The country's centrepiece commemoration of World War I has turned into a $12.7m headache for the Government after Sir Peter Jackson was almost three years late in delivering a high-profile recreation of Gallipoli trenches.

The Great War Exhibition at Wellington's landmark Dominion Building was initially intended to run for four years during the centenary commemorations of the 1914-1918 conflict, but its main attraction supplied by Jackson only opened this Anzac Day - months before the project is due to close.

Documents obtained under the Official Information Act show the 32-month delay to complete the Trench Experience - which matches the time it took the United States to enter World War I - compounded problems attracting visitors and sponsorship.

Taxpayers now face a $12.7m bill to restore the building to its original state, or a possible $50m cost if the Government has to buy the property to create a permanent museum.

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Associate Minister of Arts, Culture and Heritage Grant Robertson said officials had been quick to bring him up to speed on problems with the Trench Experience, Jackson's painstaking recreation of the catacomb-like conditions in 1915 at Quinn's Post.

"I don't want to completely bag it because I think it's a high-quality tourist attraction. But quite clearly there have been issues with the running of the exhibition and the delays that have occurred. That's unfortunate."

Associate Minister of Arts, Culture and Heritage Grant Robertson. Photo / Mark Mitchell
Associate Minister of Arts, Culture and Heritage Grant Robertson. Photo / Mark Mitchell

Clare Olssen, executive producer for Wingnut Films who worked with Jackson on the project, said the director's involvement was entirely voluntary.

"He did not request this exhibition - in 2013 he was asked to be involved in it, and he's worked on it since, as time permits around his professional commitments. By the time they approved the funding, well over a year had passed, and by that time Peter had received a green light on Mortal Engines - his day job," she said.

Olssen said the finished project was "world-class, and technically mind-bending".

"It's groundbreaking in its ambition, and that simply takes time to figure out and perfect."

The late delivery of the Trench Experience raises the prospect the multimillion-dollar project will have a short shelf-life because the lease expires in November and months of work - part of the $12.7m in make-good costs that will be billed to the ministry - need to be incurred to restore the building to its original state.

Sir Peter Jackson during the Anzac Day Dawn Service at the National War Memorial in Wellington Photo / Mark Mitchell
Sir Peter Jackson during the Anzac Day Dawn Service at the National War Memorial in Wellington Photo / Mark Mitchell

The make-good provision caused alarm with the Government's auditors, who required then-Minister Maggie Barry to account for the future spending and seek approval from the Minister of Finance for unauthorised expenditure. Barry signed off the spending during the caretaker period after the election in October.

Dame Fran Wilde, chair of the National Military Heritage Charitable Trust which runs the Great War Exhibition - Jackson also serves as a trustee - provided a written statement to the Herald saying the film-maker's generosity had been instrumental in making the exhibition possible.

"The original financial model proved unsustainable. In particularly, projected visitor numbers were overly optimistic ... The Trench was certainly delayed and this had an impact on projected income, but it has not been the only issue."

Wilde said she was brought on to the Trust only in late 2015, and earlier financial accountability issues had occurred before her arrival. "I understand that because speed was of the essence, the quality and timeliness of the exhibition were given priority over the cost," she said.

Pepper's Ghost, a NZ solider talking through the dangerous job of tunneling at Gallipoli at the Great War Exhibition's long-delayed Trench Experience.
Pepper's Ghost, a NZ solider talking through the dangerous job of tunneling at Gallipoli at the Great War Exhibition's long-delayed Trench Experience.

Installation of the apparently temporary exhibition involved the demolition of stone walls, and some large exhibition pieces loaned by Jackson - including artillery pieces and a tank - had to be installed through the roof with a crane.

The Government has tried to extend the lease and salvage the exhibition, signing off $660,000 in additional funding in August for this purpose.

However it has run into opposition from tenant Massey University, which owns the building with the Tenths Trust. The university says it needs to reclaim teaching space for its arts programme.

Briefings late last year said: "Without the lease extension, the exhibition would need to close as early as mid-2018 to allow time to deconstruct and make good."

The standoff has led to Cabinet approving the preparation of a business case to buy the building outright and avoid the make-good provision by making the exhibition part of a permanent war museum.

Such a move would likely cost the taxpayers tens of millions of dollars more, with the valuable building - on more than 6ha of central city property - having a capital valuation of $50.2m.

Robertson confirmed all options were on the table, including purchasing the building outright. "Work and discussions are underway on that, but my current focus is on discussions with Massey about the lease."

Former Minister Chris Finlayson, who held the arts, culture and heritage portfolio from 2008-2014, said he was supportive of buying the building to use as a national war museum.

"John Key and I were keen. We were chatting with Sir Peter at the [GWE opening in 2015] and we agreed; 'This is jolly good and we should make it permanent'."

Finlayson said efforts to acquire the building had been held up by an inability to settle on an agreed price with its owners.

Former Arts, Culture and Heritage Minister Chris Finlayson. Photo / John Stone
Former Arts, Culture and Heritage Minister Chris Finlayson. Photo / John Stone

Jackson, in a written statement to the Herald, said a permanent future for the GWE "has never been guaranteed".

Citing facilities in Canberra or London's Imperial War Museum, Jackson said he was aware of discussions about the Government possibly buying the building as a permanent museum, "but that requires a commitment from Government, which to date, I don't believe has been forthcoming".

The exhibition is a public-private partnership, funded by both Jackson and his Wingnut Films, the Ministry for Culture and Heritage (which has put it $8.5m to date), Lottery Grants Board and gaming trusts ($3.6m) and sponsor ANZ ($1.6m).

Jackson's contribution is unclear, but is in the millions. Ministry briefings suggest he contributed at least $2m to the Trench Experience, and 2016 accounts to the trust overseeing the GWE show entities related to Jackson were owed $4.2m - said to have been charged at cost - for creating exhibits.

Wingnut's Olssen noted many of the military artefacts on display were loaned free of charge from Jackson's personal collection: "You must understand that the GWE is simply a labour of love for Peter because he's hugely passionate about the First World War and he wanted to mark the centenary and share that passion with others."

Sir Peter Jackson at the opening of the Great War Exhibition in Wellington. Photo / Mark Tantrum
Sir Peter Jackson at the opening of the Great War Exhibition in Wellington. Photo / Mark Tantrum

Briefings to ministers about the Great War Exhibition flag how delays to Jackson's Trench Experience - originally planned to open in August 2015 - cascaded into missed attendance targets and problems securing sponsorship, leading to a financial crisis.

"The expected visitor numbers were ambitious and the expectations on sponsorship did not come to fruition, creating some financial challenges," ministry officials conceded in November.

"The lower-than-expected revenue is in part due to the delays with Sir Peter's build of the trench experience."

These problems led to plans being drawn up to raid to Te Papa's capital budget for $1.3m to make up a shortfall - later reversed after opposition from the national museum.

Within a year of opening ministers were being briefed about the need for "delicacy around the funding arrangements given the significant financial challenges facing the GWE" and the ministry having to provide assistance to deal with "financial systems and accountability issues".

A briefing in February 2017 said: "Sir Peter has made some modifications to enhance the experience which has contributed to delays."

Four months later another update said: "Construction of the Trench Room has started but is far from complete".

Barry received regular briefings as the Minister of Culture and Heritage from 2014-2017 as the crisis loomed, did not return repeated calls over the past month.

Last month a guide at the Trench Experience told the Herald the foul odours intended to approximate the scent of death and defecation experienced by soldiers during the campaign had to be dialled down after they were found to induce vomiting.