Dannevirke: Fears local jobs at risk over contract

By Christine McKay -
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Roly Ellis
Roly Ellis

Tararua District Council is intent on getting better value for money from its road maintenance contract - but some are concerned the economy drive will come at the expense of local jobs.

Currently, Infracon has the contract which expires on June 30 and a Tararua Alliance has been set up by the council to produce greater efficiency for ratepayers, as the New Zealand Transport Agency (NZTA) reviews its FAR (Financial Assistance Rate for Local Authorities) for the maintenance and renewal of roads.

Tararua District Council has the fourth longest roading network in New Zealand - 1957km - with 1183km sealed and 773km of unsealed road.

"Roading is the largest activity in terms of cost for the Tararua District Council and funding from the NZTA through the FAR system makes up the majority of that funding," Malcolm Thomas, council's strategy and policy adviser, told councillors recently.

"Any changes to the FAR system could have significant impacts on either the level of local funding required (rates) and/or the levels of service delivered to local residents."

The council receives a significant amount of funding from NZTA - $8.4 million in the 2012/13 year - from a roading expenditure of $15.7 million.

But district councillors have been told every 1 per cent reduction in the funding would mean the need to increase roading rates by 1.4 per cent, or reduce the level of service, forcing the council to put the road maintenance contract out to tender.

However, the Dannevirke News has been contacted anonymously by people fearing for the 135 jobs within Infracon, if the company loses its contract.

"Can you imagine what will happen if Infracon goes from here?" a man, who didn't want to be named, said. "I think the council is determined to shut down Infracon because they reckon it's not economical. Staff at Infracon are being blamed for the company's poor performance, but that's not the case."

Tararua District mayor Roly Ellis warns it's dangerous to speculate and is reassuring people it's "business as usual".

"Until the tenders are evaluated and a recommendation put to council no one can speculate.

"All rural councils are up in arms about the review of the NZTA funding. We've told them not to bull s**t us or muck us around."

In August last year, the CHB District Council's road maintenance contract was awarded to Fulton Hogan over existing contractor of six years, Infracon. At $3.5 million, Fulton Hogan's proposal was $1 million less than Infracon's - a company jointly owned by the Tararua and CHB district councils.

Meanwhile, Tararua council has to consider how it will fund the maintenance and renewal of the 1957km of roads after the NZTA's restructured funding assistance, especially how it will repair roading following "emergency" events, which occur frequently throughout the district.

"The NZTA is in discussions with the Government and are trying to find enough money to shove into roads of national importance [Auckland, Wellington and Christchurch]," Mr Ellis said.

"At the moment, we are just holding our breath and waiting."

Switching to a partnership approach on roading adds value and cuts costs for the council as it is a more streamlined process and is a decision made, not for short-term gains, but for long-term planning, Mr Ellis says.

An alliance partnership will shoulder some of the risk and reduce costs and is in line with the lean management ethos of council.

"At this stage, the new contract is expected to run from October 1, for five years and Infracon has agreed to continue providing road maintenance services until September 30," Mr Ellis said.

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