Residents take fast-tracked North Melbourne hospital approval to Victoria’s Ombudsman

An approval for a new 11-storey private hospital for North Melbourne has been fast-tracked by the state government, but residents have slammed the process and lodged a complaint with the Victorian Ombudsman.

The $300 million project by Australian Unity, to be built on the corner of Flemington Rd and Errol St, has been approved under the state government’s Development Facilitation Program (DFP).

Minister for Planning Sonya Kilkenny established the DFP in 2023 to “make faster decisions for priority projects”. However Australian Unity’s general manager healthcare property Chris Smith told North West City News, “the project will become a reality when a long-term anchor tenant for the project is secured and the project is financially viable, for all stakeholders.”

“We were pleased to see the Allan Labor Government greenlight a new private hospital in the Parkville precinct,” Mr Smith said. “This planning approval provides some certainty and will allow Australian Unity's Healthcare Property Trust to work with interested parties to progress a development that is sustainable for all relevant stakeholders.”

According to the government, the new hospital will deliver 223 beds, pathology and medical imaging facilities, seven operating theatres, and 10 intensive care units, and will be located directly across from the Royal Women’s Hospital.

The site, currently occupied by the Mercure Hotel, sits on the edge of a residential pocket in North Melbourne. As previously reported by North West City News, residents had raised objections to the development, citing a lack of transparency in the planning process, concerns about traffic and pedestrian safety, and potential impacts on neighbourhood amenity.

In late 2024, a group of more than 70 residents, led by Chapman St resident Bernie Cahir, argued the project had been “rushed through” with limited consultation and outdated traffic data. The short two-week window for submissions during the community engagement phase also coincided with the City of Melbourne’s election period, raising further concerns about oversight.

However, in its final approved version, the state government claimed it had made several amendments to address these issues. These include changes to building setbacks and form to allow more natural light into neighbouring properties, as well as improved pedestrian, cycling, and vehicle access to the site.

But Mr Cahir said the group that he represented argued that no substantive changes to building design, traffic access and safety of movements were reflected in the final permit.

He added that his group had provided many suggested improvements to both the Department of Transport and Planning and the City of Melbourne and received no feedback or requests for further discussions.

A spokesperson for the Department of Transport and Planning confirmed that the changes were informed by feedback received during consultation with residents and the council, with the aim of balancing hospital demand with neighbourhood impact.

Minister for Planning Sonya Kilkenny said the hospital aligned with the long-term vision for the Parkville biomedical precinct.

“We’ve given the green light for a new hospital to be built in Victoria’s world-leading biomedical precinct,” she said. “The new hospital is consistent with the plans for the Parkville precinct, an established research cluster on the doorstep of the CBD for education, health, professional and technical industries.”

But Mr Cahir told North West City News following the government’s announcement on May 7 that the state government had never met directly with residents to hear their concerns, most of which remained unaddressed.

While the City of Melbourne had initially not commented publicly on the proposal, a spokesperson later confirmed the council was undertaking an assessment and would present its position to the Future Melbourne Committee (FMC) in early 2025. However, the application never made it to an FMC meeting, with the council bypassed under the government’s fast-tracked approval DFP process.

Mr Cahir said the council was yet to confirm what its position was regarding the issuing of the permit and what permit conditions it would like to see.

Mr Cahir’s group submitted a request to the government under Freedom of Information (FoI), which had revealed correspondence from the project’s proponent pushing the government to issue an approval amid rising development fees.

While Invest Victoria is responsible for determining viability under the DFP, which aims to fast-track projects of economic value of $35 million or more across the state, Mr Cahir said this was only for projects that were considered “shovel ready”.

Considering that Australian Unity has stated on two occasions that ‘the project will become a reality when a long-term anchor tenant for the project is secured and the project is financially viable’, fast tracking a permit is to enable surety for the government that projects that are ‘shovel ready’ can proceed

“The DFP guidelines indicate that works should begin within 12 months of the issuing of permit,” Mr Cahir said, adding that the approved permit allowed the applicant 24 months to commence works and the possibility to extend with ministerial permission.

Residents have now lodged a complaint with the Victorian Ombudsman over concerns about the DFP process and the speed at which the permit was approved without proper economic analysis.

Despite the Minister’s changes to the original plans, some locals remain concerned that traffic volumes have been underestimated, particularly given the proximity of the Molesworth public housing redevelopment and nearby schools. Previous assessments relied on traffic data collected in late 2021 during a COVID-affected period, which residents argued did not reflect current or future conditions – namely the impacts from the new West Gate Tunnel Project opening later this year.

Calls for additional traffic studies were not adopted, and the project’s planned entry and exit point will not feature traffic lights – relying instead on convex mirrors for visibility, a design residents say is unsuitable for a location with high pedestrian activity, particularly school children from North Melbourne Primary and University High.

Mr Cahir previously told North West City News that the lack of transparency between planning authorities and the community left residents feeling sidelined.

“We’re not all looking at the same information at the same time; everybody’s making decisions in their own vacuum,” he said.

The government says the project will strengthen Melbourne’s biomedical capacity and benefit from improved accessibility when the Metro Tunnel opens later this year, connecting Parkville to the city’s train network for the first time.

It added that construction timelines and project partners were expected to be announced in the coming months. •