David Farrar: How Hipkins hid the $400 million school move blowout

The Post reports:

As parents, teachers and community leaders shivered together on that wintry morning, the project was already in trouble: costs had blown out from an estimated $63m to a staggering $405m.

$400 million to move two schools is just crazy. That is almost a cost of $200,000 per student!

By December, Hipkins had made up his mind: Bohally would be demolished and the two new campuses established there. The intermediate would move across town and be rebuilt on the old Marlborough Boys’ College site with space for up to 720 pupils.

Design work was set to start in the new year. But there was no mention of a revised budget in the official announcement. Officials, and Hipkins, already knew the cost had reached $170m, but that wasn’t made public.

So already blown out by over 150% and public not told.

Two years later and the costs kept going up, so officials brought in consultants Deloitte who reviewed the business case, and delivered more bad news: the bill was now $250m. Deloitte’s bill for that work was $356,763.

Still, the project rolled on. Officials needed a cash injection to pay for the design work and so in December 2020 advised Hipkins of the blow-out.

This time, the rest of the Cabinet was not officially advised, although Robertson was given “an A3”.

The cost has increased 300% and Hipkins didn’t tell Cabinet!

“We went through a process of a lot of consultation with the ministry and the other schools on the design … and the design concept was very good. There was just no talk about budgets at that time,” Tim Burfoot, chair of Marlborough Boys’ board of trustees said.

Of course not. It’s wasn’;’t their money, it was ours.

Rick Herd stepped down after 10 years as chief executive of Naylor Love in March.

“There seemed to be no accountability for managing the budget,” he said. “When prices went up, no-one said: ‘How can we bring this back down?’

“It snowballed. We were always asking ourselves when someone would come in and take control of the budget.”

The design was “ambitious and reflected aspirations of the community”, the ministry’s head of property infrastructure and digital Sam Fowler acknowledged.

As opposed to the aspirations of taxpayers!

“Given the scale of the cost escalation, it is appropriate to test the Minister and the Government appetite for the current approach at this price… we need direction,” officials wrote. It presented a range of options, ranging from proceeding with the $400m+ build, scaling the project back, or abandoning the relocation in favour of upgrading the existing buildings, at a cost of $200m.

Hipkins didn’t bring the options to Cabinet. He directed the ministry to proceed “under the current investment approach”, which meant getting smaller amounts approved each year through the Budget process.

So Hipkins told them to just for a bit more money each time, so Cabinet wouldn’t realise the costs had blown out 500%!

With the 2023 Budget fast approaching, Hipkins could have taken the opportunity to take the entire project and its over-run to Cabinet. He opted not to, and directed officials to continue with the approach of making Budget bids for incremental amounts.

I’d be annoyed if I was in that Cabinet!

“This was the perfect example of a project which could have been done through fantastic, repeatable designs, on a budget. And they chose not to do that. It was all architects and fancy designs and a bespoke building.”

A gold plated building charged to taxpayers than than a modest but effective one.

Hipkins declined to comment.

Not surprised.

David Farrar runs Curia Market Research, a specialist opinion polling and research agency, and the popular Kiwiblog where this article was sourced. He previously worked in the Parliament for eight years, serving two National Party Prime Ministers and three Opposition Leaders.