Refurbishment debacle

The Ministry of health has been accused of “serious financial mismanagement” which at least looks like a mess in relation to the refurbishment of their head office.

Stuff reports:

A multimillion-dollar miscalculation on the $24 million refit of the Health Ministry’s head office in 2014 has bought a strong rebuke from Treasury, accusing the ministry of “serious financial mismanagement”.

Health Minister Jonathan Coleman also confirmed it led to a major shakeup in the the ministry’s finance department.

Independent auditors were called in to investigate how the ministry “miscalculated” the levels of its cash reserves, and came up short of funds for the refit.

Director-General of Health Chai Chuah said the ministry’s corporate finance team made a mistake in its forecasts, TVNZ reported.

It said the Treasury was very concerned about the funding miscalculation, citing papers describing it as “serious financial mismanagement”.

In a letter to Chuah, Treasury chief executive Gabriel Makhlouf said the “the new bid for funding brings into question the governance and financial management practices of the ministry”.

This is seriously embarrassing for a Government that promotes itself as a sound financial manager.

And there’s another potential embarrassment as well:

Meanwhile, the Ministry of Business, Innovation and Employment is facing a major problem in its payroll system that may affect up to 3000 employees.

MBIE Minister Steven Joyce said the issue involved how holiday entitlements and shift pay were calculated. It could potentially involve millions of dollars but ministry chief executive David Smol had told him it would involve only small amounts in individual cases, though Joyce could not put a dollar figure on those.

The system was installed more than 10 years ago at the Department of Labour but was used for the merged super-ministry MBIE.

Holiday entitlements and pay calculations are core functions of a payroll system.

How this could have taken ten years to be identified is hard to comprehend. With a big payroll in particular it is normal that some employees would query pay calculations. So why wasn’t a problem found in the first year or two?

Holiday entitlements are complex and can be very difficult to manage and are farcical under some situations, perhaps the Government could address that at the same time they sort out the MBIE payroll.

 

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22 Comments

  1. Not a good look for govt wanting a fourth term. Key needs to start further front bench refreshment.

    Reply
  2. Jeeves

     /  8th March 2016

    Just imagine for one moment if a DHB had made a mistake like this….
    Heads would be rolling in droves.

    My personal theory… a mistake cynically allowed to pass through the checking process because people in places don’t like Chai Chuah being in charge.

    Whatever happened to the Health Benefits Limited megastore? Vanished quietly into thin air.
    The national IT infrastructure project? A never ending leviathan eating vast sums of Consultant Cash.

    Reply
    • @ Jeeves – and let’s not forget what the fallout would be if it were a Maori organisation? Well, it wouldn’t be ‘fallout’, it would be global thermo-nuclear war.

      Reply
  3. Alan Wilkinson

     /  8th March 2016

    Having been responsible for a billing system I can tell you that if you over-charge you will hear about it within microseconds and if you undercharge you will never hear for decades.

    I’m guessing it is the same for payrolls so if this was an overpayment it would never have been reported.

    Reply
    • Alan Wilkinson

       /  8th March 2016

      … referring to the MBIE case.

      Reply
    • Pete Kane

       /  8th March 2016

      I see you got a down tick from someone there Alan. Feelings of guilt perhaps?

      Reply
      • Alan Wilkinson

         /  8th March 2016

        Nah, just Lefties exercising their daily bile portal, Pete.

        Reply
        • Mefrostate

           /  8th March 2016

          Damn Lefties again!

          Reply
          • Alan Wilkinson

             /  8th March 2016

            Who else do you think routinely downticks absolutely anything I say, Mefro? Of course it is.

            Reply
            • Mefrostate

               /  8th March 2016

              Probably because you say stuff like “just Lefties exercising their daily bile portal”.

            • Jeeves

               /  8th March 2016

              Key derangement syndrome is matched only by Reds under the Beds syndrome.

            • Alan Wilkinson

               /  8th March 2016

              Probably, Mefro. They have no sense of humour.

            • Mefrostate

               /  8th March 2016

              Good point. “just Lefties exercising their daily bile portal” is a classic.

            • Alan Wilkinson

               /  8th March 2016

              Glad you liked it, Mefro. So did I.

  4. Pete Kane

     /  8th March 2016

    Slightly right field, but credit where credit is due. This term has shown just what a skilled political manager, Tony Ryall was, as Health Minister.

    Reply
  5. Pete Kane

     /  8th March 2016

    I’ve heard some appalling lines of defence by Ministers during urgent debates, but this one has got to be up there.

    http://www.inthehouse.co.nz/video/41892

    Reply
  6. John Schmidt

     /  8th March 2016

    The holiday debacle is not limited to Government departments or entities. Private Enterprises is likely to have the same problem. What has emerged now adds context to the issues the department I worked for faced many years ago. Staff representatives realised about 12 years ago that an error with holiday payout existed. It took a year to convince the department of the error. The reason it took so long is because they were checking other departments to see their interpretation. It now turns out that the information the seeked was incorrect hence why it took so long for my department to understand the error which was then fixed. To discover 11 years later that the same mistake exists across many departments is dissapointing. I think if this was investigated further the source of the incorrect interpretation will be state services as government departments always seek their advice on these types of matters or they direct government departments. So I would be looking at State Services as the source of the problem not the individual government departments.

    Reply
  7. John Schmidt

     /  8th March 2016

    Reference holiday pay, sbout 12 years agp staff representatives from the department I worked for noticed that an error with holiday payout existed. Took a year to convince the department of the error and to correct. Departments consult with others when these issues arise to check on interpretations before responding to staff queries. It now appears that the information exchanged was incorrect hence why it took a year to convince them of the error.
    Because this could be a systematic problem I would be looking beyond the government departments to find the root cause and that is likely to be State Services as they usually dictate how departments should act towards their staff and advise of interpretation of law or policy.

    Reply

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