Prison contract ‘appalling risk’ with public money
new-zealand-national-party
Tue Jan 16 2007 13:00:00 GMT+1300 (New Zealand Daylight Time)
Prison contract ‘appalling risk’ with public money
Tuesday, 16 January 2007, 11:38 am
Press Release: New Zealand National Party
Simon Power MP
National Party Justice & Corrections Spokesman
16 January 2007
Prison contract ‘appalling risk’ with public money
National Party Justice and Corrections spokesman Simon Power says Corrections’ “appallingly risky” prison building contracts have been laid bare in the department’s recently released Financial Review.
“Most commonsense Kiwis would get a concrete price when they’re building a new home or business. Not so for Corrections, which has gambled millions of taxpayer dollars on a shoddy, unproven process.”
He is commenting on answers contained in the Financial Review, which show indicative costs for building Auckland Regional Women’s Prison were not known until three years after physical work on it began.
The cost blew out from $58.4 million in April 2003 to a final cost of $158 million.
“Any assertion by Corrections that this is due to increasing the number of beds by an extra 136 means each new bed cost $732,000.
“These papers show Labour didn’t have a clue how much this prison was going to cost until three years after construction started. That is no way to do business with public money.”
The prison was completed and opened last year, after earthworks began in 2002. But information in the Financial Review reveals that an estimate of costs (known as Target Outturn Costs) was not signed off until 30 August 2005.
“Unlike a traditional contract, the new prisons have been built without a fixed price from the beginning, under the unusual Collaborative Working Arrangements (CWAs) adopted by the department.”
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Last year’s State Services Commission report into the blow-out in the construction of Otago and Spring Hill prisons criticised Corrections for not establishing the indicative costs before construction began.
“It was bad enough that the costs for Spring Hill were not known until 20 months after earthworks began, and 17 months in the case of Otago, but three years?
“The report says delays in establishing the indicative costs mean contractors are paid based on whatever they charge, without any assurance that they are reasonable.
“That’s just asking for trouble, and is typical of the cavalier manner in which this department and this Government handle taxpayers’ money,” says Mr Power.
ENDS
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