Agenda of Demerger Transition Committee Meeting

Demerger Transition Committee Meeting Agenda

10 March 2026

5.2 Engineering Gundagai

5.2.1 Lime Spreader Business Case

DOCUMENT NUMBER

461228

REPORTING OFFICER

Trevor Dando, Acting Deputy General Manager Operations

AUTHORISING OFFICER

Roger Bailey, Interim General Manager

RELEVANCE TO COMMUNITY STRATEGIC PLAN

3. Protected and enhanced environment

3.2 We have attractive towns and villages

FINANCIAL IMPLICATIONS

Financial implications associated with this report are outlined in the Options and Financial sections of the report.

LEGISLATIVE IMPLICATIONS

There are no Legislative implications associated with this report.

POLICY IMPLICATIONS

There are no Policy implications associated with this report.

ATTACHMENTS

Nil

Recommendation

The committee recommends that Council:

1. Note the report.

2. Approve the purchase of a second-hand lime spreader up to a value of $175,000 (ex GST) as per the 2025/26 Plant Replacement Program.

3. Explore entering into a MOU with the neighbouring Council’s to utilise Council’s stabiliser at an agreed rate that ensures a commercial arrangement for the benefit of the parties.

4. Explore a ‘shared service’ arrangement for the use of plant between the two future ‘new councils’.

Introduction

Council’s Gundagai Civil team undertake road stabilisation in-house. Currently the team has a tractor mounted stabiliser and lime spreader. Civil staff have expressed the following concerns with the current setup:

- The lime spreader on the front of the tractor restricts visibility, which is particularly important for urban works and stopping/starting on a particular spot;

- The lime spreader on the front of the tractor causes significant lime dust to coat the tractor when it is being discharged from the spreader providing a maintenance issue with the engine and also an OHS issue for the operator; and

- The spreader capacity is undersized for rural roads.

Civil staff have previously hired in a lime spreader truck for major rural roads and state that their work output increases from approximately 700 metres per day to 1400 metres per day using a separate spreader truck.

Background

Sealed roads are made up of multiple layers. For most roads within the CGRC LGA, this is typically a bitumen layer on top of a base layer which is made up of imported gravel. The base layer sits on top of the subgrade, or natural ground. Most of the strength within the road comes from the base layer, with very little strength coming from the bitumen layer, which typically serves to reduce water ingress, stop dust and provide a better ride quality amongst other things.

Road stabilisation is a method of improving the base layer, where strength is most needed. A stabilising machine breaks up and mixes the bitumen and base layer with additives such as lime, cement, fly ash, or other binders to create a base layer which is strong enough and resilient enough for future traffic.

Typically, the process to stabilise a road, using the in-situ stabilisation technique includes the following:

- Site establishment (traffic control, identification of utilities etc),

- Mixing the bitumen and base layer with Councils stabilising tractor,

- Applying a binder (such as lime or cement) using a spreader. Adding water (if required),

- Mixing the binder into the mix,

- Rolling the mix to achieve adequate compaction,

- Grading the layer to achieve appropriate heights,

- Applying a new bitumen layer on time and line marking.

Lime stabilisation is important because it improves the strength and durability of weak or reactive soils, especially clay subgrades. When lime is mixed into the soil, it reduces plasticity, lowers moisture sensitivity, and increases load-bearing capacity. This creates a firmer, more stable foundation for the pavement layers above. In regions with highly reactive clays, like many parts of Cootamundra-Gundagai and surrounding areas, lime treatment helps limit shrink–swell movement that can cause cracking and premature pavement failure. By improving soil performance in place, lime stabilisation can also reduce excavation, material haulage, and construction costs, leading to longer-lasting roads and lower maintenance demands.

Where lime stabilisation is not as effective, other products such as cement or slag powder can be used to achieve the desired outcome. A combination of multiple products can also be used. A geotechnical engineer usually provide advice on the appropriate binder mix and application rates based on geotechnical testing results prior to works.

Lime stabilisation, cement stabilisation, slag or any other powder-based binders can all be spread using the same truck or tractor mounted spreader. The purpose of this business case is to explore the feasibility of procurement of a 10-tonne truck mounted spreader (known as a lime spreader) to spread, in a controlled and measured manner powdered binder on Councils stabilisation works. This would supersede the current 3 tonne.

Current situation

Currently Council undertakes a combination of in-house stabilisation, primarily within the Gundagai area, whereas Cootamundra primarily undertakes contracted stabilisation services. It is understood that Cootamundra have relied more on stabilisation services by a contractor in the past. This is in contrast to Junee Council who prefer to use a stabiliser which is similar in size to the one which Council own, including on State Highways. It should be noted that there is no contractual requirement for Council to use a certain sized stabiliser on State Highways, and this provides an opportunity for Council if it were to purchase a 10-tonne spreader.

The current preference to utilise contractors for some of Councils work has been because Contractors are sometimes more competitive than Council with Council’s small spreader reducing economy of scale. Where transport and establishment is further away from Gundagai, contractors can be more economical currently with the use of the 3-tonne spreader. Increased productivity, by increasing the spreader capacity from 3 tonne to 10 tonne will likely offset current contractor financial benefits.

Usage to date of the stabiliser has been as follows:

- 60 hours in 2022 financial year

- 630 hours in 2023 financial year

- 360.5 hours in 2024 financial year

- 298.5 hours in 2025 financial year

- 150 hours in 2026 financial year (estimate for full year)

This makes an average of 300hrs per annum (5.8hrs per week).

In the 2026 financial year Council has undertaken significantly more rehabilitation works than heavy patching works. Currently contractors are more financially viable for undertaking rehabilitation works as the works require spreading of significantly larger amounts of lime in one go. This will not be the case if Council procures a 10-tonne lime spreader as those efficiencies which contractors currently enjoy will also be enjoyed by Council staff and equipment.

Options Assessment

Option 1 – Keep current configuration, where Council continues to use the stabiliser and tractor mounted spreader where feasible, and contracts in stabilisation services for works which are not conducive of the small tractor mounted spreader.

Benefits	Constraints
Utilises current equipment. This will incur no capital expenditure	The lime spreader on the front of the tractor restricts visibility, which is particularly important for urban works and stopping/starting on a particular spot and provides an OHS risk that could be eliminated
No requirement to wait on contractors to complete works	The lime spreader on the front of the tractor causes significant lime dust to coat the tractor when it is being discharged from the spreader and provides earlier degradation of the engine and provides for higher maintenance costs.
	The current spreader capacity (3 tonne) is undersized for rural roads

Option 2a – Procure a NEW 10 tonne lime spreader truck to compliment and optimise the output of our stabiliser.

Benefits	Constraints
Increased spreader capacity	Significant capital investment ($276,500)
No requirement to wait on contractors to complete works	Additional equipment to register and maintain
Reduction in employee and tractor dust exposure
Increased ability to undertake private works for neighbouring Councils.

Option 2b – Procure a SECOND HAND 10 tonne lime spreader truck to compliment and optimise the output of our stabiliser.

Benefits	Constraints
Increased spreader capacity	Large capital investment ($175,000)
No requirement to wait on contractors to complete works	Additional equipment to register and maintain
Reduction in employee and tractor dust exposure
Increased ability to undertake private works for neighbouring Councils.

Option 3 – Sell stabiliser, lime tanker and organise full contracting of all stabilisation services.

Benefits	Constraints
Nil capital investment on plant	Typically, more expensive than undertaking works in-house
Nil Council employee training requirements	Inability to guarantee plant is available when we needed which effects program
Ability to source plant which are optimised to the project (i.e. smaller one for town streets, larger one for rural roads)	Council need to pay for wet weather costs as Contractors cannot be re-deployed to other Council tasks like staff can.

Financial

Option 1 - has no capital expenditure (other than renewal of existing assets as required). This is financially cheaper from a fleet perspective, however, does not allow for project cost efficiencies.

Option 2 - has significant capital expenditure and will likely reduce project stabilisation costs by up to 25% on large projects if adopted. The following financial assessment assumes savings for the stabiliser/spreader combination only as external Councils are likely to request that combination, however additional savings are likely to be realised depending on if CGRC undertake a full-service stabilising, where rollers, graders and other staff are utilised and become more productive as a result of less waiting around. Option 2 will see all profits be retained by Council and assist in topping up the Plant Reserve Fund.

Option 3 - has no capital expenditure (and will provide a short-term capital benefit from the sale of assets). This is financially cheaper from a fleet perspective, however, will likely be more expensive than undertaking the works in-house. Contractors have the ability to make a profit from the works which they are undertaking, of which option 3 will see 100% of those profits be provided to the contractor. This option will also see Council’s contractors budget increase.

Applying Councils internal rates of $200/h for stabiliser, and $60/h for crew (x2 = $120/h) and assuming a 10-hour day the total daily cost would be $4,400 made up of $2,000 for the stabiliser, $1,200 for 2 crew and $1,200 for the spreader.

Council currently has a contract with Stabilfix for use of a stabiliser and spreader. They currently charge $5,500/day for this equipment.

Over the last 12 months, Council has paid for 41 days of stabilisation services. ($225,500). If Council was to complete this in-house, it would have cost Council $4,400 per day, or $180,400 over the works completed in the last 12 months. If Council was to complete the works in-house, Council would have saved $45,100.

Junee Council

Over the last three years they have completed 120,000 m² of small patches and 60,000m² of road rehabilitation. This is approximately 4 weeks per year (20 business days) worth of work. Currently they are paying $4,900 per day for the stabiliser and lime spreader. If Council was to charge $4,900 per day to Junee Council to match their current rates, Council would have made a profit of $9,400 after expenses over the last 12 months.

Combining just Council’s savings and one other Council’s work there could be a profit stream of in excess of $50,000 per annum. It is expected that other Councils will also be interested in seeking CGRC stabilization services. Historically Snowy Valleys Council have also received private works for stabilization services, and by further developing relationships with other neighbouring Councils will see similar requests from them as well.

At the 2024 Local Government Annual Return, Councils stated they had the following:

- Hilltops Council has 1274km of sealed local and regional roads,

- Yass Valley Council has 674km of sealed local and regional roads

- Snowy Valleys Council has 732km of sealed local and regional roads

- Temora Council has 484km of sealed local and regional roads

- Wagga Council has 1281km of sealed local and regional roads.

Assuming a life of 80 years between stabilisation, this indicates an additional 55km of stabilising per year should be available throughout neighbouring councils for Council to potentially provide. This is approximately 4-6 months of works assuming only major rehabilitation works and would provide more work than Council’s stabiliser has capability of completing within the optimal construction season.

The general consensus with neighbouring Councils is that it can be difficult to source stabilising services within the optimal construction season. A similar experience is evident in Gundagai, during construction season (September to March each year) it can be difficult to get a stabilizer unless it is pre-booked with significant lead times. Stabilising companies are more supportive of larger quantities of work, where Councils book a stabiliser for one month or greater blocks. This can pose problematic for Councils which do not require services for a one-month block at a time.

Each year Council invests in significant stabilisation projects and long-term asset forecasts indicates that similar expenditure will be required long term to maintain roads at an acceptable level.

New Lime Spreader (Option 2a)

Council has sought quotations from companies to determine what it may cost to procure a spreader. Wirtgen Group provided a quotation of $317,979.00 +GST. This included the spreader to be mounted on a vehicle provided by Council. StabilFix provided a quotation of $276,500.00 + GST. This included the spreader to be mounted on a vehicle provided by Council. Flocon Industries provided a quotation of $322,630.00 + GST This included the spreader to be mounted on a vehicle provided by Council.

Second Hand Lime Spreader (Option 2b)

Council staff have located a second-hand unit in Hartley, near Lithgow, which has a 10-tonne spreader on a 2017 Isuzu truck for $145,000. The owner is using Grays Online to negotiate the sale. Council staff have personally inspected the spreader and have found that it is in good working condition.

The Gundagai Workshop Supervisor and the Gundagai Roads Supervisor have inspected the vehicle and spreader and believe it to be in reasonably good condition and meets the needs of the organisation to address the WHS matters raised above.

Investigations have also been made with Grays Online, and they estimate that the resale value of the 3-tonne spreader, if Council decided to purchase a 10-tonne spreader, would be in the order of $25,000 (conservatively).

Economy of scale

A 10-tonne lime spreader complements Council’s existing equipment. The stabiliser tractor and bulk lime tanker which Council already own both support direct implementation of the ten-tonne spreader. By procuring a 10-tonne spreader, Council will see efficiencies as follows:

- Reduction in grader, roller, water cart and other machinery waiting for lime spreading by up to 1 hour per day.

- Increased output over a 10-hour working day by 12.5% - This will see employee and machinery internal hire costs reduced by 12.5% for stabilising, or it will see an increase in operating output by up to 12.5% (excluding supply of lime)

- Reduction in establishment cost and transport costs for each project. For small projects which would typically take 1.5 days to complete will now be completed in 1 day. This reduces 1 day worth of establishment.

Based on an average of $750,000 for rural road heavy patching in Gundagai per year and a conservative estimated 10% savings across a whole project if a larger lime spreader is used because of optimised productivity, it is estimated that Council will be able to find approximately $75,000 in savings, or increased work scope per year. Council will be more competitive to outsource stabilization works to other Councils. Depending on the total value of spreader procured, it is estimated that a payback period of 3 years is realistic with Council financially better off on year 4. This will likely be less if significant private works is undertaken for other Councils. It is estimated that the life of the spreader will be approximately 10 years.

RMCC Works

Currently Council contracts all stabilisation services out for RMCC works. The current RMCC contract, which Council have with Transport for NSW and technical specifications which TfNSW rely on, allow for Councils current stabiliser to be utilised for these works. This will provide further benefit to both Cootamundra and Gundagai’s Council, should Council procure the 10-tonne spreader. It will provide benefit to Cootamundra Council by offering a service can be more reliable and/or cheaper than contractors. It also provides Gundagai Council ability to have a profit generating income from private works.

Profit/loss of stabiliser to date

Council has reviewed the plant costs for Councils owned stabiliser to date to ensure that the stabiliser will not be a loss-making entity if we procure a spreader.

Description	Life to Date
Operating Expenditure	-$121,068.01
Depreciation	-$133,827.10
Operating Income	$277,095.00
Profit/~~Loss~~	$22,199.89

Life to date profit, after costs and depreciation is $22,199.89. It is expected that this profit will improve with additional usage which a spreader would encourage.

Key Risks

Council staff have reviewed key risks when purchasing the lime spreader.

Description	Initial risk	Mitigation	Final risk
The lime spreader creates a loss-making business for Council	Medium	The business model for the lime spreader is primarily based on daily hire of the stabiliser and spreader combination. Should losses be realised, Council has multiple avenues to address this loss, including adjusting our hire rates, amending the availability to external councils, and at worst case scenario sell the spreader, stabiliser and bulk lime tanker. The risk to Council is a similar type of risk to if we were to private hire a grader to a neighbouring Council.	Low – with ongoing monitoring.
Council is unable to attract and retain appropriate staff	High	Attraction of Council staff relies on employee market variations. By ensuring that attraction is competitive in the market reduces this risk. Recently Council was able to successfully fill two senior plant operators, both positions are required to be able to operate the stabiliser and lime spreader.	Low-Medium depending on market at the time.
The spreader is unable to perform the job correctly	Low	Spreader will be calibrated regularly to reduce this risk. Typically, poor performance for stabilised pavements is in process practices or poor geotechnical analysis of the pavement. This risk typically sits with the project manager who directs the amount of lime to be spread. The more work which Council undertakes further reduces this risk as key staff are more familiar with industry best practice.	Low
Council is unable to prioritise works (internal vs external)	Medium	Appropriate Council staffing is maintained, and scheduling is managed. If in future where Council is requested to complete works outside of our capability, Internal works take priority. This is likely to be a risk if large grants for pavement rehabilitation become available to Council. Council also has the ability to offer part service wet-hire of the spreader and stabiliser, relying on other Councils teams to compact and trim the pavement. Some Councils will request this anyway.	Low
Council has a catastrophic failure of spreader and/or stabiliser	Extreme (but rare)	Continual preventative maintenance for the machinery, and supply of critical parts needs to be maintained. This risk is no different to a grader, loader or other key piece of Council equipment.	Medium

Local Economic Benefit

If Council was to procure a larger spreader, the purchase will not directly attract local economic benefit, however its usage by Council will attract significant local economic benefit as follows:

- Support local employees who will be operating the stabiliser and spreader – This will be a direct benefit compared to contractors undertaking the works.

- Better control of supply of lime products allows for Council to procure lime from neighbouring Council areas rather than from the greater market. This provides some economic benefit to Council as some of the operators of the neighbouring mine live and do business within the CGRC area.

OLG 23a Guideline consideration

Does not conflict with the Guidelines.

REPORTING OFFICER	Peter Bascomb, Demerger Transition Manager
AUTHORISING OFFICER	Roger Bailey, Interim General Manager
FINANCIAL IMPLICATIONS	There are no Financial implications associated with this report.
LEGISLATIVE IMPLICATIONS	There are no Legislative implications associated with this report.
POLICY IMPLICATIONS	There are no Policy implications associated with this report.
ATTACHMENTS	1. Minutes of the Demerger Transition Committee Meeting held on Tuesday 24 February 2026


CHAIRPERSON	GENERAL MANAGER