Substantial increases in costs are affecting Council’s ability to undertake construction projects.

“The construction sector is experiencing significant volatility and price increases as a result of a ‘perfect storm’ of COVID-19, materials supply issues, fuel price increases, and the fastest inflation growth in 40 years,” Shire CEO Bradley Thomas informed Council at their regular meeting this week.

Inflation has now hit record highs, and the construction sector is experiencing a confluence of factors that are driving up prices and limiting contractor availability.

Council’s capital works delivery for 2021/2022 was the highest of the last five years and, based on figures to February, the delivery for 2022/2023 is on track to eclipse those levels.

Over the 12 months to December, the CPI as published by the ABS was 7.8% but tenderers for Council projects are putting a much higher price on risk of further inflation and some construction costs are 20-30% higher than expected.

Given the state of Council finances and the limited unrestricted cash, Mr Thomas advised Council that the scope of some projects will need to be reduced or additional funding will be required in the 2023/2024 budget