Defence Minister Ron Mark put the blame of the blowout squarely in the lap of the previous Government. Photo / Mark Mitchell
Defence Minister Ron Mark put the blame of the blowout squarely in the lap of the previous Government. Photo / Mark Mitchell
The expected cost of refitting a key Government building, housing top-secret classified material for New Zealand's spy agencies, has shot up from $30 million to $110m.
A Treasury report, obtained under the official information act (OIA), lays bare the total estimated cost of the redevelopment of the new Defence Forceheadquarters in Wellington, next to Parliament.
The $80m cost increase represents a 266 per cent jump on the initial estimated refitting cost as the project was reconfigured from a seven to a 13-storey building.
He said the then-Minister for Economic Development – now National Leader Simon Bridges - "grossly underestimated the true cost" of the building's redevelopment.
Although some of the cost can be attributed to earthquake strengthening after the 2016 Kaikoura earthquake, a significant proportion of the cost increase was to make it suitable for New Zealand's spy agencies to operate from.
"Significant parts of the building have been designed with additional security requirements to provide for Secret and Top Secret classified material," the report said.
The majority of the "security requirements" costs have been redacted from the OIA as making them public would "prejudice the security or defence of New Zealand".
In 2015, the Ministry of Business, Innovation and Employment (MBIE) – which was tasked with assessing refurbishment costs – estimated the cost of the seven-storey fit-out of the Bowen State building, later renamed Defence Force House, would be $30 million.
It did say, however, there was a "high risk" that its initial estimates would be "inadequate" and additional costs would inevitably be included, the Treasury report said.
A Defence Force spokesperson said the re-fitting had to include new security requirements, and equipment so it can continue to operate should a natural disaster occur.
An impression of what the building will look like once works are completed. Image / Supplied
For example, electrical generators would kick in so the headquarters would be able to operate in the event of power being knocked out in the city.
A number of Government agencies, such as MBIE, the Ministry of Transport, Pharmac and the Earthquake Commission, were initially meant to move into the Bowen State Building.
But after the Kaikoura earthquake, the New Zealand Defence Force (NZDF) was forced to relocate to the building, after three of its buildings were damaged – including the old Defence House which was demolished.
In August 2017, the then-National Government agreed that a "security and intelligence sector cluster" would be housed in the Bowen State building.
That cluster consisted of the NZDF, Ministry of Defence, the Government Communications Security Bureau (GCSB), the New Zealand Security Intelligence Service (NZSIS) and the Department of Prime Minister and Cabinet (DPMC).
None of the three agencies, however, would say how many of their staff were located in the new Defence House for security reasons.
In 2017, NZDF commissioned its own assessment of how much the fit-out would cost, given the building would be home to the security and intelligence sector cluster.
In October last year, NZDF's assessment revealed the final estimated cost of the fit-out of the now 13-storey building would be $110 million.
The Defence Force spokesperson said the final cost was less than $110 million, but it was unable to reveal the exact cost until next year.
The Bowen State Building is owned by NZX-listed Precinct Properties, which owns many significant buildings across the country, such as the ANZ Centre and the PwC Tower in Auckland.
The Government leases space in the Bowen State Building from Precinct.
According to the NZDF spokesperson, a commercial property landlord provides general infrastructure ready for tenant-specific fitout, which the tenant then pays for.
Minister Mark was critical of the previous Government's due diligence of the building's redevelopment.
"If more robust work had been done at the time, these costs may have been identified before signing off Defence's occupancy of the building, because they were primarily driven by the mandatory security requirements that were set by the previous Government back in 2014."
Defence Minister Ron Mark tours the new building earlier this year. Photo / Supplied
