Counties Manukau DHB was reluctant to ask the previous government for funding to fix mouldy, rotting and unstable buildings because of pressure from ministers to stay in surplus, its acting CEO says.
It will cost $1.6 billion to remediate the issues in multiple buildings, and add new buildings to meet demand, and about the same to build a new acute hospital and facilities.
Counties Manukau District Health Board acting CEO Gloria Johnson told Checkpoint with John Campbell: "The reality is we may need both given the growth in Auckland."
Details of the serious building issues were revealed earlier this week.
Health Minister David Clark said he was demanding answers from the DHB because he was only told one building had serious mould, but the issue was much larger than that.
There were "serious" cladding issues in four buildings, and asbestos and seismic issues and deferred maintenance in other buildings.
"And some of our buildings have all of those problems together, so we've got lots of problems."
The DHB has been aware of some of the issues for about four to six years, but was hesitant to ask for any funding to fix them.
In a letter titled 'Living within your means' and dated 27 October, 2016, former Health Minister Jonathan Coleman wrote to the DHB: "I am pleased to see that your dhb is planning a surplus for 16/17 and the following three years."
When asked if the DHB was not doing the work required because Dr Coleman wanted it to stay in surplus, Dr Johnson replied "yes".
"I think the government, the whole government has expected the health sector to be able to live within its means, and to be able to do that we have had to compromise on our capital investment programme."
Following the Christchurch earthquakes, DHBs "were given to understand" that there was "very limited capital available for other things", Dr Johnson said. If it had acted to remediate any issues, or build any new buildings, it would have to spend capital, be charged interest and acquire depreciation, "that then affects our operational budgets and runs the risk that we will run into deficit."
"In general terms, we have a problem with a reluctance to actually identify the scale of the problem and therefore the cost and the effort that might be required to fix the problems because of a belief in the health sector that we were not going to be able to actually get the capital investment required and that we were not going to be able to afford to engage in the work."
While the DHB desperately needed issues on many of its buildings to be remediated, there was a more urgent need for additional buildings to meet demand from a growing population, Dr Johnson said.
"We can't afford to wait until we've finished all the remediation work before we start investing in new capacity because we need new capacity as well."
Dr Coleman and Health Minister David Clark declined to be interviewed on this subject.
Dr Clark has a meeting with Dr Johnson later this week.
In a statement, he said: "The previous government neglected and underfunded our hospitals. This government is committed to a well-funded public health service, but the reality is that the legacy of underfunding will take some years to turn around."