Budget bust ‘doesn’t create confidence’

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    Invercargill Deputy Mayor Nobby Clark. Photo: File

    INVERCARGILL’S deputy mayor is worried a budget blowout of projects makes the council look like it “does not know what it is doing” and creates distrust from ratepayers.

    Invercargill city councillor Nobby Clark said he raised concerns with council staff about projections around the Branxholme pipeline project and the redevelopment of the Civic Administration Building which has nearly doubled in cost from the original budget.

    He said he could not accept the explanation from staff who told him, ‘‘we don’t always get it right’’.

    Cr Clark said in July last year, as part of the council’s long-term plan, it had set aside $11.5 million to carry out an upgrade of the Branxholme water main.

    Within one month, in August 2021, councillors got advice from management stating the project cost was closer to $20 million.

    However, in March this year, during a risk and assurance meeting, a report showed an overall forecast budget of $25.35 million from the project.

    ‘‘That worries me when you get a big difference like that and the response I got from the staff when I queried about this huge increase was ‘we don’t always get it right’.’’

    Then at the same meeting, he said staff presented a forecasted budget for the Civic Administration Building renewal project of $27.5 million — $11.5 million more than the original budget of $16 million.

    Cr Clark said he could not accept the figures were that wrong after such extensive work from elected members and staff.

    He said councillors took part in about 30 workshops in relation to the annual plan and he could not figure how the cost had increased so much within nine months of the long-term plan adoption.

    ‘‘The whole idea of a long-term plan is to give some certainty for ratepayers.

    ‘‘It is a huge amount of work and to be getting [those figures] horribly wrong is not good for me and I am sure that doesn’t create confidence for a lot of people in the business world or in the residential world. It seems council doesn’t know what it is doing.’’

    He believed those mistakes were one of the main reasons which led council to propose a rates increase of 7.78%, almost doubling next financial year’s rates rise from that previously forecast in its long-term plan.

    Cr Clark urged people to make submissions to the annual plan until the end of this week if they were not happy with this increase.

    ‘‘It is too easy to throw this bill to ratepayers.’’

    Approached by the Southland Express for comment, Invercargill City Council acting chief executive Erin Moogan said long-term plan project budgets were often developed with five or more years ahead of a project being delivered and long before design commenced.

    ‘‘As a result we don’t always get this right and need to make adjustments through subsequent Annual Plan or Long-term Plan budget processes.’’

    She explained the Branxholme budget was set at $11.5 million in 2019 not in August 2021.

    ‘‘Council officers advised the budget allocated to this project had included a number of assumptions that had not proven to be correct, and that it had omitted some key costs.’’

    Key impacts included a different route alignment required to what was originally envisioned and a requirement for underground drilling in two locations as the original costs were based on open trenching, she said.

    As well as that, she said the increased market costs, professional services fees, escalation and contingency budget were not included in the original cost.

    With the Civic Theatre project, she said the project had a budget of $16 million, but early advice from staff indicated this budget was likely to be insufficient for a full refurbishment of the building.

    ‘‘This is primarily due to there being a number of exclusions in the original project budget including not all floors of the building being in scope for renewal.’’

    However, this project had not yet been designed and was still in the early stages of being scoped.

    ‘‘There is currently no change to the project budget. What has been provided by council staff is an early warning that there is a risk this project will require changes in scope expectation and/or an increase in budget to deliver.’’

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