaker 2 (03:58):
And we're spending more than we're getting in. So we've
got to get back to financial discipline, which is why
we just had the chat on the Denetan hospital because
you say, right, let the one point one billion go through,
but it's one point one billion there, it's two billion
on ferries, it's two billion on skill buildings. We've got
to have some financial discipline around that. We've got to
make sure that we then set up for growth. That's
what we're focused on right now, because we've got spending

(04:20):
sort of getting gripped up. We'll continue to do that
daily practice. That's hard work going forward. We know we've
got some limited allowances, but we've got to question the
spends that we've already got going on and make sure
they're getting returns. We've got inflation coming down, we've got
interest rates coming down, we've got business confidence rising. But
we need to see the economy grow.

Speaker 1 (04:38):
But you're going to have to cut as well, aren't you.
And I mean Dominic Stevens was saying last week that
the level of cuts that you will have to do
are unprecedented in New Zealand history.

Speaker 2 (04:45):
Yeah, but possible. We can do a lot more with less,
you know. And as we've seen, there's been a lot
of dumb and wasteful spending go on across the system
for a number of for the last six years.

Speaker 1 (04:54):
Are we going to get another of all budgets type scenario?

Speaker 2 (04:56):
Potentially? I think you've seen our approach, which is that
you know, we know we've got to deliver a surplus.
We know it'll be ten years. I think by the
time we get it back into books, and we know
we've got to get the books in order. You cannot
whether you're a family or ten years from now, No,
ten years, it'll be ten years that we would have
had a deficit before we get there. But you know,
we're doing it in a really sensible, balanced kind of way,

(05:17):
and so we're not throwing the country into hard austerity.
What we're doing as balancing as you've seen, tax relief
for lower middle income workers. Yes, reprioritize twenty three billion
of savings within government spending, get it out of the bureaucracy,
get it to the frontline services. So we're working through
in a very balanced, sort of considered kind of way.
But the point is, if you're a family with a budget,

(05:38):
you can't keep spending more than you earn. If you're
a business, you can't do the same. And government's having
to do the same thing.

Speaker 1 (05:43):
Hey, are you surprised by the level of resistance to
sending the public servants back to work?

Speaker 2 (05:49):
Well, no, not really, but you were expecting this, Yeah, yeah,
I mean I get it. People may not like it,
but the point is that's what's going to happen. We
want people back in the office on a very effective
public service. We want it firing on all cylinders, whether
you lead large corporates or whether you lead large government employees.
The reality is you can maintain a culture for a
period of time virtually, but you need people in the office.

Speaker 1 (06:12):
When are you going to give me my minimum days?
They have to be back?

Speaker 2 (06:14):
This's what I want, Well, we want the starting point
needs to be you're in the office, and then if
you have formal arrangements that's formally agreed.

Speaker 1 (06:20):
It's not an entitle So are you saying to me
right now it's five days in the office unless you've
got some some permission not to be there.

Speaker 2 (06:27):
Yep, correct, So it's a minimum of five Well, it's
a starting you know, we want everyone in the office.
That's that's the starter. It's not an entitlement that you
just get to work from home.

Speaker 1 (06:36):
And this is great, Chris, why don't you just say
this on the day five days in the office?

Speaker 2 (06:39):
There you go, Well, no, we said, we said we
want people in the office, and if you want to
make alternative arrangements, you've got to do that in a
formal way. But the point we're trying to make here
is that we want, you know, the public service. We've
got some great public servants, but we've got a lot
that we've got to get sorted in this country. And therefore,
if that you know, and here's the research I mean,
and the evidence I've seen is that young people, for example,

(07:00):
people who are working from home and not getting coaching
or feedback or development opportunities as a result. When you
go look at career progression of those that work in
the office versus those that work from home, you know,
there's all those sort of benefits, better communication. A lot
of the problems we've got our cross ministries. You know,
we're dealing with people who are stuck in emergency housing,
but school attendance issues with you know, that's the same cohort.

(07:21):
We need a cross government response to those sorts of issues.
So I'm just saying, look, you've got to come back
to the office. That's where we are. That's not inconsistent
with what other governments and global leaders doing. And let's
get into it. You moved into Premier house yet moved
in on the weekend.

Speaker 1 (07:37):
Hold, well, god, be honest. I mean it's drafty and ancient.

Speaker 2 (07:42):
Well, it's we finally managed to get new paint, new curtains,
and new carpet. That's what the work has been over
the last six months. In part of the house, which
it was last time when Jim Bolger was there in
nineteen ninety. Yes, so the carpet had been stretched I
think seven times, pretty fair thread beer. But we managed
to get that approved to get that speak. Are you cold,

(08:03):
I've got a nice jumper. It's all good.

Speaker 1 (08:07):
Are you cranking the heat all night?

Speaker 2 (08:09):
I've got a good jumper, you know, jeez, it's all good.

Speaker 1 (08:15):
It's get some silicon around those windows, you know.

Speaker 2 (08:17):
Sort. I had a bit of a working bee on
the weekend and so I got some of the tools
out and carry on sort of thing things out. But look,
it's it's a privileged to be Prome Miister of New Zealand,
and it's a privilege to live in part.

Speaker 1 (08:27):
I love that you're putting a positive spin on this.
It is so utterly transparent what you're doing right now.
How do you feel about the fact that we're obsessed
with how much money you've made on your regial property?

Speaker 2 (08:36):
And yeah, look, I mean I don't know how to
explain it any other way, which is you know, I
came to politics four years ago. I bought an apartment
in October twenty twenty, when the election was twenty twenty.
I then became Prime minister. I was normally my promises
would sell their apartment move into premier house. I couldn't
because there was basic maintenance needs to be done, as
I said, paint, curtains, carpet some of it, and that's

(08:58):
been done. Now I'm moving in and I don't need
the apartments. I'm selling it. So that's what John Key
did when he became prominent.

Speaker 1 (09:04):
You feel about the fact that it was all over
the TV news last night.

Speaker 2 (09:07):
I haven't metal well, I've come to expect that, you know,
which is is a bit what I can't well, I can't.
I mean the bottom lines I said right from the
beginning of my first day in politics. You know, yep,
I'm a kid who's apparents at school sixteen, I went
to university, did well in the world, successful, get it right,
and I've chosen to come to politics because I want
to add back to New Zealand. So that's my reason
for it. But if we're going to criticize people for

(09:28):
being successful, and you know, let's be clear, you know
I'm wealthy, I'm sorted.

Speaker 1 (09:33):
Have you seen what you Cinda's doing? Chris? After this,
you can you can go on the speaking circuit. No. Look,
you can make as much in one gig speaking as
you do on your property.

Speaker 2 (09:42):
Like that won't be my focus. There's a lot of
other things to do post politics, but right now I
am absolutely determined. We have a great future. We've got
a great potential on this joint and we just got
to get it.

Speaker 1 (09:51):
Really, we've got a structural deficit to fix. First. Hey, Chris,
thank you very much, really appreciate your time. That's Chris
Lacks in the Prime Minister. For more from The Mic
Asking Breakfast, listen live to news Tour s at b
from six am weekdays, or follow the podcast on iHeartRadio.
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