Dunedin Hospital Crown Manager's $2500 Daily Fee More Than Doubles

The Cabinet paper suggests Davies’ Crown manager fees will line up with those of Health NZ chairman Lester Levy, who will receive fees totalling up to $450,000 this fiscal year, based on a $2500 per day rate to work 130 days annually, with scope for an additional 50 days provided for in a contingency. The paper notes: “This rate [$2500 per day] is consistent with that of the Health NZ board chair when multiplied across a full year for the expected time to be spent on Crown manager business.” A Health NZ spokeswoman declined to estimate Davies’ likely time commitment in the role and said “a specific number of working days” has not been calculated. Davies did not respond to questions emailed by the Herald, including how he will fit the hospital build work, which will take up 130 days or more annually, around his fulltime job as group chief executive of the private conglomerate Todd Corporation. The hours Levy has worked meant he had received fees in excess of the $167,000 per annum upper limit for large public sector chairs. The story is similar for other Health NZ board members. Guideline pay scales for members of most public bodies (not covered by the Remuneration Authority and excluding state-owned enterprises) are outlined in the Cabinet Fees Framework and were increased last year after not being updated for some years. The framework does not anticipate the specific role of Crown manager but the highest daily fee it recommends is $1645, which Davies’ fees will exceed. His work as Crown manager is to oversee the build and delivery of the New Dunedin Hospital inpatient facilities and ensure all necessary measures are in place so contractual terms are met (the more straightforward outpatient buildings are expected to be completed this year). Davies was appointed by Health Minister Simeon Brown in June last year and reports to him, with a particular responsibility to flag problems. Asked to explain Davies’ fee and, in particular, the increase from previous roles, Brown said the “remuneration aligns with the responsibilities and expectations of the role, and most importantly, ensures the project gets built”. He said the previous Government failed to secure a construction contract, despite repeated promises, and since appointing Davies as Crown manager one has now been signed. He said the new build is a “key priority” for the Government and is “on track”. Davies’ job is the second such role the Government has created to tighten its grip on the country’s main health services provider, Health NZ, which is responsible for the new hospital build. Last July, Brown appointed Hamiora Bowkett as Crown observer to the Health NZ board, then newly re-established after a year of more direct control by Levy as commissioner with three deputies. Bowkett also reports directly to Brown. Health NZ is governed by its own board, which generally puts it at arm’s length from the minister, notwithstanding the year of commissioner governance. The agency has struggled since its formation in mid-2022 through the amalgamation of the country’s district health boards. Its financial management is widely considered poor and spending last year was in deep deficit; it also has specialist staff shortages and patients are subject to long wait times for treatment. Davies’ Crown manager appointment was made under provisions in the Pae Ora (Healthy Futures) Act 2022 on the grounds the scale of the New Dunedin Hospital project poses a risk to the operation or long-term viability of Health NZ. The new build is already hundreds of millions of dollars over its original $1.4 billion budget, set under the previous Labour Government, and a range of reviews and reports in recent years have found deficiencies in project oversight, governance and the focus on delivery. The first (indicative) business case for the plan was produced under the former National Government in 2017. Current Government ministers paused the project in 2024, paring the scope and the cost, before restarting it with a new budget of $1.88b. They have repeatedly blamed Labour for the project’s troubles. With an election happening this year there is political pressure to ensure completion and first use, expected in 2030 and 2031 respectively, is not further delayed and that the current budget is not blown. Labour’s health spokeswoman Ayesha Verrall said the Government has done little but recklessly interrupt the new hospital build. “Ironically they have now returned to the same site, plan and Crown manager as appointed by Labour in Government,” she said. Of Davies’ fee, Verrall said: “It shows how out of touch Christopher Luxon is that he thinks nurses only deserve a 1% raise for their work, yet Crown managers are getting $2500 a day.” Davies has extensive commercial experience. He was the former head of Todd Corporation’s land and property development business and is now chief executive to the whole conglomerate. He has also served in public sector, build-related roles including as chairman of the Ministry of Health’s Capital Investment Committee. The cost and extent of his work as Crown manager raised no concerns with the key public service union the Public Service Association. National secretary Fleur Fitzsimons told the Herald: “The New Dunedin Hospital is sorely needed in the Otago community. We’d like to see everything possible done to make sure the new build is completed on time.”