State govt scraps private hospital plan

The state government has scrapped plans for a Public-Private Partnership (PPP) to build the new children's hospital saying it will be totally funded by yesterday's historic royalties agreement with BHP Billiton and Rio Tinto.

Yesterday, Premier Colin Barnett announced the two companies would make a joint one-off payment to the state government of $350 million and that the government had decided to allocate that money to pay for the construction of the hospital at the QEII medical site.

The new children's hospital will replace ageing Princess Margaret Hospital in Subiaco, which celebrated its centenary last year.

The hospital will have more than 250 beds and house the State's only paediatric trauma centre and will provide tertiary and key secondary health services including inpatient, ambulatory and outpatient care.

"This project was earmarked as a Public-Private Partnership where the private sector would fund construction of the hospital, and the State Government would lease it back," said Health Minister Kim Hames.

"This new funding is an appropriate and inspiring way for the Government to use this one-off payment from the mining companies to make a return to the community, and will result in a reduction for the need of WA Health to lease the building back," he said.

Mr Hames said the PPP model was a sound concept and may be used for future state government projects.

Construction on the new children's hospital is scheduled to start in 2012 and be completed in 2015.

Mr Hames said it was likely in the future, some of the increased amount from the iron ore royalties would also go towards to the hospital project.