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New projects slashed by $225 million

Media release - for immediate release

23 February 2006

New projects slashed by $225 million

A Government announcement that it may have to slash new project funding for roading by $225 million is a serious blow to a Civil Construction industry the New Zealand Contractors’ Federation (NZCF) said today.

NZCF chief executive Richard Michael said the industry was already facing tight margins and very competitive conditions and could not be squeezed any further.

“The civil contracting industry has already geared up and employed more people on the strength of the Government’s pre-election assurances that there would be a steady stream of work for the foreseeable future,” Mr Michael said.

“Less than one year after those assurances were given they have proved to be incorrect. This is tremendously damaging for the industry, communities and the economy.”

He said industry feared that the announcement would inevitably lead to lower quality and higher prices for taxpayers as resources moved out of the sector.

“We are competing in a tight labour market, not just domestically but internationally. The skilled people required to build a world class infrastructure will just not be there and our economy will suffer as a result.”

Mr Michael said the Government’s announcement highlighted the weaknesses in the existing funding mechanisms.

“Having a variable amount available for roading each year makes planning for new construction impossible.

“New Zealand desperately needs a more certain funding system that allocates a definite minimum dollar amount for a period of at least three years going forward. Australia have managed a 5 year period in some areas so three years should be possible. “

The Ministerial Advisory Group currently being assembled would be the perfect team to initiate the feasibility of this approach.

Mr Michael said the NZCF and wider industry was keen to work with the Government in finding solutions.

“Obviously different funding streams are going to be required if we are to complete the 10 year program as originally envisaged and we would like to be around the table talking about it sooner rather than later.

“Our plea is that we get more certainty of funding and the present system clearly is not delivering this. If New Zealand is to have genuine first world infrastructure to support a growing economy and major events such as the 2011 Rugby World Cup we need coherent long term planning,” he said.

ENDS

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