“Potholes are Becoming an Election Issue in New Zealand”
On 14th October, there will be the next elections for New Zealand’s prime minister. Currently, a large election issue for the national and labour party is the state of the roads in Auckland where over a third of the New Zealand population lives. Both parties are blaming each other for the lack of investment to make the roads safe.
The National Party has promised to create a $500 million Pothole Repair Fund for repairs to local roads and state highways if its elected. The government was spending $2.8 billion on highway maintenance, saying it was a 65 percent increase on what the previous National government had spent. They mention that the last government stopped resurfacing roads – or they froze the funding for maintenance – and therefore the number of roads that could be resurfaced. Asked whether this was a political gimmick, Simeon Brown (Member of Parliament in the House of Representatives for the National Party) said: “Not at all, this is a reality of our roads being in the worst state they’ve ever been and the need for us to be investing in making sure that they are safe to drive on so we can keep our economy moving.”
On the other hand, The Green Party has criticised the plan, saying the work is already being done. They are suggesting using the budget to further expand public transportation with a focus on the railroad system. The next election will have a large consequence on the demand for pothole repairs in the next year.
In other news, UK equities registered a positive month in July – the FTSE All-Share rose by 2.5% – following a better-than-expected improvement in inflation in the UK. However, both PMI and consumer confidence data continued to support the fragility of current economic conditions. UK focussed equity funds also continue to see redemptions, with July marking the 26th consecutive month of outflows.
Finally, within the construction industry, tender prices rose by 1.1% over the last quarter, a similar increase to the previous quarterly rise. However, the annual rise dropped by 1.5% to 4.9% when compared with the same quarter in 2023. Tender prices have been rising since the second quarter of 2020, but the rate of increase is forecast to increase further to 6.9% by early 2023 driven by strong cost pressures currently being experienced.
The forecast for the following 4 years indicates lower tender price increases of around 2.5% in 2023 and 3% per annum over the remainder of the forecast period. Decreasing demand and fewer opportunities will lead to more competitive pricing, with contractors absorbing some of the predicted increases in site labour costs in the short term. Over the next five years tender prices are currently forecast to rise by 21% overall, a 2% decrease compared to the last forecast.
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