POWER PROJECT “£90,000 Paid For Nothing”

Press, Volume CIV, Issue 30793, 3 July 1965, Page 3

POWER PROJECT “£90,000 Paid For Nothing”

(New Zealand Press Association)

WELLINGTON, July 3.

Parliament was today told the Government had paid nearly £90,000 in cancellation for the supply of machinery to a power station never approved. The machines were now required and would have to be purchased again.

The Deputy-Leader of the Opposition (Mr Watt), speaking during the debate on the Legislative Department estimates, said the annual report of the Auditor-General referred to the cancellation of two overseas contracts for the supply of turbines and generators for the Kopuriki power station, which had involved the Government in costs amounting to £89,918.

‘•When did the Government ever approve the Kopuriki power station? When did the Government ever order machines for the Kopuriki power station?” Mr Watt asked. (Kopuriki is about 50 miles south-westwards by road from Whakatane on the eastern banks of the Rangitaiki river. The name means “Little Belly.”] “I can find no evidence to show this or any other Government approved construction of the station. How can the Government have ordered machines for i power station that was never approved?” Mr Watt said he suggested that when it was decided not to proceed with Maraetai 11. the Maraetai machines were transferred to Matahina and the Matahina machines cancelled. “There seems to be an attempt here by someone to hide the fact that the Government is paying £90.000 compensation because the Government stopped work on the Maraetai II power station.” In addition, the machines were now required for Maraetai. which meant the Government had spent £90,000 for nothing. The Minister of Electricity (Mr Shand) told the House there was “no secret” about the machinery, and “nothing wrong” about it. He said when it was reported there would be no practical use for the Maraetai station until 1970, one of the problems had been what to do with the equipment ordered. Mr Shand said when the Government decided to cancel Maraetai, arrangements were made for the Maraetai machinery equipment to be used at Matahina. Unfavourable Report He added that the equipment ordered for Matahina would be sent to the site of the Kopuriki power station—but then the Kopuriki project was cancelled when the Government received an unfavourable report The Minister said the Government had been bound to a contract for the Matahina machinery. Interjecting, the Leader of the Opposition (Mr Nordmeyer) said: “Although 1 followed the Minister very carefully, 1 find myself very confused. The fact is that there was never a contract for Kopuriki.” Mr Shand replied that a binding contract had been entered into to the effect that the Matahina equipment would be re-activated at Kopuriki. Mr Nordmeyer criticised I

the Auditor-General’s report as misleading. Referring to the contract, he said: “I do not think it was right that the Government should have entered into a contract for a scheme that had not even been formed. “This whole business is most unsatisfactory. Things have been happening that the Minister has not been aware of.” Mr Nordmeyer said the situation represented a “most unsatisfactory state of affairs,” and he hoped the House would not have any other reports before it which gave entirely wrong impressions. Mr H. L. J. May (Opp., Porirua) said the House had been told at the time work was stopped at Maraetai, that a redeeming feature was the Government had made the decision in time to have machinery transferred to Matahina and thereby save about £90.000 in preliminary costs there. “Covering Minister” The Auditor-General’s report was probably not trying to deceive. “I would say the department itself is responsible for trying to cover up for a Minister,” he said. Mr May said a commission was needed to examine the whole project. If it was passed over, such a thing could happen again. “I want to ask the Government where it can point out in any document or ministerial statement that it bordered machinery for Kopu- ' riki.” The Minister of Works (Mr Allen) said he was prepared lat any time to offer the House a full investigation into the three schemes. It was impossible to have two lots of machinery on order for one project. Therefore the Matahina machinery was transferred to Kopuriki. Mr Allen said it was sheer, nonsense to sav the Labour Government did not plan to TO ahead with Kopuriki at the same time as Matahina. The highlv expensive village near Matahina had been built on the economics of serving both protects.

The decision not to proceed with Kopuriki was taken at the time earth faults were found at Matahina.

“The Electricity Department has been fair and square in charging machinery to a station that would have been built if fault lines had not been found.” Mr Watt said what Mr Allen had said about intentions on Kopuriki of the Labour Government were basically correct. “But neither the Labour administration, nor this administion, approved the construction of a station at Kopuriki. “Both Ministers have admitted the Government never approved the construction of a nower station at Kopuriki. ’’herefore there were never

any contracts let and therefore the statement in the Auditor-General's report is incorrect. “Now we will have to buy machines (for Maraetai II) we have already paid com-! pensation for.” Mr Shand said what the Auditor-General said was strictly correct. But although no decision to go ahead with Kopuriki was made there was a contract with the company producing the machinery. Mr Shand said the cost should really be charged to Matahina, not Maraetai 11, as Mr Watt said, but he admitted it could also properly be charged to Maraetai. Old Argument However, by delaying Maraetai construction until 1970. there would be a saving of (700.000 in interest payments. The cost of halting work would be about £500.000, which meant an actual cash saving of about £2OO 000. Mr Shand said. However, this could be lost in escalation of costs. “I’m sorry that once more this old argument about Maraetai II has been raised in the House.” Mr Shand said. He believed it was the sound and proper thing to do to stop construction, but said he did not know what political effects this brought. “We’ve never been in a position to say with certainty, our demands for electricity could be satisfied in a given period,” said Mr W. A. Fox (Opp.; Miramar).