Rising transport, labour costs force price rethink

Increased fuel and labour costs are beginning to impact strongly on Far North District Council refuse management operational overheads.

Labour and transport costs calculated on the Labour Cost Index and the Producer Price Index have lifted by 22.9% since refuse contracts were let in August 2004 and are expected to lift by a further 2.5% by the end of this year.

Water, Wastewater & Refuse General Manager Peter Johnson said today these external cost increases, over which the council had absolutely no control, were forcing a review of user charges.

The current charges for the disposal of refuse at Refuse Transfer Stations were set when the transfer station and refuse disposal contracts were established in 2005 at $2 per bag, $30 per cubic metre for non-compacted refuse and $54 per cubic metre for compacted waste

"Cost fluctuations between August 2004 and June 2008 have added over $447,000 to operating overheads at Transfer Stations and it is projected that the figure will reach $627,000 by June 2009.

"Since April 2005 we have been able to maintain the charges we set for Refuse Transfer Stations by subsidizing costs from the general rate. But the stage has now been reached when we will shortly need to go to the council for a decision on whether to increase user charges or to ask for a further increase in the ratepayer contribution," he said.

Mr Johnson said by the end of the current financial year based on current charges, Transfer Station users would be meeting less than 18% of the total cost of refuse and recycling services.

"These charges were based on contracts enter into in late in 2004 with commercial refuse companies. However the contracts quite properly have inflation clauses, based on movements in transport and labour costs in the respective price indices. It is mainly the fuel content in transport costs which is now really starting to bite home.

"While fuel prices have been falling back in recent weeks, it is not likely to have a significant impact on overall costs and we are still not going to be able to meet our operational budgets. In the quarter ending June this year, transport costs lifted by 3.8% principally as a result of fuel costs," he said.