Government warned that without urgent works the building would require substantial demolition to make it safe

The Flinders St building bought by the state government for its now-scrapped plans for a CBD injecting room will need millions in repairs.

The $40m building bought by the state government to set up a CBD injecting room is falling apart and uninhabitable.

The Herald Sun can reveal that the government has been warned it must invest millions of dollars to repair the former Yooralla building – bought by the government in 2021 at a cost of $40.3m – or risk its potential demolition.

The building is now set to be converted into a community health hub after Jacinta Allan scrapped plans to set up a second injecting room.

But the site, at 244 Flinders St, requires millions of dollars in urgent repairs after being plagued by water leaks and a serious mould infestation.

The former Yooralla building on Flinders Street was bought by the state government in 2021. Picture: Mark Stewart

Ms Allan on Monday said work was “progressing” on the site but couldn’t put a dollar figure on how much the repairs would cost.

Ms Allan said the government was aware “some refurbishment works” would be needed when it bought the site.

“We are working on the works that are needed on this building to transform this site into a brand new community health facility in the heart of the CBD,” Ms Allan said.

“We did know that there needed to be some refurbishment works on this building site.”

“The costs for the refurbishment are within the overall costs of acquiring and fitting out the building,’ she said.

“And we did know that, when that building was acquired, that there would need to be further works.”

Premier of Victoria Jacinta Allan says work is ‘progressing’ on the site but shied away from putting a dollar figure on the repairs project.

Opposition leader John Pesutto accused the government of failing to carry out basic due diligence before purchasing the site.

“Didn’t the Alan Labor government even conduct a site inspection before they bought this lemon of a site?” Mr Pesutto asked.

“You would have thought, if they were acting like any normal, rational, reasonable purchaser of a property, you would undertake a basic investigation and inspection of the site.

“Clearly, the Allan Labor government did not do any of those basic things, which is consistent with the way they’ve managed major projects and a whole lot of other things in Victoria.”

Mr Pesutto went on to slam the government for not revealing the cost of the repairs.

“It’s become so farcical in Victoria … that the Allen Labor government is prepared to release the cost of buying the property, just not the cost of repairing the property,” Me Pesutto said.

“We can only assume, given the water damage, the mould and other structural problems besetting this site, that the repairs … will cost many millions of dollars in the very least.

“How can you be prepared to say how much you bought it for, but not be prepared to say how much it’s going to cost to bring it up to speed in terms of being able to deliver those (health) services?”

John Pesutto accused the government of failing to carry out basic due diligence. Picture: David Crosling

It comes after the Herald Sun revealed the government was warned in June last year that without urgent works the building would require substantial demolition to make it safe.

A ministerial brief, obtained by the state opposition, warned urgent repair works would take at least six months to complete.

“The building infrastructure, including the hydraulics, electrical and mechanical services have been dormant since May 2021 as the site has not been occupied since settlement,” it said.

“The property has also had several water leaks, including leaks from the fire sprinkler system, the potable water system, and water incursion from the failed terrace roof membrane.

“The first leak was identified in April 2022 and there have been consistent leaks since then. Water damage to the building is extensive and considerable mould is now present across all building floor levels inclusive of the ceilings, walls, and floors.

“The mould presence continues to be exacerbated due to the state of the building. Areas of the ceiling have also collapsed.

“If repair works are not commenced imminently, and the damaged building elements removed, the building will continue to deteriorate and would require significantly further remediation and demolition works to make it safe.

“There are also significant occupational health and safety risks from not undertaking works due to the large building areas covered in mould that was not present at the time of the purchase.”

A government spokeswoman refused to say how much the works were expected to cost.

“The new community health hub for the CBD at 244 Flinders St – with wraparound health, mental health and social support services – remains on track to be delivered in 2026, on time and on budget,” she said.

But Health Infrastructure Minister Mary-Anne Thomas endorsed a request to seek approval for the release of millions in contingency funds.

Opposition health spokeswoman Georgie Crozier slammed the financial waste.

“Instead of taxpayer money being thrown away on an derelict building in the CBD, this money should have been spent on fixing Victoria’s health crisis and providing support to Victorians across the state,” Ms Crozier said.