Why Splurge on Children's Hospital, while Scrimping Elsewhere?

Andy Storey

Andy Storey is a lecturer in political economy at University College Dublin and a board member of human rights group Action from Ireland (Afri).

The planned new children’s hospital at the St James’s site in Dublin will likely end up the most expensive such children’s facility ever constructed anywhere in the world.

Not only that, but it will be the second dearest hospital of any sort globally, and will join the list of the 20 all-time most expensive buildings.

In 2012, the cost was reported by The Journal to be €484 million for the children’s hospital and an additional €120 million for the maternity hospital.

Now it stands in excess of €1 billion, and even that may be optimistic – information technology (IT) and equipment costs are not, apparently, included (which seems like a pretty startling omission).

Paul Cullen of the Irish Times has dug out some revealing European comparisons. A children’s hospital of roughly the same capacity planned for Finland will cost €500 million, including IT.

One just constructed in Liverpool – also a children’s facility, Alder Hey – will have 270 beds, a little over half the number planned for Ireland, but it came in on a budget of €280 million, likely a quarter the cost of the St James’s project.

Overall, the St James’s cost of, perhaps, €1.9 million per bed is reportedly well out of line with an industry standard of about €1 million per bed.

And, remarkably, the land is available to the Irish hospital builders – Dutch multinational BAM, already very active in the Irish construction sector – for the princely sum of zero. (One of BAM’s previous Irish projects was the building of the controversial Corrib gas pipeline in County Mayo).

One of the reasons being cited for the escalating budget is that construction inflation is now said to be running at 9 percent per annum compared to 3 percent in 2014. But other figures suggest that the cost of building materials rose just 1.1 percent between July 2015 and July 2016, and at least one alternative forecast for construction cost rises between 2016 and 2017 is 6 percent.

Even if one accepted the 9 percent estimate, is it being assumed that this rate of increase will persist for the entire duration of the project? The short answer is we just don’t know, and, even if we did, we have no idea whether this could possibly come close to explaining the stunning inflation in the estimated overall cost of the project.

How has the government responded to this rather worrying development? With rather remarkable insouciance. Tánaiste Frances Fitzgerald shrugged off criticism, citing the claim of 9 percent construction inflation and also pointing to new facilities not in the original plan, such as a research and education centre. How much of the increased cost is due to the addition of these new elements? Specification came there none.

Minister for Children Katherine Zappone contented herself with the “hope that if the costs are the most in the world, that in fact we have the best children’s hospital in the world”. Chance would be a fine thing.

By way of contrast, the government is adamant that it cannot step in and cover the cost of Bus Eireann’s public transport services, despite the fact that the contentious cost-cutting proposals which have generated calls to strike will save only €12 million per year.

Restoration of pay equality for secondary school teachers earning less than their more senior colleagues is seen as similarly unaffordable, even though the annual bill would be €70 million or under, less than 1 per cent of the Department of Education’s budget.

Of course annual, recurring budget costs are different to the (hopefully one-off) capital costs of building a hospital. But what is strange is how calm, seemingly complacent even, the government is about accepting a claim from a private construction company that it has to ramp up its costs spectacularly – which it may do again between now and the projected completion date of 2020.

And how sharply this contrasts with how unwilling the same government is to accept subsidy and pay claims from public sector bodies and workers that would generate much more modest pressures on the exchequer.

Bus drivers and teachers are obliged to deliver value for money and accountability, to operate within strict budgetary constraints. Whereas some private contractors seem to be given almost a blank cheque. Strange that.

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Reader responses

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Dympna McMahon (former Chair of Children in Hospital Ireland)
at 7 March 2017 at 01:46

Wonderful piece Andy on the childrens hospital. How to get the madness of St James decision across to the general public is the big question. After all they will be paying for it and yet 73% of prople dont want it. What’s wrong and why is the taxpayer so lethargic? Why allow this hospital to be rammed down unwilling throats FG et al march over them with hobnail boots. Wake up prople out there and smell the mistake before it’s too late. Connolly will be cheaper, faster, available, unencumbered, accessible etc etc.

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