Published 19 May 2010
Transport Minister Steven Joyce said yesterday the Government had committed in principle to a total support package of $750 million over the next 3 years for the KiwiRail turnaround plan, with final decisions on funding subject to individual business cases.
The Budget appropriation is the first round of Government support for the objectives of the $4.6 billion turnaround plan, which is designed to make the rail freight business sustainable within a decade by getting it to a point where it funds its costs solely from customer revenue.
"In fact, the lion’s share of the $4.6 billion will come from the business itself. The Government investment reflects the fact the amount of freight being moved on New Zealand’s transport network will double by 2040, and all transport modes need to become more efficient to meet this demand.
"The Government is committed to retaining & improving the rail freight network and is providing KiwiRail the capital investment to demonstrate it can become commercially viable and make a valuable contribution to the New Zealand economy.
"To do this, it will need to focus on the areas where it can increase revenue, become more efficient and carry more – primarily bulk & long-distance freight."
Mr Joyce said the Government would set stringent conditions for its funding to make KiwiRail accountable to taxpayers.
Auckland Regional Council chairman Mike Lee said Mr Joyce’s announcement was heartening news, but clarity was still needed on how the plan would impact on commuter rail services in Auckland, as discussions on equitable cost-sharing continued with the Ministry of Transport.
“Aucklanders are paying $5 million/year to the Government to have access to the rail network. There is still a long way to go to ensure robust & reliable access costs are defined and for these costs to be shared equitably between passenger & freight services.
“We would also like the Government to confirm that it will pay for the electric trains promised to Auckland when the regional fuel tax was removed last year. The Auckland region has made a significant contribution, some $363 million, towards improving rail services over the past 5 years, including building Britomart, double-tracking the western line, upgrading rail stations and refurbishing trains.
KiwiRail chief executive Jim Quinn said the Government announcement “enables us to invest in our business in a way that our predecessors haven’t been able to in a long time…. Our customers have been telling us they would consign more goods to rail if transit times were more relevant and the network more reliable…. We are confident that, with improved infrastructure & rolling stock, we can also carry more of the domestic goods that largely travel from Auckland, down the North Island to Christchurch & destinations in between."
Mr Quinn said one of the central elements of the plan is the need to maintain a connected network rather than reverting to a series of short lines: “We will review the minor lines and ultimately, unless they have an anchor customer or there is a compelling public-good reason for them to stay open, they will be closed or mothballed.
"While the emphasis is on freight growth, we will also be looking to grow our long-distance passenger business and to partner with regional councils in Auckland & Wellington to provide integrated public transport systems that meet urban passenger needs, while ensuring transparency of costs."
Difference over suburban network share
The plan provides $7 million for the next financial year as a contribution towards “appropriate track access charges” – described as a one-off to meet a potential funding shortfall for metro rail renewals.
Although Mr Lee argued that the Auckland region had paid a high price for passenger rail services, the Ministry of Transport is arguing the opposite: “While costs associated with providing access to the metro networks have risen over the years, track access charges paid by the metro rail operators (in turn funded by the passengers, regional councils & NZ Transport Agency) have not kept pace. This has mainly arisen because the various parties involved, through a period of mixed ownership objectives, have not been able to reach agreement on the fair apportionment of costs.
“At present the costs of the metro-related infrastructure & services that KiwiRail provides to the regions are not being fully met by passengers, regional councils & the NZ Transport Agency. This shortfall has been disguised over recent years by the significant Government capital funding provided in Wellington & Auckland for rail upgrades, and operating losses for the old Ontrack division of KiwiRail.
“Longer term, regional council contributions & fare prices will need to be adjusted to meet a fairer share of the cost of using services. It is the Government’s expectation that these increases would be gradual and reflect the better service that current investment in infrastructure & new electric trains in Auckland will deliver in the coming years and the greater reliability & service timeliness in Wellington.”
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