Roadbuilders hope Government keeps promise

Contractors are desperate for the Budget to inject money into roads and hope that the Government honours a promise to remedy a funding shortfall from reduced fuel sales and cost rises.

Roading NZ chief executive Chris Olsen said last night that contractors were looking for more work after increasing their capacity by 50 per cent in the last four years on the Government's prompting.

Contractors were buoyed by assurances from Prime Minister Helen Clark and other ministers in February, after Transit NZ announced a radical trimming of its 10-year state highway forecast, that the programme would not be allowed to lose ground, he said.

Transit had warned then of having to defer many big projects by two to three years unless a shortfall of $685 million from the Government funding agency Land Transport NZ over the next decade could be overcome.

Land Transport pointed to an additional likely deficit of $400 million in its share of local road construction and maintenance.

Associate Finance Minister Trevor Mallard had at that time said that the Government was not happy with Transit's forecast and was committed to ensuring vital roading projects proceeded as planned, by making up the shortfall.

He and then Transport Minister David Parker also set up an advisory group to consider ways of reducing construction costs and streamlining Transit's contracting procedures, in the face of rising prices for materials.

Mr Olsen said the industry had been holding out against cutting spare capacity until learning today what Finance Minister Michael Cullen had in store.

Contractors Federation chief executive Richard Michael said any reduction of capacity was likely to result in higher tender prices and loss of skilled workers.

The industry had been burnt before by gearing up on the promise of more roading work, only to have to make cuts when big projects were delayed, he said.

Though Transit's draft forecast signals $12.4 billion of spending over 10 years on highway construction and maintenance, the deficit meant spending would be down to $40 million from $225 million in the next financial year.