Good Tidings Among Gloomy Roading Stats

A New Zealand Transport Agency review decision to retain the current level of roading subsidy for the next three years is welcome news for Tararua District Council.

The provisional indicated subsidy adjustment from the current 60% to 59% would have cost ratepayers another $130,000 per annum to maintain the district’s roading network, manager district assets Stephen Taylor told the council.

Mr Taylor’s announcement was the only bright spot in a gloomy litany of cost increases forecast by the recently published June 2008 Statistics Indices.

Significant increases nationally will impact on rural local authorities already struggling to rein in rate rises and maintain roading budgets, he believes.

Fuel and oil have risen by 39.5% in the last 12 months, transport and storage by 17.9% and road transport by 10.8%.

These rises when input into the Cost Adjustment Factors published by the New Zealand Transport Agency indicate a 9.01% rise over 12 months in maintenance and a 9.26% increase in construction.
Against this backdrop, a number of the council’s maintenance contracts would be affected because of a variance between the original value, projected cost fluctuations and the council’s budget, Mr Taylor said.

The original annual contract value of a road maintenance contract let in 2005 for example was $3,827,562, but allowing for cost fluctuations an additional $907,515.00 was required to complete the same level of work. However, the council had only budgeted an increase of $578,000.

Nor is the gloom confined to roading infrastructure.

Similar issues will arise in the utilities area with the likelihood that water and sewage treatment projects will run over budget because outcomes are predetermined and there is less flexibility to reduce the volume of work, Mr Taylor predicts.

Budgets that contain maintenance work involving machinery may also struggle to stay within budget this year, he says.