HQ revamp costs TVNZ $60.3m

The new office will be completed in the next few weeks after two-and-a-half years of construction, a TVNZ spokeswoman said. Ohoto / Doug Sherring

A refit of TVNZ's headquarters needed after land was sold for the convention centre-for-pokies deal has blown out by more than $23 million.

The state-owned broadcaster swapped carpet tiles for wooden floors to try to rein in costs but the upgrade of its Auckland office still cost $60.3 million - 64 per cent more than originally budgeted.

The new office will be completed in the next few weeks after two-and-a-half years of construction, a TVNZ spokeswoman said.

"Initial phases of the project identified the need for more remedial work than was originally anticipated including the need to address external cladding issues, water tightness, and bringing the building up to current building codes," she said.

The project was sparked by the $10.6 million sale of land and buildings for the controversial SkyCity international convention centre.

The casino operator is building the centre in return for a law change to allow it more gaming machines.

TVNZ's sale of the taxpayer-owned land on Hobson St was needed for the convention centre to be built to design, but that was possible only if all of the broadcaster's staff could work out of a hub at 100 Victoria St West.

That led to the plans for a major revamp which TVNZ, on the advice of surveyors, estimated would cost $36.6 million. To help meet that cost it struck a deal with the Government in 2013 that saw it suspend its annual dividend payment for two years - equivalent to about $24 million.

In June 2014 the board signed off a revised budget of $43.3 million.

Last October Treasury told Broadcasting Minister Amy Adams and Finance Minister Bill English the latest estimate was $59 to $60 million.

The Treasury briefing, released under the Official Information Act, outlined TVNZ efforts to haul in costs, including using carpet tiles.

In an earlier aide memoire in July last year, Treasury noted the project's capital expenditure "was never going to produce income nor reduce operating cost to the extent of meeting TVNZ's cost of capital".

As well as the planned $36.6 million spend on its office refit, TVNZ had also budgeted about $7 million in decamp costs, including renting temporary office space.

Treasury opposed the office refurbishment plan and request for dividend relief before its sign-off by the Government in 2013.

Once the budget problems became apparent, PwC was engaged to review how TVNZ had handled the project, and concluded that the broadcaster's board had acted appropriately.

The TVNZ spokeswoman said the increased refurbishment costs have been funded by TVNZ, and the broadcaster did not ask the Government to extend the dividend relief granted in 2013.