The Newcastle Art Gallery expansion project is costing the city's ratepayers close to $30 million, almost twice as much as previously announced.
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An analysis of the council's contracts register shows the total cost of the gallery rebuild is now $53 million, excluding goods and services tax.
The council announced in April that it had awarded the main construction contract to Hansen Yuncken for $43,840,386, excluding GST.
Other project contracts awarded in 2022, excluding GST, include $4 million to Daracon for mine grouting and moving telecommunications equipment, $2 million for principal design, $350,000 for artwork storage and $225,000 for grouting verification.
The council says it expects to recover about $1 million under the state government's Newcastle Mines Grouting Fund.
The $50.4 million in contracts awarded over the past two years is in addition to $3.6 million the council reported in February 2021 had already been spent on the project.
The state and federal governments have committed $5 million each to the work, Newcastle Art Gallery Foundation $13 million and the Margaret Olley Art Trust $500,000.
The $23.5 million in external funding leaves the council with a bill of $29.5 million, significantly more than the $16.5 million forecast last year.
A City of Newcastle spokesperson said the council's share of the project costs would come from council reserves and a $12.6 million "low-cost" Treasury Corporation loan.
A chronology of the council's gallery decisions in recent years shows how cost forecasts have changed.
In February 2021, the elected council approved increasing City of Newcastle's contribution to the project to $16.2 million, "including $3.6 million already invested".
In July 2021, the council voted to seek a $22.6 million loan from Treasury Corp for the project. The total cost was estimated at $35.6 million at that time.
In January 2022, lord mayor Nuatali Nelmes said the council's contribution would revert to $16.5 million after the state and federal governments committed funding.
At that time, and again in August 2022, the council described the work as a "$40 million expansion project".
The contract dollar figures exclude GST because these tax payments are refunded in full to local government.
The council spokesperson said City of Newcastle had been open about the project costs.
"When a specialist estimation of the project was last undertaken two years ago, the construction cost to complete the project was $40 million," the spokesperson said.
"In April this year, when the contract was awarded, City of Newcastle was upfront in both the $4 million increase in construction costs as well as the reasons for it, which were primarily due to higher costs of steel and labour in the building industry.
"This increase in costs was reported by the Newcastle Herald as well as discussed in the council chamber."
The spokesperson said the Hansen Yuncken contract value had not been altered since April and included the building's fit-out.
"The expanded Newcastle Art Gallery will be home to the most valuable art collection in Australia outside of a capital city," the spokesperson said.
"It is a service-intensive project where climate control is a critical component of its design.
"For that reason, specialist architectural advice along with structural, mechanical and electrical engineering advice are all required.
"These are costs not directly part of construction but are integral to ensuring our $126 million collection is safely protected in a fit-for-purpose building."
The gallery is not the first major council project to encounter significant cost increases in recent years.
The troubled South Newcastle beach skate park, first costed at $11 million when it was announced in 2018, will have a price tag of more than $20 million by the time it is finally completed next year.
The council's shift from Civic to new offices in Newcastle West was estimated in 2017 to cost $7 million before the council revealed in 2021 that the total bill was $17.6 million.
Michael Parris
Michael Parris reports on politics for the Newcastle Herald. He started at the Herald in 1994 after working in the ABC Newcastle newsroom. Michael spent much of his career as a sub-editor before moving into political reporting in 2017. He was a finalist in the Sports Australia national media awards for his stories about a male-only tennis club in Newcastle. He has covered NSW and federal elections, state and federal budgets and local politics. He has also written extensively about the COVID-19 pandemic with a special focus on data analysis and the effects of lockdowns on the Hunter community.
Michael Parris reports on politics for the Newcastle Herald. He started at the Herald in 1994 after working in the ABC Newcastle newsroom. Michael spent much of his career as a sub-editor before moving into political reporting in 2017. He was a finalist in the Sports Australia national media awards for his stories about a male-only tennis club in Newcastle. He has covered NSW and federal elections, state and federal budgets and local politics. He has also written extensively about the COVID-19 pandemic with a special focus on data analysis and the effects of lockdowns on the Hunter community.
