Ashburton shooting contributes to $7m increase in Waikato DHB office refurbishment

An artist's impression of a Waikato DHB office block where beefed-up security following the Ashburton Winz shooting has contributed to a $7m refurbishment cost increase. Photo / Supplied

Significant security upgrades to avoid another Ashburton-type shooting have contributed to costs doubling for a district health board office block renovation.

The $7.7 million refurbishment of Hamilton's KPMG building by the cash-strapped Waikato DHB has blown out to $14.7m in one year, documents released to the Herald under the Official Information Act confirm.

One reason for the $7m increase was a significant security upgrade after the Ministry of Social Development was convicted in December of having an unsafe Work and Income in Ashburton, where its staff were not protected from violent clients.

The case brought by WorkSafe came after Winz client Russell John Tully shot and killed two staff members and injured two others in September 2014.

Waikato DHB executive director of facilities and business Chris Cardwell said security was significantly redesigned at the KPMG office after the prosecution to reflect concerns over "public-facing accommodation".

Other reasons for the cost blowout included:

• A 25 per cent increase of staff to be housed at the office block, from 647 to 808

• Extra consulting room and work space

• Extra technology and space for associated staff

• Extra capacity to accommodate HealthShare, a DHB partner organisation, and its eSpace team

• Extra seismic strengthening

• And an increase in construction costs of more than 10 per cent in one year.

The first business case was approved by the board behind closed doors in May last year and the updated case was heard by members in a public-excluded meeting in July this year.

The extra cost requires Ministry of Health sign-off by the Capital Investment Committee because the works now exceed $10m.

Cardwell said the case went before the committee this month and had been endorsed subject to clarification over capital phasing and lease terminations.

He said the 12,000sq m office block, previously leased by Farmers, would consolidate DHB services from nine locations across Hamilton including various mental health facilities and a diabetes service.

"Because the leases were coming to an end on many of our other locations across the city it was a once-in-a-lifetime opportunity to bring many services together in a more efficient and cost-effective way," Cardwell said.

"It also encourages collaborative working, improves the service to our clients and creates future capacity. Moving staff from the hospital campus to the CBD will also take pressure off the hospital site and free up more space to use for clinical work."

But the July business case shows at least one of the other leases was not due to expire until 2019 and it could cost the DHB $1.7m to honour that lease.

It would also cost $100,000 to move staff to the new building, as well as $565,000 to provide administration, security, rubbish, IT and a shuttle to the Waikato Hospital campus.

Sources said frontline staff including doctors and nurses felt the relocation would remove senior managers further from the pressure of stretched resources at the hospital.

Hamilton-based Labour MP Sue Moroney earlier called the blowout another example of DHB leaders not doing due diligence.

"The New Zealand and Waikato taxpayers deserve better than that. If the cost has doubled in a year that would suggest to me not enough work was done initially on what the true costs were," Moroney said.

"And this is now on the back of a DHB that's got significant question marks over the spending of its CEO, and its investment into SmartHealth."

CEO Dr Nigel Murray has been on leave since July 22, when the Weekend Herald revealed he was under investigation by the board for alleged unexplained spending of taxpayer money.

Board chairman Bob Simcock and the DHB have this week refused to answer questions on the status of the investigation.

The DHB has also come under fire for its virtual health tool SmartHealth, believed to have cost up to $15m, but is so far not meeting targets.

At the same time, the DHB is battling a $32m deficit for the current financial year.

Information released under the OIA and leaked to the Herald shows a Ministry of Health funding increase to Waikato DHB has decreased by $8.7m in one year.

In the 2016/17 financial year the funding increase was at $52.62m but in the current financial year it was $43.91m.