Wellington council observer advocated for $100m-plus cost blowout project

Friday, 15 November 2024

Lindsay McKenzie, the Crown observer keeping an eye on the Wellington City Council purse strings, advocated for an upper South Island dam that blew out in cost by more than $100 million.

McKenzie was the Tasman District Council chief executive in 2017 when he switched from cynicism about the then $82.5m Waimea Dam to becoming a self-described “advocate” for it while acknowledging it was high-risk. By the time the dam became fully operational in September it had cost $204m and remains under litigation.

Waimea Irrigators and Water Users consultant Brian Halstead, who warned before work started that the dam would blow out in cost, questioned McKenzie’s appointment.

“The decision to go ahead [with the dam] was by the councillors and mayor but [McKenzie] should have had better judgement,” Halstead said. The cost of the dam was about evenly split between the council and irrigators, he said.

After the Wellington City Council was forced to amend its long-term plan, after voting down selling its 34% stake in Wellington Water, Local Government Minister Simeon Brown appointed McKenzie as his eyes and ears on the council. Much of his reasoning was around the council’s handling of finances.

A lot of the council’s current financial strife is due to its own cost blowout with fixing the Town Hall jumping from $182m to up to $329m, mixed with decades of under investment in pipes, and big costs such as a planned revamp of the Golden Mile. Meanwhile, residents have had years of big rates rises while the long-term plan McKenzie is helping amend has years of hefty increases planned. McKenzie is costing the council $1000 each day he works.

Former Treasury economist Peter Fraser was also in 2017 sounding the alarm about a cost blowout at the Waimea Dam and warning it would leave ratepayers “on the hook”.

“These schemes: Try to find anything that comes in on cost,” he said. Then-Tasman Mayor Richard Kempthorne said there was a 95% confidence the dam would be constructed at or below the estimated cost – then $82.5m.

Fraser on Thursday said the $100m-plus blowout was what he expected, but some councillors thought he was an “idiot” at the time. The district council was aware of his warnings but he was not sure how much McKenzie, then about to leave the job, knew, he said.

His dealings with McKenzie left a good and “professional” impression.

“I think Wellington could do a shitload worse,” he said.

Waimea Water chief executive Mike Scott said the cost had risen to $104m by the time he started in 2019 because further investigation showed the scale of the work.

The extra $100m after that was about half spent on fixing geological issues, with a quarter on electrical and mechanical costs and another quarter due to issues such as Covid and supply chain problems.

“Hindsight is wonderful management management tool,” he said.

“Any dam project … people know there is a risk.”

McKenzie remained “very highly thought of” within the Tasman District Council and by local irrigators.The dam, which opened this year, was giving water security to the region, he said.

Brown was asked it he knew of the Waimea blowout when he appointed McKenzie. “Lindsay McKenzie’s views on a Tasman District infrastructure project had no bearing on his appointment as a Crown observer to Wellington City Council,” he said in an emailed statement.

McKenzie, who was recommended for the Wellington job by long-time National MP and now Nelson Mayor Nick Smith, started on Wednesday. He refused to comment on the Waimea project.