New twist in $300m North Melbourne private hospital stoush

Furious locals have not ruled out taking further action against a controversial private hospital in North Melbourne, with the Allan government accused of sidelining residents.

North Melbourne residents are up in arms over an application to build a proposal to build an 11-storey high private hospital on Errol Street in North Melbourne,

Furious locals have not ruled out taking further action against a controversial private hospital project the Allan government has rushed through under its fast-track development scheme.

As first revealed by the Herald Sun, the proposed $300m private facility in North Melbourne has been fast-tracked for construction by Planning Minister Sonya Kilkenny despite strong opposition from North Melbourne residents over its height, traffic and pedestrian safety concerns.

The hospital development has been touted as a key asset in the Parkville biomedical precinct, despite another private hospital in Sunshine - which was owned by its same backer Australian Unity - last year falling into voluntary administration just 14 months after opening.

Furious locals have rejected Planning Minister Sonya Kilkenny’s claim that she engaged with the community over a private hospital proposal in North Melbourne. Picture: Valeriu Campan

Health company Australian Unity has previously stated that this project would only go ahead if a long-term tenant for the project is secured and the financials stacked up after the permit was green lit.

On Wednesday the Herald Sun revealed that Ms Kilkenny had approved the project under the government’s Development Facilitation Program.

This is despite its own guidelines stating the scheme is reserved for projects that have “demonstrated investment certainty”.

Invest Victoria determines investment certainty. But in a letter seen by the Herald Sun the state government agency gave no guarantee, only saying the project would “likely be feasible”.

The private hospital will be built on Errol Street in North Melbourne.

The Herald Sun understands residents have now filed a complaint with the Victorian Ombudsman over concerns about the application process and the speed at which the permit was approved.

In a statement, Ms Kilkenny said the government had “consulted with the community and council throughout the application process and amendments were made including changes to the setbacks and building form to increase natural light to nearby properties”.

But locals have disputed this and said Ms Kilkenny had refused to meet and her office had also not responded to repeated emails.

The site of the proposed 11-storey high private hospital on Errol Street in North Melbourne. It will replace a three-storey Mercure Hotel.

According to planning documents, the Department of Planning and Transport was first aware of the project in 2022 but residents weren’t informed until November 2024 when the permit application was publicly advertised.

Last year, an independent town planning assessment – commissioned by concerned residents around Chapman and Errol Streets – found the hospital would present an “intensity of use that is unsuitable for a site located in a residential zone”.

North Melbourne resident Bernie Cahir, who represents a group of more than 70 concerned locals, said the government had failed to consult or engage with the community.

Planning Minister Sonya Kilkenny (right) said the hospital is “consistent” with the plans for the Parkville precinct. Picture: Aaron Francis

“We welcome the addition of some conditions to the permit but are disappointed in the overall outcome, particularly regarding the built form - including height and bulk - as well as transport and safety,” Mr Cahir said.

“We are also disappointed by the lack of consultation and engagement.

“We will be discussing the outcome with stakeholders and exploring our options to achieve a more balanced outcome for residents.”

Australian Unity healthcare property general manager Chris Smith said the planning approval provided “some certainty” and will allow the organisation to “work with interested parties to progress a development that is sustainable for all relevant stakeholders”.

“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,” Mr Smith said.

On Wednesday, deputy Premier Ben Carroll said the development would proceed.

“Building this 200 bed new hospital with 10 ICU beds will be a gamechanger,” he said.