A group of Hawke's Bay roading contractors is looking to its national body for help to head off a proposal it believes threatens the survival of small and medium enterprises (SMEs).
The Hawke's Bay branch of the New Zealand Contractors' Federation met recently to talk about a New Zealand Transport Agency plan to change the way it offers contracts. The agency is considering longer contracts, for nine years, and widening the contract areas, combining Hawke's Bay and Gisborne an example.
Branch president Quentin Welch said the possible changes were worrying many small to medium contractors.
At the meeting the group had agreed it could not see any economic benefits or improvements from longer-term contracts, but feared the proposal would inhibit competition as well as growth opportunities for contractors that missed out on contracts.
In some cases, a minimum of nine years before an opportunity to tender for a contract would threaten the survival of some smaller contractors.
"The local industry is concerned about this change and we are putting our feedback to our national body as our voice to the policy makers," he said. "It has been a difficult few years in the industry. I understand it's a hard task to balance the costs of maintaining the state highway network and I am not sure how to solve that problem."
Another Hawke's Bay roading contractor, Chris Russell, said if the proposal went ahead it would relegate businesses like his to permanent subcontractor status.
New Zealand Contractors' Federation president Jeremy Sole said the group would make submissions to the NZTA proposal. "You are correct that there is a high level of trepidation amongst the SME contracting business owners throughout the country," he said.
"This process is only just beginning so we have not formulated a response yet. We should be in a position to start formulating our formal submission in around three to four weeks time when the roadshows and consultation is substantively complete."
NZTA has released a State Highway Maintenance and Operations Review on its website with open comments by its highways and network operations general manager Colin Crampton.
He said the entire public sector was being asked to find ways to operate more efficiently within existing budgets.
"For its part, the NZTA is facing a 6 per cent annual increase on its maintenance, operations and renewals expenditure during the next three years without any corresponding increase in budget. "This amounts to a $160million shortfall over the next three years."
The review would look at how to achieve "better economies of scale" and best use of funding across the country.
NZTA is planning a presentation to Hawke's Bay councils in Napier on Monday as well as a workshop for asset managers, council partners and suppliers in Napier on September 4.