Power Simon: Questions for Oral Answer — Questions to Ministers 
Power Simon: Questions for Oral Answer — Questions to Ministers 
[Volume:634;Page:5763] 
11.  
SIMON POWER (National—Rangitikei) 
 to the  
Minister of Corrections 
: Does he have confidence in his department; if so why? 
Hon DAMIEN O'CONNOR (Minister of Corrections) 
: 
 Yes but there is always room for improvement. 
Simon Power 
: How can the Minister be confident in his department when the indicative cost for Spring Hill prison was not known until June this year 20 months after earthworks began and the indicative cost for Otago prison also known as the “Milton Hilton” was known only in May 17 months after physical work began; and did Cabinet know that the estimates it was being given every time the Minister asked it for more money were not even based on agreed costs? 
Hon DAMIEN O'CONNOR 
: All of these issues have been thoroughly canvassed by the State Services Commission. Treasury is also inquiring into the processes that effectively managed one of the largest building projects in this country. Those four new prisons have been and will be completed on time. I think that is a major achievement. 
Simon Power 
: Can the Minister confirm that the State Services Commission report states that the indicative target out-turn costs should have been calculated before construction began because the delay meant that contractors were paid based on costs they claimed without any assurance that those costs were reasonable and with no incentives to save money; and how can the public be certain that contractors were not creaming it at taxpayers’ expense during that hiatus? 
Hon DAMIEN O'CONNOR 
: The inquiry by the State Services Commission uncovered no extortion by any contractors. The report did state that without the collaborative working arrangement management system it was unlikely that these projects would have been completed on time. They have been and will be completed on time and that is a major achievement. 
Simon Power 
: How can he be confident in his department when a report by Opus International Consultants done for Treasury stated that it could not find any clear rationale for the decision to adopt collaborative working arrangement contracts for the construction of new prisons that it was “untested in New Zealand” and “a significant departure from the previously agreed and well-tested methodology”? 
Hon DAMIEN O'CONNOR 
: This was effectively one of the largest construction projects undertaken by the Government in this country. The collaborative working arrangement was a new management regime. Internationally there are many other variations of that regime to manage such large projects. The State Services Commission and Treasury I am sure as identified have said this was an appropriate method of management. 
Simon Power 
: Can the Minister confirm that even before the collaborative working arrangement for the earthworks at Spring Hill could be signed off the cost estimates were already $9 million over budget which led a Treasury official to state in an email: “I can’t see how Corrections can enter into a contract that knowingly exceeds the amount Cabinet has specifically allocated for Spring Hill.”? 
Hon DAMIEN O'CONNOR 
: I am sure that email from a Treasury official will be part of the investigations. I await the report from Treasury. The report from the State Services Commission stated the collaborative working arrangement was appropriate for a project of that size. 
Simon Power 
: Can the Minister confirm the finding of the State Services Commission that there is no recorded decision by the project steering group to adopt the collaborative working arrangement methodology which was “heavily dependent” on the advice of the project director John Hamilton and the New Zealand expert on collaborative working arrangements Stewart Rix—who according to answers to my written questions has benefited by $1.3 million plus expenses to date—because the Department of Corrections had “very little knowledge and understanding of collective working arrangements”; and how can he maintain that this methodology has not lost the taxpayer hundreds of millions of dollars in budget blowouts? 
Hon DAMIEN O'CONNOR 
: I ask the member to read and quote the full report in this House. That report did not expose any major problems. It did however identify that at early stages of the project there were shortcomings and changes were made. I am confident that the completion of these projects on time will be acknowledged as a major achievement for the Government and the corrections system.