22 June 2012
The Gillard Government has agreed to a proposal to deliver greater value for money in Queensland disaster reconstruction projects, following the devastating 2010–11 floods and Cyclone Yasi.
Minister Assisting on Queensland Floods Recovery, Senator Joe Ludwig, said the Local Government Value for Money Pricing Model would benefit councils and keep costs low for the Commonwealth.
“Under the Value for Money model Queensland local councils will be able to use their own internal labour for reconstruction projects and be eligible for disaster payments.
“This is great news for local councils across Queensland still rebuilding from the worst natural disasters in over a generation,” Minister Ludwig said.
Councils in Queensland were in a unique situation and this model addresses their needs.
“Under the model, councils won’t need to rely on outsourced labour to claim reconstruction costs. We know that the mining boom, combined with the extraordinary amount of reconstruction work required, has brought labour challenges for local councils.
“On top of this, I understand that sometimes councils can perform basic reconstruction work, like gravel re–sheeting, much cheaper than if they outsourced the work. In some cases local council project costs could be reduced by 45 per cent by using internal labour.”
Under the longstanding Natural Disaster Relief and Recovery Arrangements (NDRRA), held under successive governments, councils are not reimbursed for reconstruction work undertaken by their own internal labour.
“In practice, this means that councils are outsourcing reconstruction works to contractors where the costs are claimable under the NDRRA, rather than using their own resources,” Minister Ludwig said.
“Under the new model, internal council labour can be claimed in situations where there is a demonstration that there is greater cost effectiveness than outsourcing, as assessed by the Queensland Reconstruction Authority (QRA).”
The Commonwealth has informed the Queensland Government that it is accepting the Value for Money model developed by the QRA, while still ensuring transparency and oversight.
The model will only apply to reconstruction of eligible assets damaged in the 2010–11 floods and Tropical Cyclone Yasi and any of those assets re–damaged in subsequent years. This is in recognition of the extraordinary circumstances faced by Queensland local councils as a result of the unprecedented 2010–11 natural disasters.
The Australian Government Reconstruction Inspectorate will retain oversight for projects under the National Partnership Agreement for Natural Disaster Reconstruction and Recovery, while the QRA would assess eligibility of projects to achieve value for money. The model will be regularly reviewed with reports to both Governments, and these reports will feed in to any further reforms to NDRRA.