10 Jul 2018

Ministers and Corrections at odds on Waikeria prison contract

7:46 pm on 10 July 2018

The head of Corrections has contradicted statements made by senior government ministers in Parliament, that a contract for the public private partnership (PPP) to build the new Waikeria Prison was already in place when the government came to power.

Ray Smith - Chief Executive Corrections

Corrections chief executive Ray Smith says the signing of the public private partnership Waikeria contract was still some months away from when the new government came into power. Photo: RNZ / Claire Eastham-Farrelly

Ray Smith told MPs today, while there were a number of agreements with the consortium the National government had been working with, the signing of the formal contract was still some months away.

The coalition government has been under pressure to explain why it has proceeded with a $750m PPP after Labour MPs vocally opposed using the private sector to build anything other than transport infrastructure.

National said the fact the contract had not been signed showed the coalition government could have pulled out of the PPP if it had really wanted to.

"Whether the government has been deliberately duplicitous or simply chaotic... it is yet another example of its shambolic handling of law and order," National's Corrections spokesperson David Bennett said.

Back in June, while defending the decision to stick with the PPP, ministers David Clark and Andrew Little both told Parliament there was already a contract in place "and it cost $34m".

Corrections Minister Kelvin Davis was drilled about that at select committee, and was asked by opposition MPs why the government had decided to push ahead with the PPP.

Corrections Deputy chief executive Jeremy Lightfoot told the committee in December last year a decision was made to appoint a "preferred bidder" for the PPP arrangements and provided advice to the minister about how that "could be pursued".

National MP Nick Smith accused the government of misleading voters by campaigning against PPPs, then happily adopting one once in power.

Mr Davis had one line in response, one he repeated to every question about the PPP: "I'm happy that the prison will be built, and Corrections will be running it".

Speaking after the hearing, Corrections chief executive Ray Smith would not be drawn on whether Parliament had been misled.

However, he said there would have been a cost to the government if it had decided to abandon the PPP.

"Fortunately, the project has gone ahead... if the project had been cancelled altogether there would have been a cost associated with that, but we're not in that position."

There would have been a $5m "liability" for the government if the agreements had been breached, plus the cost of the work that had already been agreed to, Mr Smith said.

Mr Bennett said it was clear the statements from Dr Clark and Mr Little "were incorrect" but "whether ministers were being deliberately misleading or were simply confused remains to be seen".

Mr Little said he was not going to "dance on the head of a pin" when asked if he had misled Parliament.

He said the question in the House was about a "contract" and he was referring to "procurement agreements" for the design work.

"There was an agreement let and entered into, and I'm confident about the advice that I received in a meeting with other ministers about the cost of exiting the agreement."

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