Soaring inflation puts pressure on transport and construction sectors

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The trucking industry says its operators will have to pass on any increased fuel costs to customers.

Photo: 123rf.com

Inflation hit 6.9% in the year to March, the biggest rise since mid-1990.

Soaring inflation rates are likely to put additional pressure on road transport companies already reeling from the global energy crisis.

Trucking association Ia Ara Aotearoa Transporting chief executive Nick Leggett said the sector has mostly small businesses with similar pressures on households who will have to pass on rising costs to their customers to remain viable.

“The thing about transportation is that it’s a service provider, it’s often the kind of meat in the sandwich, it has to make sure all of its costs are passed on to its customers because to maintain a supply chain, we need to have viable businesses.”

He said the government’s three-month road user charge rebate will help ease the pressure on trucking companies.

Infometrics senior economist Brad Olsen said government intervention and lower fuel taxes for a while means fuel costs haven’t risen as much as they could have.

“Petrol prices are up I think 32% from last year, but diesel, which hasn’t been reduced in terms of taxes, is up 55%.”

Olsen said a temporary fuel tax cut had helped keep inflation below 7%, but now it would have to be considered when they remove that cut.

“The government must now determine when it will return to 25 cents per liter [to petrol] either that or they must continue to subsidize $350 million a quarter of infrastructure spending from debt financing. »

Leggett said part of the cost pressures for the industry will be on wages.

“We are an industry that was short of drivers before Covid, which only got worse with Covid. I think there is an issue in terms of loss of staff to Australia.”

Leggett said he worked with the government to start an internship to bring more people into the industry.

He added that the industry also faced challenges.

“Employers also recognize that to keep people, they need to be engaged, they need to be trained, they need to be invested and, obviously, they need to be paid.”

Leggett said New Zealand is at the end of the supply chain, so it costs more to bring goods here.

“That assurance of supply that we get from shipping is also a bit more compromised, so there are a lot of factors driving up costs here.”

Gull Petroleum chief executive Dave Bodger said he has great sympathy for the trucking industry as the price of diesel has risen $75 a barrel since December, which is a huge increase for a small business.

Smaller homes would increase supply of affordable housing – Chamberlain

Construction costs are named as one of the main contributors to the country’s record inflation.

Olsen said construction costs have risen 18% over the past year, which is the highest cost since the 1980s.

NZ Certified Builders chairman Ian Chamberlain said builders need to be properly trained and qualified to ensure construction remains to a high standard.

It is important to ensure that a good number of apprentices arrive, he said.

Chamberlain would like to see the government’s Targeted Training and Learning Fund which offers free fees to continue beyond July 1, when it is due to end.

He said the increase in construction of tiny homes will boost the supply of more affordable homes.

“It’s actually more sustainable and people can move up the property ladder if we’re looking at smaller sized properties and part of that is because the land supply doesn’t actually allow for construction. of some of these smaller properties at the moment which drives up the costs.”

Chamberlain said construction costs generally don’t go down, and the only cost that can be reduced is usually the cost of land.

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