Audit finds NSW hospital construction budgets risk service cuts and cost overruns

An audit report found that the NSW government’s hospital-building program is routinely approving budgets long before preliminary business cases are developed. This process forces Health Infrastructure NSW and local health districts to scale back projects, sometimes by deleting planned wards or operating theatres, a practice called “cold shelling”. The NSW government has allocated $11.9 billion for health capital expenditure between 2026-27 and 2029-30.

The audit found that NSW Health could not demonstrate that its capital investment prioritized patient needs, favoring expensive construction over community care hubs and outpatient clinics. Furthermore, the cost of bridging the operational funding gap for newly opened facilities was $90.5 million in 2025-26.