The Scott Base rebuild is fraught with risk – including fears the US could pull out of a logistics sharing agreement, says the man hired by Government to assess the project.

But when Kerry McDonald, a respected economist and professional director, raised the potential problems, he says he was told Cabinet had already decided to green-light the expensive construction.

Stuff revealed the cost of the decade-long upgrade of the 65-year-old facility may have blown out from $344m to closer to $500m.

But Antarctica New Zealand chief executive Sarah Williamson says three Treasury co-ordinated reviews have been undertaken on the project, with the most recent, undertaken last year, complimenting its “strong project management disciplines”.

McDonald, who was chairman of the Bank of NZ from 1996 to 2008 and an Antarctica NZ board member, from 2003 to 2009, was asked by Treasury to chair a risk committee and pen a report in May/June 2017.

“It's a very expensive project, and it's very high risk,” he said.

“You get bad weather, problems with logistics and the cost goes through the roof. But there are also a significant number of operating risks.”

The most significant he identified was New Zealand’s lack of military air capability and an ongoing logistics sharing agreement with the United States.

“That agreement is critical to New Zealand's operation of Scott Base because it means most of New Zealand’s travel and freight is carried on American planes.

“It works because the Americans have a major base at McMurdo Sound [3km from Scott Base]. They spend tens of millions making, and maintaining the ice runway at the start of each season. The cost is astronomic. If you take the Americans out of the equation it's very difficult to see a viable Scott Base.”

The US also bears the cost of breaking a passage through the Ross Sea ice, giving port access, he said.

Australia regularly petitions the US to move its national programme from Christchurch to Hobart, he said.

“We're just lucky Christchurch has been more convenient,” he said.

“I've seen a number of reports done by US officials on the economics of McMurdo, and it is touch-and-go whether it's better to provide logistics support through South America or through New Zealand or Australia.

The economics of closing McMurdo completely and supplying other bases through South America were identified as attractive.

The ability to supply Scott Base without a logistics partner is “marginal to non-existent”, he added.

McDonald chaired a meeting for about 30 ‘interested parties’ at the Ministry of Foreign Affairs in Wellington on May 15, 2017 to discuss his committee’s report, which was to be submitted to Antarctica New Zealand.

The then-chief executive Peter Beggs was invited to comment. “He said something like...all of this stuff about logistics, airfields and all the rest of it, we don't have to worry about because Cabinet has already approved the project,” McDonald said.

There was then a brief discussion during which “no-one else supported his [Begg’s] view” and the meeting continued, McDonald said.

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Beggs, who was sacked from the agency in 2018, rejects this account of the meeting but would not be interviewed.

Former Foreign Minister Gerry Brownlee said there was “goodwill” among National-led government ministers towards the project from 2016, when a white paper identified the frozen continent as strategically important to security.

“There was an understanding inside Cabinet that we would be funding a rebuild of Scott Base...that doesn’t mean we wouldn’t be interested in any risk assessment,” he said.

“You have to know the risks. You're seeing, right now, the effects of a risky project, where the costs are starting to blow out. The expectation would have been that all that was in place.”

The project wasn’t funded until last year’s Budget. A business case with three options – renew, redevelop or reimagine – was presented to Cabinet in 2018. It included a commentary on risk management and key delivery risks. The paper does not refer to any threats to the annual US agreement, but identifies other problems including the challenging environment. Treasury has continued to identify the project as ‘high-risk’.

Williamson said her agency was required to take part in three week-long reviews, co-ordinated through Treasury and conducted by a panel of independent experts.

The 2021 review “complimented the project on strong project management disciplines, extensive stakeholder engagement and management, and strengthened project governance”.

The redevelopment “rated well, albeit there is an acknowledgement of extreme Antarctic conditions”, she added.

Williamson said Antarctica New Zealand “continues to enjoy an excellent relationship” with the US programme since it started operating out of Christchurch in 1957.

“Christchurch is the closest gateway city to the Ross Sea region, and there is no indication that the United States would choose to leave. McMurdo Station is the logistics hub for US South Pole station. While the US remain operating in the Ross Sea region, they will continue to require their infrastructure including wharf and runway.”

The new base would allow the agency “to continue supporting world-class science for at least the next 50 years”.

Stuff has asked for a copy of McDonald’s risk assessment, which could not be supplied by McDonald under the terms of his contract.

McDonald said the project was “the standard political monument”. “If you repaint a building, that's not significant. If it's a new building, someone gets to own that, open it and gets the kudos.”