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Chch councillors rue govt funding pullback in successful $2.2B SCIRT programme

Tuesday 7th May 2019

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Christchurch city councillors were left ruing central government's decision to dial back its share of the largely successful $2.24 billion programme to rebuild and repair the city's horizontal infrastructure such as water pipes and roads. 

The council's finance and performance committee last week received a final report on the Stronger Christchurch Infrastructure Rebuild Team - SCIRT - and were largely complimentary on the programme's ability to deliver about 740 individual projects within budget.

However, the Crown's 2016 decision to change its cost-sharing commitment, saddling council with an extra $67.1 million of cost, still stuck in the craw of councillors. 

Committee chair Raf Manji, who unsuccessfully sought to oust former minister Gerry Brownlee from his Ilam electorate seat in 2017, said the government made a serious error in continually dialling back how much money it spent on the rebuild simply to get its own books back into surplus. 

"When people ask me to sum up the rebuild in a few words, I say 'overpromised and underbudgeted'. That’s never a place you want to be."

The SCIRT alliance - comprising council's Citycare Group, Downer EDI, Fulton Hogan, McConnell Dowell, and Fletcher Building's construction arm - was deemed to be a very successful way to rebuild infrastructure, with costs significantly lower than the initial $2.94 billion estimated for the designated work. 

Rod Cameron, SCIRT value manager, told the committee that the work was initially split equally among the contractors, but as the projects went on, the more successful ones got more work. Without identifying them, he said one contractor picked up 24 percent of the work, one got 17 percent, and the other three were in between. 

The alliance also included a pain/gain provision, where the incentive payments or rebates were shared equally. As it stood, the alliance ended up $12 million over budget, triggering the 'pain' rebate, something Cameron said was a good performance given the size of the programme.  

The report to council acknowledged the funding debate about SCIRT but said a significant sum was spent by the government to repair and restore horizontal infrastructure. 

"The city could not have this without the assistance of the government and the progress has been impressive," the report said. 

The 2013 cost-sharing agreement was to have seen the Crown's contribution capped at $1.8 billion and the council's at $1.4 billion. The now defunct-Canterbury Earthquake Recovery Authority was to pay for 60 percent of eligible three waters work and the New Zealand Transport Agency was to pay for 83 percent of eligible road, bridge and retaining wall repairs. 

That arrangement got scaled back when a new government policy meant the Crown's cost-sharing was calculated on the depreciated value of the assets, not the replacement cost of projects. That capped out at $1.69 billion and effectively transferred $67.1 million of cost on to the council. 

Christchurch City Council staff said better planning by funders in future arrangements could deliver a better result for the public, such as by better coordinating the timing of projects to avoid some of the double-handling that had occurred in Christchurch. 

"In hindsight, it may have been prudent for CCC to have considered fully funding this type of work, taking advantage of the economies of scale and integrating this additional work with the SCIRT programme," the staff report said.

"The same applies to other utility companies, in Christchurch’s case Orion and Enable and private developers. This would require greater communication on where work is planned and seeking their cooperation. The effort would be worthwhile." 

The council's books were stretched by the rebuild, and at the time the local authority considered selling assets to meet its share of the bill. 

(BusinessDesk)



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