In one of the fastest-growing areas of Australia, a church dispute has thrown a spanner in the works for a new hospital

Original source (on modern site)

Victorian taxpayers could be on the hook for an $8.5 million compensation bill over the state's newest public hospital, with the Catholic Church claiming it was severely shortchanged when it gave up the land.

Church lawyers have taken the government to the state's highest planning tribunal over the new Melton Hospital, claiming it is worth almost double of what it was paid.

The government acquired the land using special legal powers and paid the church just shy of $9 million, with the hospital expected to be finished within the next five years.

But if the church is successful, taxpayers may need to fork out $8.5 million.

"We dispute the amount of compensation which the Authority has offered and claim the sum of $17,530,127.37 for compensation plus reserved amounts for interest," its lawyers said in tribunal documents seen by the ABC.

But the Allan Government is standing firm and says the legal action will not delay the construction of the hospital.

"Melton residents have told us they need a local, 24-hour hospital that can expand with their growing community, and we have listened," a spokeswoman said.

"Work is already underway to deliver this massive new hospital by 2029, so local patients can get the world-class care they need, close to home."

Church disputed initial land valuation

In 2021, the then-Andrews government acquired the site for the new hospital on Ferris Road at Cobblebank using compulsory acquisition powers, promising to build a $900 million health service with 274 beds, an intensive care unit and a 24-hour emergency department.

The 6.86 hectare site will also be Victoria's first fully electric hospital.

In exchange, the Roman Catholic Trusts Corporation, which manages properties on behalf of the Diocese of Melbourne, was paid $8.99 million based on a valuation from Victoria's Valuer-General.

That multi-million dollar figure includes $8.82 million for the land, $15,000 in compensation, $12,000 for valuation and planning costs and $150,000 in compensation.

The money was transferred into the church's coffers in April 2022.

But in November 2022, the church rejected the offer and flagged it would be seeking compensation.

The Victorian government acquired land owned by the Catholic Church for the new Melton Hospital.(Supplied: Victorian Health Building Authority)

The disputed amount includes just over $17 million for the land, about $158,000 for legal, professional and valuation fees, about $12,000 for economic development expenses, $150,000 in compensation.

The church also claimed an extra $86,584 because it said the health minister failed to make an offer for compensation within the legal time frame, and which the church says cost it in interest debt repayments.

The Catholic Archdiocese of Melbourne has declined to comment.

The legal battle is a headache for the government, which is still facing $162.2 billion in net debt after the pandemic.

Hospital needed in fast growing region

A new public hospital will relieve serious pressures on Melton, which is one of the fastest-growing areas in Australia.

But the government's own tender documents from January 2023 reveal that within seven years of the new hospital opening, the number of beds will have to more than double to meet projected demand.

Melton's population is expected to double by 2036-37, which would make it bigger than Geelong and close to the size of Canberra by around 2036.

The boom in growth is also expected to double the demand for acute health care within the next two decades, which would put severe pressures on surrounding public hospitals.

At the moment the area is only serviced by one health service — the Bacchus Marsh and Melton Regional Hospital — which only has 42 beds.

Locals have campaigned for many years for a new hospital for the Melton region.(Supplied)

Patients are currently being forced to travel up to 40 minutes to reach hospitals like the Royal Melbourne, the Royal Women's and the Royal Children's, which deal with acute medical conditions.

"The health system in Melbourne's west is experiencing significant demand pressure," the documents said.

"Hospital capacity has not kept up with demand in Melbourne's outer west, placing unsustainable pressure on the acute hospital system in Melbourne's west and inner-city hospitals.

"Strong and continued growth in demand for acute health services from the Melton catchment … is expected to see demand for hospital services in Melbourne's west more than double over the next 20 years, faster than any other area in the state."

Ian Birchall, who has lived in Melton for 22 years and co-founded the Melton Hospital Group to advocate for a better health service in the region, said there needed to be an urgent reassessment of the current plans before construction began.

"We've been saying from the outset we need a 500-bed hospital, five, 10 years ago and the way it's going, it's still on the never never and we may get what's required too little, too late," said Dr Birchall, who has run as an independent candidate at the state election.

He said that at the moment, patients were being forced to travel to either Sunshine or Ballarat to access their hospital networks.

"On the other side of town there's multiple hospitals for the population and there's not much in the outer west, all the money seems to be spent on the bayside, leafy suburbs, and people in the west have been missing out forever," Dr Birchall said.

"I just don't understand why they haven't planned ahead.

"Forty years ago they said Melton was going to be a satellite city and it never happened, all they've done is turn it into a dormitory type suburb where people have to commute on very unsatisfactory roads to go to work in other places."