Luxury rentals, empty apartments and spending concerns raised in leaked review of Cyclone Gabrielle rebuild alliance
Sunday, 10 May 2026
A confidential preliminary review into the taxpayer-funded alliance set up to rebuild roads after Cyclone Gabrielle has raised concerns about spending, accommodation, surplus staffing and resistance to releasing information.
The review into the Transport Rebuild East Coast (TREC) alliance says concerns raised by whistleblowers “do have substance”. However, it stops short of making final findings, saying the full extent of any problems could not be determined in the limited time available to investigators.
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TREC was established in July 2023 following Cyclone Gabrielle to rebuild transport links across Hawke’s Bay and Tairāwhiti. It brings together NZ Transport Agency Waka Kotahi (NZTA) and KiwiRail as owner participants, and infrastructure giants Downer, Fulton Hogan and Higgins delivering the construction work.
A separate design alliance included engineering consultancies Tonkin & Taylor, Aurecon and WSP.
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The alliance was backed by hundreds of millions of dollars in public funding. After an initial $384 million package in 2023, Budget 2024 allocated a further $250 million.
But according to the review, the Government later reduced the alliance’s funding envelope to $602 million, shifting it to a “recovery only, no frills alliance”.
Despite that direction, the February 2025 report raises questions about spending controls and whether public money was being used prudently.
Luxury living and low occupancy
Part of the review focuses on staff accommodation.
An NZTA rental property audit from November 2024 found 27 residential properties had been rented for alliance use, with occupancy rates ranging from 32% to 100%.
Among them was 142 Battery Rd in a Napier coastal suburb, a $1.4m property later marketed by high-end realtor Sotheby’s as “a masterpiece of luxury living in the heart of Ahuriri”.
The review says the property was leased for 12 months for female senior leadership staff from October 2023 to October 2024 at a monthly cost of $6215.08.
It describes the property as including a self-contained furnished studio, with the main house containing two bedrooms and two bathrooms.
The report records allegations about whether the property was being used for its stated operational purpose, but says some claims could not be fully substantiated, in part because of limited documentation.
NZTA this week rejected any suggestion the property was misused, saying one allegation raised by the protected discloser was incorrect and that accommodation decisions were made under severe supply constraints following Cyclone Gabrielle.
The final rental payment was made in October 2024, with a further $1650 claimed for 'exit cleaning' the following month.
The review says the property was leased for 12 months from October 2023 to October 2024 at a monthly cost of $6215.08.
Total accommodation-related costs were estimated at about $850,000, and included rent, furnishings, laundry and maintenance.
Fifteen properties were furnished, with examples cited including $10,056.75 at Big Save Furniture, a $2573.50 washing machine from Noel Leeming and $56.38 spent on wine glasses from Briscoes.
Andrew Clark, NZTA’s national manager maintenance and operations, told the Sunday Star-Times this week that accommodation decisions were made under severe supply constraints after the cyclone and renting houses was often more economical than relying on hotels or motels, where availability could not be guaranteed.
He said some homes were used by individual staff members where that best met operational requirements and supported worker wellbeing during extended deployments.
The level of spending was proportionate in the context of a $650m recovery programme and an urgent need to reconnect transport links, he added.
And some properties were unfurnished and basic items were required to bring accommodation up to a suitable standard for fly-in, fly-out staff, he said.
Flavoured teas and staff with little to do
The report also raised concerns about day-to-day spending.
It says staff credit cards were used for morning tea snacks, lunches and dinners without sufficient justification.
A 250-page spending file relating to October 2023 purchases from Office Depot totalled $173,674.21 including GST.
Items included stationery, sugar, coffee and flavoured teas that the review says did “not align with normal NZTA expenditure”.
A Christmas party brunch for Napier-based TREC staff was also noted.
Travel arrangements were another area of concern.
The review says some employees booked their own flights outside NZTA guidelines which require 14 days’ notice where possible.
It also cited one instance in which a contractor allegedly flew from Christchurch to Gisborne for a one-hour meeting.
The protected disclosure also alleged some highly paid staff remained employed despite workloads dropping after funding changes, with staff described as sitting on phones and having little to do.
The review does not independently verify each allegation, but says enough concerns had been substantiated to warrant further scrutiny.
Clark said NZTA considered the spending as part of establishing temporary alliance offices following Cyclone Gabrielle, but noted that limited documentation at the time meant it was not always possible to fully assess approvals, asset tracking and the end use of some items.
Delays and information gaps ‘careless, apathetic or possibly intentional’
The document says 32 requests for information had been received from mayors, councillors, MPs and business owners relating to TREC funding, spending, procurement and conflicts of interest.
It says ministerial staff reported reluctance by TREC to share information, causing significant delays in responding to requesters.
The review further notes that requests for information were often answered slowly, only in part, or not at all.
It also raises concern about the coding and description of expenditure, saying it was difficult to get a clear picture of what money was being spent on.
“This could be careless, apathetic or possibly intentional,” the report says.
The Sunday Star-Times first asked NZTA questions in early February about concerns relating to alliance contracting arrangements.
It took until April 20 for the agency to respond. Mike Birchler, group general counsel, wrote confirming the preliminary investigation was conducted by the agency’s compliance and integrity team.
NZTA withheld the full report claiming privacy, commercial sensitivity, and confidentiality grounds but said it would provide a “summary of findings and actions” by April 30.
The agency did not answer further questions from the Star-Times and then emailed on April 29 saying the report summary would not be released until May 15.
Birchler also refused to release correspondence or communications with law enforcement and oversight agencies about referral decisions and related discussions on the grounds of substantial collation and operational burden.
The Star-Times has asked the Office of the Ombudsman to investigate.
Clark said no staff member, contractor or alliance participant has faced disciplinary action, been stood down, or had contracts reviewed as a result of the matters raised.
The alliance was established under emergency conditions following Cyclone Gabrielle, requiring rapid mobilisation while governance systems and controls were still being developed, he said.
Three protected disclosures were assessed and investigated.
“The inquiry confirmed that the issues identified related to process and control issues, not fraud or corrupt intent,” Clark said, while NZTA also confirmed that the matters weren’t referred to the SFO or police or the official auditors. Birchler said the matter was “further reviewed internally”
Clark said the preliminary investigation found that “while TREC’s rapid start was commendable in urgency, it also led to administrative and financial process problems that needed to be addressed.”
The agency had not waited for media scrutiny before acting, and had already strengthened governance settings, reset expectations across TREC and other alliances, and improved oversight, Clark said.
Because major weather events are increasing in frequency, NZTA is “embedding system level improvements to reduce the likelihood of the recurrence of similar issues in future recovery responses,” Clark said.
Both Fulton Hogan and Downer referred questions to NZTA.
The alliance contracting model is widely used in New Zealand and Australia for large public infrastructure projects.
NZTA has been involved in around 40 alliance contracts across the country, covering major transport and infrastructure projects. These include large-scale delivery arrangements such as the Ngauranga to Petone Shared Path, due to open this month, Auckland’s Waterview Tunnel, the tunnelling of State Highway 1 under Pukeahu National War Memorial Park in Wellington, and the 11.5km-long, four-lane highway connecting Ashhurst and Woodville over the Ruahine Range.
Other alliances have been used for post-disaster work, including earthquake recovery in Canterbury and major state highway upgrades across the network.
Under the model, NZTA appoints an independent auditor to assess payment claims but the agency acknowledges that there can be differing interpretations of what costs are claimable, with disputes typically resolved through a contractual governance process rather than legal action.
Former Fulton Hogan chief executive Robert Jones said the model delivers better value for money over the long term, even if it is not always the lowest upfront price. In 2016, he said traditional contracting can lead to hidden costs emerging later, while alliances allow clients to maintain control over delivery and cost risk.
However, the model came under scrutiny last year following two scathing reports into Wellington Water, which is owned by the region’s councils.
The reports found the organisation had been paying contractors, including Fulton Hogan, more than necessary for some repair work, identified weaknesses in procurement and tendering processes, and said the system was vulnerable to fraud risks.
And in 2024, a review into Queenstown Lakes District Council’s Whakatipu Transport Programme Alliance with NZTA found the council was “blindsided” by cost overruns across major infrastructure projects worth about $500 million.
The report pointed to weak oversight, under-resourcing within council, and limited visibility of risks and cost escalation, although it also said many overruns were driven by unavoidable factors such as inflation, ground conditions and design complexity.
The review found that while the alliance model was “totally reasonable” for delivering complex infrastructure, its success depended heavily on strong governance, adequate oversight and clear reporting structures, areas it found were inconsistent in practice.