About $76 million a year could have been saved if the Government had set up a system to charge public utilities for digging up roads, the report says.
It criticises the administration for slow progress in implementing an excavation permit fee scheme and a new penalty system for public utilities.
Utility operators have to obtain excavation permits from the Highways Department to carry out works on public roads. The permits are free.
In 1995, the Government told the Public Accounts Committee it would introduce legislative amendments to charge public utilities on a cost-recovery basis. It said it also would consider imposing penalties on operators who did not perform satisfactorily.
But the auditor found no such legislative amendments had been tabled to the Legislative Council since then.
Slow progress in setting up a penalty system has deprived the Highways Department of a useful weapon to improve control of utility openings, and slow progress in implementing the excavation permit fee has delayed government efforts to achieve cost-recovery objectives, the Auditor says. It is suggested that the Government monitor progress closely and prevent any further delays.