OTIRA TUNNEL.

Dominion, Volume 6, Issue 1575, 19 October 1912, Page 9

OTIRA TUNNEL.

SELECT COMMITTEE'S REPORT. ON CONTRACTORS' PETITION. RECOMMENDATION FOI! IJKLEASK. The Committee of the House of lteprofontative.s set lip to inquire into Ihe petition of .Murdoch M'Lean aud another praying that the Government should lake over the work of the Olira 'runnel contract as a public undertaking, anil that Ihe petitioners be released, 011 equitable terms, from carrying 011 the works of I lie contract, presented tlieir report to the llouso of Representatives yesterday afternoon. Following is the text of the Committee's recommendations:— ,1

(1.) On August 1, 1907, the tender of Messrs. Murdoch and Neil M'l.can, carrying on business under the style of "John M'Lean and Sons." was accepted by tho Government for the Arthur's Pass Tunnel contract; and 011 .-Vugust 0, 1907, a contract was signed by the contractors aud their sureties, Messrs. Oliver Nicholls and John M'Lean, both of Auckland. The contract sum was <£a!) 9,791, and the time stipulated for the work was five years, which expired 011 August 9, 1912. . (-.) The contractors lodged a deposit of .£SOOO, which is still held by the Government, and wilh the sureties entered into a bond of for tho due fulfilment of their contract. It was stipulated in their contract that the contractors would be liabio to a deduction, or set-off, at the rate of .£2BO per week for each week after ■August !), 1012, until the completion ,<f the contract.

(3.) The contractors purchased the requisite plant, aud have since carried 011 the work continuously in terms of their contract. The length of Ihe tunnel as designed is 5 miles 21 chains, and the contract inclules somo formation and bridge work at each end, making the- whole length of tho railway included in the contract 8 miles.

(4.) lu. 1000 the contractors promoted a company (John Jl'Loen and Sons, Limited) to assist them in carrying out this and other works which they had in hand, and assigned tlio contract." to the company, with the consent of tho Government, by deed, dated December 10, 1009. Since 1009 tho works under the contract have been carried out by this company. (5.) In November, 1009, the contractors applied to the Government for an advance of .£20,000 to enable them lo carry 011 the works, stating iu support of. the application that their own available capital was locked up in the work. After consideration it was decided to advance ,£20,000 in tho shape of an additional progress payment. Tho original contract stipulated that progress payments were to bo at tho rate of 90 per cent, of the value of the work done, and 50 per cent, of tho valuo of plant and machinery brought 011 lo the works.

o>.) On February S, 1912, the contractors applied to tlie Government for further financial assistance, urging that the contract had, owing to unforeseen difficulties, proved unprofitable, and. that they were unable out of their own resources to procure some additional necessary plant. .At that lime the contractors had done work and provided plant and material to the value of £219.882, and Irul received payments amounting to .£216.173, leaving a margin in favour of the (iovcrnmont of ■£33,709. besides the contractors' deposit of .£SOOO am! the bond of .£25,000. (7.) On May 13 Cabinet decided to advance .£10,000—.£5000 for payment of liabilities, and =£5000 for the purpose of additional plant: the latter <£5000 to bo advanced at the rato of 100 per cent, of the value of the new plant brought on to tho works. It was also agreed that tho reduction in the rate of progresspayments, which should have come into operation on payment of the final instalment of the first advance, should bo postponed until either the full amount of tho new advance was paid or until March 1, 1913, whichever event occurred first. The total sum specially advanced to the contractors in excess of the 50 per cent, as provided in their contract is J25.000. (8.) Approximately, one-third of the work of the contractors as provided .by tho contract has been completed, at a loss to' the contractors of the sum of •£53,118 13s. 4d., made up as follows:— • ■ -2 s. d. Cost of work 213,362 '17 9 Value 100 per cent, of work as per contract 206,596 0 0 6,166 17 9 Less various recoveries... 1,772 A 5 1,(301 12 4 £ s. d. Add 10 per cent, of finished work to credit of Government to June, 1912 20,689 0 0 Add certificate for amount payable for work done during June, 1912 1,113 0 0 2-1,802 0 -0 Deposit in hands of Government 5,000 0 0 31,196 12 1 Book valno of plant and material ... 78,333 1 7 Advances by Government to contractors—so per ccnt. on • plant ,£31,111; cash balance .£25,000: 59,111 0 0 18,922 1 7 Loss to contractors at end of June, 1912, assuming that Government terminated contract 'and seized plant, etc 53,118 13 11 -C s.d. There is due to the contractors on account of 10 per cent, retained by the Government as against finishi cd work, and for finished 1 wfcrk at end of June, 1912 21,802 0 0 Plus deposit 5,000 0 0 In all r 21),502 0 0 Less advances over 50 per cent, on plant and materials 25,000 0 0 Balance ' 4,802 0 0 Tliia would represent the amount due to the contractors if the contract were cancelled and the plant and material taken over at half the actual cost as at the end of .Tune, 1912. (9.) That the contractors have, under great and varying difficulties, endeavoured to carry out the terms of tho contract, ancl have sustained heavy losses both in connection with the Otira Tunnel-, and Wellington Dock contracts. (10.) That, in view of the whole of the circumstances and of the difficulties experienced by the contractors, the Government be recommended to release the contractors and their sureties from their contract if the contractors so desire, and to return to the contractors the sum of .ESOIIO, the deposit paid. • (11.) That the Otira Tunnel is a national work, and should be completed. That the Government bo further recommended to invito tenders for the completion of the contract, and that, pending a decision on such tenders, the Government should CAfly on the works. (12.) That, in the event of no satisfactory tender being received, the Government be recommended to take such steps and mako such arrangements for _ the completion of the works as a national undertaking as they may think advisable. The Prime Minister promised to give the House an opportunity of discussing the report next Friday afternoon.