The frequency of weather-related events is one factor that has affected Whanganui's roading budget. Photo / Bevan Conley
Roading in the Whanganui district is set to cost $1.72 million more than expected by the end of this financial year, with the council approving additional debt funding to cover it.
Whanganui Alliance performance manager David Lane told the council’s Operations and Performance Committee the main concern was price escalation, particularly with bitumen.
The frequency of weather-related events was also a factor, as was the pressure currently on the national pool of funding available for emergency works.
“The issues we are experiencing here are by no means unique,” Lane said.
The roading alliance is a partnership between the council and Downer Whanganui.
Whanganui District Council chief financial officer Mike Fermor told the Chronicle day-to-day council expenditure was funded through rates, and large, one-off projects were initially funded through debt.
“We will then repay that debt off over a number of years through rates,” Fermor said.
“With this $1.72 million, that has come to the party late in the piece. It’s work that will be done now, for this financial year, and we’ve already set the rates for the roading budget.”
Fermor said the projected opening debt balance for the 2023/24 Annual Plan would be sufficient to cover the additional roading costs.
The Annual Plan is currently out for public consultation, with a rates increase of 8.2 per cent.
“If you think of your own personal expenditure and large assets you purchase that last a long time, you go to the bank to borrow for that and repay the debt,” Fermor said.
“It’s exactly the same principle for the council. The large assets we have, the Sarjeant Gallery for example, will last many years. Our [council’s] contribution to that is around $14 million now, I think.
“We don’t say to the ratepayers, ‘Pay us $14 million right now’. We will raise loans for that, just like you do for a house or a motor vehicle.”
According to Lane’s report to the committee, the major areas of projected overspending were environmental maintenance ($644,000), sealed pavement maintenance ($477,000) and the annual reseal programme ($677,000).
That programme included some deferred work from the last construction season, when planned reseals could not be completed due to weather.
Kerb and sump cleaning was projected to go over budget by $401,000.
The report said that, where possible, the extent of forecast overspending had been reduced through savings achieved in “other activity areas”.
Meanwhile, Waka Kotahi New Zealand Transport Agency general manager of transport services Brett Gliddon said Waka Kotahi and other road-controlling authorities currently accounted for more than 90 per cent of all bitumen used in New Zealand.
In 2021, Refining NZ announced it would cease onshore production of bitumen at Marsden Point Refinery.
Z Energy, which has since been the main source of imported bitumen, has announced it will exit the market in mid-2023.
Despite this, a recent report undertaken by Waka Kotahi had provided reassurances that the import market was operating well, Gliddon said.
“The feedback from industry has provided us with comfort that the open import market has been operating effectively since the switch to a solely imported product in 2021, when domestic production ceased at Marsden Point refinery.”
Gliddon said Waka Kotahi would continue to monitor and review how the supply chain was operating under its mandatory quality standards, which included requiring refineries to make an application to supply and then monitoring compliance to specifications later at storage facilities around the country.
“The standards apply regardless of whether the core product is produced domestically or imported, and we’re not aware of any issues with quality to date.”
Whanganui District Council chief executive David Langford said the additional debt funding would bridge the gap between now and the end of this financial year.
“We can either get on with the work programme we know we need to get done in front of us and incur some additional debt, or you instruct me and the team to go away and see if there are other parts of the programme we can pare back without taking undue risks to the safety and condition of our roading network,” Langford told the council.
Infrastructure work programmes like roading were facing inflation in the “mid-to-high teens”, but investment needed to be maintained, Langford said.
He said if it wasn’t, there would be a relatively rapid deterioration of the district’s roading network.
Committee members unanimously approved the additional debt funding.
The budget for maintenance, operations and renewals for the Alliance roading programme is currently set at $13,383,569, but the forecast for end-of-year expenditure is $15,103,881.
Lane said that extra expenditure was not purely to address safety issues on the roads.
“One budget that has significantly overspent is environmental maintenance, but we’re just entering the period where we do clean-up of streets from leaf-fall.
“In the first year I was in this job, there was one street that was missed on one particular occasion and there were a number of calls that came in about it.
“We’ve built up an expectation from residents now that they blow all their leaves from their properties out on to the street because they know the truck will be there on Thursday. If the truck misses, it becomes a significant issue.
“It’s completely untenable to not do that work.”
The council’s street cleaning schedule was available by calling the council, Lane said.