Tauranga council hits back at 'budget blowout' claims, says Covid costs out of its control

Friday, 11 February 2022

A project to provide safe access to Omanawa Falls, on the outskirts of Tauranga, will get another $2.7m.

A Tauranga ratepayer group has levelled accusations of budget blowouts at Tauranga City Council and its commissioners, on four major city projects.

However, the council has hit back, saying the increased funding is because of the effects of Covid – which are outside the council’s control, SunLive reported.

The Tauranga Ratepayers’ Alliance, whose members include elected councillors replaced by the commission a year ago, has taken aim at the council for increased funding for projects at Omanawa Falls, Elizabeth Street, Cameron Road and the destination skate park proposal.

They point to a recent council meeting, highlighting an increase in funding for the Omanawa Falls project of $2.72m, the skate park $1.38m and Elizabeth St $575,000.

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“Revelations of blowouts in these projects are unacceptable,” says Tauranga Ratepayers Alliance spokeswoman Kim Williams.

“Revelations of blowouts in these projects are unacceptable, and Tauranga deserves better leadership,” says ratepayers’ alliance spokeswoman Kim Williams, calling the extra expenditure the “tip of the iceberg”.

“Cameron Road has blown out from $45m to $74.5m on the commission’s watch,” she says.

The comments “show a lack of understanding” of how much of an impact Covid has had on New Zealand’s construction sector, Tauranga City Council commissioner Anne Tolley said.

Williams is also concerned that the spending will continue to rise, highlighting the recently approved Civic Precinct redevelopment, including a museum and library.

“On their current performance, we don’t believe our community can have any confidence that the museum and library budget will stick to $300m.”

The council has projected a provisional cost of $270m-$300m for part of the civic precinct redevelopment, named Te Manawataki o Te Papa - the heartbeat of Te Papa, not the entire project.

Commissioner Anne Tolley has hit back at the claims, suggesting they do not take into account the budgetary changes made necessary by the impact of Covid-19.

“The comments made by the Tauranga Ratepayers’ Alliance show a lack of understanding of the very significant changes affecting New Zealand’s construction sector as a result of the pandemic lockdowns and disruption of the international supply chain,” she says.

“The cost changes highlighted are not ‘budget blowouts’, but simply the effects of Covid-related delays, material shortages and under-capacity in our construction industry. All of those factors are outside of Council’s control.”

The original budget for Omanawa Falls was set in 2018, prior to the onset of the pandemic.

A budget increase of $575,000 went to Tauranga's Farmers building development in Elizabeth Street. The council says more of a contingency is needed because of delays.

Council also says it is seeking third-party funding to help alleviate the need for ratepayer funding.

The project has already been granted $1m of funding from the Tourism Infrastructure Fund.

The Omanawa Falls project aims to give safe access to the deadly beauty spot, in co-operation with Ngāti Hangarau and Tourism Bay of Plenty.

“The project has gone through a number of design changes as the falls themselves have steep cliffs, which are unstable in parts,” says council director of Spaces and Places Paul Dunphy.

“This means creating safe access is challenging.

“During the co-design process the budget, which was originally set in 2018, needed to be revised, and the cost estimate has been updated to reflect this.”

The skate park project, which does not yet have a confirmed site, will also be targeted for external funding – with as much as 50 per cent potentially sought.

On the subject of Elizabeth Street, Dunphy said the recent budget increase comes from a contingency standpoint due to delays on the Thirty Eight Elizabeth development, known as the Farmers building.

“Delays in the completion of that project mean that additional contingency budget is required to ensure the Elizabeth Street upgrade can be delivered as planned,” he says.

“However, due to underspending in the project’s wastewater and water budgets, the overall project budget is unlikely to change. The additional budget requested is contingency funding and will only be used if it is required.”

Council director of Transport Brendan Bisley says the increased funding for Cameron Road, approved in August 2021, will be split over the next two financial years and “covers the nationwide construction sector cost increases” incurred by the pandemic since initial Government funding applications went through in April 2020.

There are also additions to the plan, which relate to “safety, connectivity and amenity”, Bisley said.

This includes additional traffic signals at three intersections, crossing points for pedestrians and cyclists, the treatment of stormwater, cultural artwork funding and water supply upgrading.

“Council was successful in securing $45 million for this project from central government to support NZ’s recovery from Covid-19,” Bisley said.

Covid-19’s impact is likely to continue regionally, and across New Zealand, for the foreseeable future as the nation continues to handle the Omicron variant, Dunphy said.

“Covid-19 has caused construction delays due to lockdowns, worldwide supply chain issues affecting a wide range of materials, and significant impacts on availability of construction workers. This has led to project delays which have caused many projects to exceed their contingency budgets.”

The budget increases for the Elizabeth Street Upgrade and Omanawa Falls will be included in the draft Annual Plan, with community feedback sought in April.

Decisions will be made at the end of June 2022.

- SunLive