Road construction inflation soars …

We start the News for 2012 with challenging news on the cost front. Last financial year, the cost of building and maintaining roads in Australia soared upwards by 11%; I think that makes it the single largest increase in any year on record.

Spend any time out on the roads and you’re always left with a nagging doubt about just how the road agencies can afford to have so much heavy gear parked up and seeming not to get used.

And there are also some questions to be asked of State Governments who hand all their maintenance work to the local Council or Shire rather than tendering it out. Are they really getting the best deal possible?

Source:  Australian Govt – Bureau of Infrastructure, Transport and Regional Economics

But the bottom line is that since the early 2000s, inflation of the cost of building Australia’s roads has been regularly running at more than double and even more than three times the rate of general inflation across the economy.

Why does this matter? Firstly, it’s a problem for the whole community as it makes it harder to get governments to deliver the roads the nation needs. It makes it harder to fix the nation’s infrastructure backlog. But for transport operators, the effect is far more immediate. This inflation in the costs of building roads feeds into the annual adjustment of the registration and road use charges paid by industry …

… annual indexation of charges will be up around 6% in 2012

The NTC has spent summer consulting with our Association and others on the likely figure for the Annual Indexation of registration charges that is due to occur on 1 July 2012.

The NTC’s worked hard to exclude as many factors as possible. The cost of rebuilding roads after floods is definitely being taken out.

Yet the forecast is still for an increase of around 6% on rego and fuel. That’s a pretty big hit.

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