7. SIMON POWER (National—Rangitikei) Link to this
to the Minister of Corrections
Does he have confidence in his department; if so, why?
Hon MITA RIRINUI (Acting Minister of Corrections) Link to this
Yes, but there is always room for improvement.
Collaborative working arrangements, known as alliances, share the risks between designer, constructor, and owner. The risk is lower for all parties because the rewards and the risks are shared.
Why did the Minister’s department adopt the collaborative working arrangement method, when it has been described as “one of the first of its kind in New Zealand”, with project manager John Hamilton claiming that the department was providing “a major leadership role in undertaking the project in such an innovative way”; and does the Minister think it appropriate that a Government department take on the risk of experimenting with such an untested contracting arrangement, when it has clearly led to a half-billion-dollar blowout in the construction of four new prisons?
Once again, the member is wrong. There is nothing new about closer working relationships, either internationally or in this country. I can give the member some examples. The central motorway junction in Auckland—the construction and expansion of Auckland’s central city motorway sections—was successfully completed last year. Fletcher Construction was involved in that. We understand that the cost of that programme was in excess of $1 million. Mighty River Power is another example. Would the member like me to go on?
Can the Minister confirm that under the collaborative working arrangement approach contractors lose a proportion of their margin if forecast costs are exceeded, but if costs blow out any further “it is the department only taking responsibility”, as a Department of Corrections report states; and why are taxpayers carrying the $490 million can for this suspect contracting arrangement?
Once again I repeat for the member’s benefit that closer working alliances are nothing new. The risks and the benefits of the construction are shared. If the member does not understand that philosophy he should ask his back-bench colleague from Tauranga, Bob Clarkson.
Is the Minister confident that the reviews by the State Services Commission and Treasury will find that his department was competent in managing the costs of the regional prisons project; if not, why not?
Can the Minister confirm the rumour that the corrections portfolio is in such a mess that all decisions relating to the construction of the four new prisons have been taken out of his hands and are now made on the ninth floor of the Beehive?
Ron MarkWould the Minister not accept that many of the problems that have plagued the Department of Corrections over the past 6 years, and have led to a reduction in public confidence in the department, have arisen because many of the people in the middle management tiers and in head office are simply incompetent; if he does accept that that statement has some validity, can he tell the House what progress he is making on the restructuring of that office?