Ports of Auckland could become a make-or-break issue for the Coalition

An artist’s impression of a port-less Auckland. Graphic/Stop Stealing Our Harbour

An artist’s impression of a port-less Auckland. Graphic/Stop Stealing Our Harbour

New Zealand First appears as closed-minded on the Ports of Auckland as the other vested interests, who are either opposing change or advocating for alternatives.However dysfunctional those charged with providing vital transport infrastructure can be, they somehow always manage an instant massed-wagon-circling at the very mention of reform.

The Government is about to receive reports on both the future location of the Ports of Auckland and the feasibility of upgrading Northland’s rail. Labour’s support partner, New Zealand First, is fervently committed to moving some of Auckland’s port business to Northland, saying it will relieve our biggest city of congestion and bring much-needed growth to the north. For the coalition, this could become a make-or-break issue.

Unfortunately, NZ First appears as closed-minded on the issues as the other vested interests, who are either opposing change or advocating for alternatives, such as Tauranga, the Firth of Thames or Manukau Harbour.

Because of the complex governance and ownership issues of Ports of Auckland and other potentially affected ports and public entities, any Government changes will be extremely hard to negotiate. The choices available will also be sandbagged by the virtual impossibility of getting any case for new or restored rail to stack up financially.

However, the biggest hurdle will be patch protection – not just from commercial interests, but also from public agencies who too quickly forget the wider obligation that their state-conferred monopoly status puts on them.

Chief interested party is Auckland Council, which owns 100% of the Ports of Auckland. It has consistently defended its right to the port’s undiminished annual dividend of more than $50 million – to the point of vowing to build a multistorey waterfront car park for more revenue.

Mayor Phil Goff is adamant the port is essential to Auckland’s future. However, this assertion is debatable, given that a city such as Sydney survives very well with its harbour reserved for cruise ships and cargo sent to Port Botany, Wollongong or Newcastle.

Loss of port revenue would, however, doubtless force Aucklanders to pay for the loss with even higher rates, for benefits mostly accruing outside its boundaries. This would be unfair, especially to those on low incomes, and so politically dangerous that no sane administration would cause it to happen.

Perhaps a better starting point would be to regularise, even centralise, the haphazard patchwork of ports ownership. This would inevitably land the Government with a fat compensation bill, but the existing potpourri of local body, port-specific and private shareholders is a barrier to efficiency. Intra-agency competition and multiple interests – Auckland part-owns Tauranga’s and Northland’s port as well – further occlude the picture.

The National Party’s policy of treating the ports as discrete commercial entities immune from state interference is recklessly hands-off. But, by the same token, Aucklanders may be incensed at seeing their port asset commandeered, especially with NZ First so blatantly using Northland as its electoral base.

Yet, Auckland’s port must somehow be restored to being part of the national ports network. Aucklanders, used to the city’s infamous congestion, would be the first to agree it remains an international embarrassment that a prime waterfront site is used to store second-hand cars. Moving the port would unlock 77ha of superb shore land.

Northland’s Marsden Point tempts as an existing deep-water port, which, with a suitable rail spur from the Auckland line, could handle the business. Tourist and even commuter growth could ensue. Yet, there are other considerations, including the likelihood that moving the port to Northland would hugely increase congestion in Auckland, since most goods exported out of it are produced south of the city and would have to pass through it. Even if some of the goods went by train – and the expense of building rail tracks could itself prove prohibitive – the trains would be more frequent and longer, causing frustrating delays at level crossings. There are also the climate-change considerations, with increased emissions from transporting freight over longer distances.

In New Zealand, 99.7% of all imports and exports travel by sea, so the ports issue is not trivial. Any changes to these assets will affect, for better or worse, numerous other sectors and projects, not least the still-uncosted light rail to Auckland Airport. The sheer complexity and political risk may simply end in inertia. But everyone concerned has a duty to approach this debate with the country’s best interests at heart.

An electoral double-whammy on Auckland Port’s future

Container straddle cranes are being automated as part of moves to extend the terminal's capacity and life
Container straddle cranes are being automated as part of moves to extend the terminal’s capacity and life

Todd Niall – RNZ.

OPINION: The future of Auckland’s downtown port deserves careful and unemotive consideration – the problem is, it will become entangled in two elections in the next two years.

The big question is, should all or part of Ports of Auckland’s current operations go elsewhere, either to existing upper North Island ports, or to a brand new port?

Before the 2017 general election New Zealand First pledged to move the whole thing to Northland by 2027 – with the vehicle import trade gone this year.

Mayor Phil Goff (2nd from right) and Councillor Paul Young (left) watching the arrival of new container cranes at the port
SUPPLIEDMayor Phil Goff (2nd from right) and Councillor Paul Young (left) watching the arrival of new container cranes at the port

 A working group led by former Far North mayor Wayne Brown has finished an interim report after canvassing the views of major stakeholders on the futures of the three major upper North Island ports, but it has yet to go to cabinet, and is described as “non-decision-making.”.

A more substantial “final” report from the group is expected in September, a month before local body elections.

Cruise ship berths will eventually move further east, as Ports of Auckland shrinks its cargo and container space
Cruise ship berths will eventually move further east, as Ports of Auckland shrinks its cargo and container space

That is expected to be only the end of the beginning of the debate, signalling the investigations needed if the idea is to be pursued.

Those who were at an early meeting involving Brown and Auckland mayor Phil Goff, described the tone as “interesting”, and the pair clashed publicly even before that meeting.

Goff is navigating a tricky political path, having himself campaigned in 2016 on moving the car trade, and eventually the port, but now having to defend the interests of ratepayers who own Ports of Auckland through the council.

The mayor has quickly filed away a report he commissioned in 2017, hoped to show the economic argument for shifting the vehicle trade out of Auckland.

The report by NZIER in fact found the gain of reclaiming part of the waterfront to be $115 million, but the net cost of losing the trade to be around $1 billion.

If the Brown group report is delivered in the run-up to the local body elections it risks fuelling political posturing on an issue needing no urgent decisions.

Ports of Auckland is working to ensure it can do its job for another 30-40 years within its existing footprint, and even then no one knows what new technology, or trade patterns might extend that.

Automation of the container terminal alone will nearly double the capacity it has today.

Ugly though the port might be, it directly employs about 500 staff, pays $68m in wages, and chips a $51m annual profit into council coffers.

In short, it may never have to move, but there are arguments in favour of it doing so, and releasing prime waterfront land for more public enjoyment.

Any huffing and puffing this year over the port might pale against what could happen next year, as the parties in the coalition government return to their individual stances in the run-up to the general election.

NZ First will want to show progress on its 2017 pledge, with both leader Winston Peters and list MP Shane Jones – who oversees the port work – wanting to keep faith with their Northland supporters.

Labour’s influence in the cautiously worded work now underway suggests less enthusiasm for a rush to undertake the biggest infrastructure project the country has ever seen, in relocating all or part of a port, with the roading and rail links needed.

Shareholders would solve Ports of Auckland’s problems

New cranes at Ports of Auckland. Photo / Jason Oxenham
New cranes at Ports of Auckland. Photo / Jason Oxenham

NZ Herald Editorial

COMMENT:

Of all the policies the NZ First Party brought into this coalition Government, the wildest and wackiest was to move the entire port of Auckland to Marsden Pt. The Labour Party agreed only to commission a feasibility study the idea of moving the port and left open the choice of alternative sites. Winston Peters, hoping to hold the Northland seat, promised to move the whole operation to Northport, but the coalition agreement merely directed Northport be given “serious consideration”.

The feasibility study led by former Far North District mayor Wayne Brown is reported to have produced an interim report for the Government and its tentative suggestions ought to be interesting. The fact that ministers will receive at the same time a report on upgrading the railway from Auckland the Marsden Pt suggests Northport is the preferred alternative for at least some of Auckland’s imports.

Doubtless there are countless ways that goods shipped to or from New Zealand could be better shared between various ports, not only for more efficient handling and distribution but also to stop the Auckland port encroaching ever further on the Waitematā harbour.

Doubtless too, the companies running ports would quickly find a more efficient use of them — within the constraints on Auckland — if Ports of Auckland Ltd had commercial shareholders.

Its nearest rivals, Port of Tauranga and Northport, are majority owned by their local bodies but also have tradeable shares which has resulted in a degree of cross-ownership. Tauranga has a stake in Northport, as does Ports of Auckland Ltd. But PoAL is entirely owned by the Auckland Council which has been averse to any of its business going to other ports.

Total public ownership has been a mixed blessing for Auckland citizens. While the council collects all the port’s dividends it suffers a conflict of interest when Aucklanders oppose the port’s further expansion. Despite a long campaign to stop the port company extending wharves for the latest cruise ships, the council is allowing moored “dolphins” and walkways to extend Queens Wharf.

Mayor Phil Goff did not exactly welcome news this week that an interim report of the feasibility study has arrived on ministers’ desks. “Any decisions on the future of Ports of Auckland should have the agreement of the council,” he said. “We accept that at some point the growth of freight into Auckland will outgrow the land available…..” Citizens opposed to further harbour reclamation would say that point was reached some time ago. Goff said the same when he stood for election.

“However, the port is also a critical lifeline of freight into our city,” he says now. No it is not. Freight from any other port could reach Auckland, making room for cruise ships within Auckland port’s existing harbour footprint.

Most of Auckland’s port is unlikely to be going anywhere. The feasibility study should be looking at rationalising the use of all New Zealand Ports but it should not suppose politicians can best decide where freight goes. The Hawke’s Bay Regional Council is planning to partially float its port at Napier. If the Auckland Council did likewise it would see the city’s interests more clearly.

KiwiRail struggles to meet upgrade funding goals

KiwiRail’s plans to upgrade its network are running into funding obstacles.

The first passenger train on the newly reopened Coastal Pacific Rail Line arrives in Christchurch from Picton.

A passenger train on passenger train on Coastal Pacific Rail Line arrives in Christchurch from Picton. Photo: RNZ / Simon Rogers

Newly released documents show its attempts to get money from the Provincial Growth Fund have not all been successful, with officials warning the fund may not be able to support the level of funding the rail company wants.

These include plans to run a daily service between Auckland and Wellington and a request to fund “core capital requirements” in the regions.

In last year’s budget KiwiRail sought $300 million to fund two years projects to upgrade its ageing network and rolling stock.

The government approved $185m, saying the remaining amount would be provided from the Provincial Growth Fund.

In subsequent discussions with the Ministry for Business, Innovation and Employment, officials warned KiwiRail “the fund may not be able to support this level of funding”.

KiwiRail subsequently received $50m, leaving it $65m short of the $115m it had hoped to get.

However, it would not discuss the shortfall, saying the money it asked for was over two years and any future funding was budget-sensitive.

KiwiRail said using the fund to pay for working capital met the fund’s criteria because an efficient rail network is essential for regional economic development and productivity.

“Part of KiwiRail’s network which do not have commercial volumes sufficient to cover capital costs have been in a state of managed decline for some time,” the company said in a statement.

“The PGF investment will allow capital works and maintenance costs for lines south of Christchurch, Hawke’s Bay, Taranaki, the West Coast and eastern Bay of Plenty, with additional work across other parts of regional New Zealand.”

Regional Economic Development Minister Shane Jones, who oversees the fund, said an important proportion of the fund was dedicated to KiwiRail but the state-owned enterprise was not going to be able to fund all of its aspirations through it.

Instead KiwiRail was going to have to work with Treasury in order to secure long-term capital.

Mr Jones said there was only so much the fund could spend on KiwiRail in the provinces, and he had made that clear to KiwiRail.

“We’ve got a limited number of dollars for provincial rail growth and I’ve said to KiwiRail staff and in particular the new chair of KiwiRail, Mr Greg Miller, that we’re going to have to ration in terms of access to the Provincial Growth Fund,” he said.

New Zealand First MP Shane Jones answering media questions

Regional Economic Development Minister Shane Jones. Photo: VNP / Phil Smith

Getting money from the fund was a competitive process – something Mr Jones said he was constantly reminded of.

“It’s fair to say that the officials on a regular basis are warning the first citizen of the provinces that there are a host of other infrastructure projects, not the least of which is the $130m allocated to upgrade the roads around Tairāwhiti, Northland and part of the Bay of Plenty,” he said.

“KiwiRail, whilst important, is not the exclusive recipient,” he said.

However, he stressed that KiwiRail was not out of favour with the government.

“I wouldn’t say that KiwiRail is raiding the fund but, put it this way, they’ve been starved of capital for so long and they know that my leader [Winston Peters] and I … are very much pro-KiwiRail people. As far as we’re concerned, KiwiRail are in favour with this government.”

Tourism

In July last year KiwiRail sought $185m from the Provincial Growth Fund to upgrade services on its tourist routes including the Northern Explorer (Auckland to Wellington), Coastal Pacific (Picton to Christchurch) and TranzAlpine (Christchurch to Greymouth).

Northern Explorer crossing the Hapuwhenua Viaduct

Northern Explorer crossing the Hapuwhenua Viaduct Photo: Kiwirail

The state-owned enterprise argued the extra services would double the spend by rail passengers from $100m currently to $220m by 2027 across the Waikato, Ruapehu, Manawatū-Whanganui, Marlborough, Kaikōura regions and the West Coast. It would also double the number of tourism jobs rail supports, from 863 to 1906 over the same period.

Although the government announced $80m to upgrade services on the Coastal Pacific and TranzAlpine, there was no such announcement about the Northern Explorer.

In a statement KiwiRail said its original proposal was for a package of tourism investments of up to $185m, including a bi-directional daily Northern Explorer service – up from three days a week it currently operates.

The view from KiwiRail's Coastal Pacific train, just south of Kaikōura.

The view from KiwiRail’s Coastal Pacific train, just south of Kaikōura. Photo: Great Journeys of New Zealand / Facebook

“Following consultation with officials, a second lower-cost package focusing on key investment regions was submitted, which provided for additional capacity, premium services, platform upgrades and international marketing for the TranzAlpine and Coastal Pacific Great Journeys of New Zealand,” KiwiRail said in a statement.

Mr Jones said the government was looking for more information before it would sign off on plans to extend the Northern Explorer service.

“Investing in the Northern Explorer requires investment in a different type of trains and locomotives than the South Island trains and would involve a significant additional investment. The key rail investment in the North Island in 2018 is a logistics hub near Palmerston North,” he said.

Govt forced KiwiRail to backtrack on locomotives decision, documents show

Newly released documents show the government forced KiwiRail to backtrack on its decision to ditch the electric locomotives on the North Island’s main trunk line.

According to the Treasury, it’s the first time a state-owned enterprise has been directed by a minister to make a decision that didn’t stack up commercially.

The State-Owned Enterprises Act said an entity’s principle objective was to be a successful business.

In 2016, KiwiRail’s board decided to replace its 15 electric locomotives with diesel, arguing it would make the company more efficient and better able to take freight, and with less freight going by road, there’d be a positive environmental impact.

On 30 October last year the government put a stop to the plan instead promising a $35 million cash injection to refurbish the electric locomotives.

In a letter to Transport Minister Phil Twyford two weeks before the decision was announced, acting chief executive Todd Moyle made it clear KiwiRail didn’t have the money to refurbish the locomotives.

“KiwiRail has no funding for these additional costs and is unable to recoup the investment and there is no uplift in revenue associated with this decision,” he wrote.

Labour Party MP Phil Twyford.

Transport Minister Phil Twyford Photo: RNZ / Mei Heron

But a Cabinet minute written the day before the government’s announcement, showed Cabinet agreed to use its powers under the State Owned Enterprises Act to direct the company to provide a non-commercial service.

Mr Twyford said being a successful SOE was more than just about profit and loss for a particular year, and this government wanted to grow rail.

He said previous governments had left KiwiRail on financial life support with no future vision.

“That’s not how our government sees it, we’re committed to bringing rail into the heart of the transport system, instead of treating it as the poor cousin and drip-feeding it a little bit of money year after year and barely keeping it alive,” he said.

KiwiRail uses electric locomotives on the main trunk line between Hamilton and Palmerston North.

When it said it was going to switch to diesel, the Rail and Maritime Transport Union accused it of “environmental terrorism”.

The union’s general secretary Wayne Butson said the decision to go down the diesel track was the best case of reverse engineering he’d ever seen.

“What you started with as your opening premise was the decision that they wanted to have and then they just worked backwards, and they screwed the scrum, massaged the logic and the numbers”, he said.

He said at that time KiwiRail’s board were wedded to a philosophy of simplify and standardise.

“There was this mantra which said ‘we only wanted one type of wagon, we only want one type of loco and that will give us immeasurable gains over time. It will reduce the inventory that we need, in terms of spares that we need for things’. In my view it didn’t have any logic,” he said.

Mr Butson said that decision failed to consider the needs of a modern railway, which must have some level of variation in the types of locomotives and wagons it uses.

Engineer Roger Blakeley said the decision to scrap the electrics was at odds with the Labour government’s target of getting to net zero carbon emissions by 2050 and leader Jacinda Ardern’s claimthat climate change was her generation’s “nuclear free moment”.

“With the diesel locomotives, if KiwiRail went ahead with them, it would burn an extra 8 million litres of diesel fuel per year and add around 12,000 tonnes of carbon dioxide to the atmosphere each year. That’s what would have been the implications of a switch back to diesels,” he said.

The Palmerston North to Hamilton route was electrified in the 1980s and the plan then was to carry on and electrify the whole main trunk line from Wellington to Auckland.

It’s estimated completing the project now would cost around a billion dollars.

Mr Twyford said it’s not part of the government’s immediate work programme.

Infrastructure Minister Shane Jones launches the New Zealand Infrastructure Commission

The Government has launched a new independent Crown entity tasked with addressing New Zealand’s “unprecedented infrastructure deficit”.

The New Zealand Infrastructure Commission – Te Waihanga – would look at ways of fixing and further funding areas where infrastructure investment is needed.

Transport projects and urban infrastructure issues would likely be the focus of the new commission.

Infrastructure Minister Shane Jones said New Zealand has an “unprecedented infrastructure deficit” and the commission was tasked with addressing that.

He said New Zealand’s transport and urban infrastructure was struggling to keep up with population growth.

“This infrastructure deficit is manifesting in housing unaffordability, congestion, poor-quality drinking water and lost productivity.”

“That’s simply not good enough,” he said.

The Treasury has estimated the total infrastructure spend over the next five years would be $42 billion – more than double that of the past five years.

Jones said this showed why the establishment of the Infrastructure Commission was needed.

Overall strategy and planning would be the focus of the new body.

In a Cabinet paper, Jones said the Infrastructure Commission would also act as a “shop front” for private companies looking to invest in New Zealand.

He pointed the finger at the previous Government, accusing National of focusing on short-term projects and under-investing in infrastructure projects.

Local Government New Zealand president Dave Cull said unprecedented population growth and the need to adapt for climate change, as well as a low-emissions economy, means that New Zealand was “behind the eight ball in terms of infrastructure investment”.

“Having a central agency to act as a shop front that the private sector can interact with, and having an ability to buy goods and services in bulk will be a massive benefit to regional development projects,” he said.

The Cabinet has approved just over $4 million to establish the commission and legislation establishing the body would go before Parliament in April.

The creation of the Infrastructure Commission has been well flagged – in August last year Jones announced work had begun on establishing the body.

He said Treasury had been unable to properly quantify the value of the infrastructure deficit New Zealand was facing which he said “was not good enough”.

The new body would work to quantify the level of the deficit, as well as figuring out how to fix it.

The Government received 130 submissions on what the body should look like.

“We have heard that message, and we have delivered.”

Ministers will retain final decisions on infrastructure investments, but the Commission will have an independent board and the autonomy it needs to provide robust, impartial advice.

“It will help hold this Government, and future governments, to account and we welcome that,” Jones said.

KiwiRail’s Todd Moyle: Next ferries will carry trains across Cook Strait

KiwiRail is buying two new, large, rail-enabled ferries to replace the current three-ship Interislander fleet. This is an investment in a future that is not only ours but also New Zealand’s.

Our ferries play a crucial role linking the north and south of the country but the Aratere, Kaiarahi and Kaitaki are all reaching the end of their useful lives.

Every year 800,000 passengers cross the strait on nearly 4000 sailings. The ferries also transport the equivalent of a queue of freight trucks 1200km long and a train with 500km of wagons carrying goods for supermarkets and commodities such as grain, gas, wood products and aluminium.

And as we saw when the Kaikoura earthquake struck just over two years ago, our ships are a lifeline for our vulnerable capital city and for the top of the South Island.

Our ferries are a vital set of sinews that connect the economic muscles of New Zealand.

There is huge interest in the future of our ferries and the decision on their replacements. That is understandable. Crossing the strait on the Interislander is part of many Kiwis’ childhood memories, and many are aware of the role they play in building stronger connections for New Zealand.

The ships are well-maintained and delivering great results – 99 per cent of our scheduled services operate as planned and 93 per cent arrive on or ahead of schedule. But they are ageing, and will reach the end of their useful lives around the middle of the next decade.

The decision on what to replace them with spans generations. Each ship is expected to cost upwards of $200 million, though this may change depending on the final specifications, and the ships are likely to remain in service until at least 2050.

The two big questions we had to answer were how many ships we should have, and whether or not they should be capable of carrying trains.

There are clear economic benefits in a two-ship fleet. Large ships – we expect the new ferries will be around 30 per cent larger than what we have now – have the capacity to cater for demand at peak periods, such as the holiday season. Two large ships will deliver what is required through the year at a lower cost than a three-ship fleet.

Crucially, having three ships instead of two would simply add to operating and capital expenditure without generating any additional revenue.

The reduction in fleet size will not affect capacity, with up to six return sailings possible each day.

Having two identical ships is also more efficient, allowing standardisation of all aspects of the operation, including terminal infrastructure, crew familiarisation and training, and a reduced spare parts inventory.

It also makes sense for KiwiRail to opt for rail-capable ferries as part of our commitment to grow rail freight in New Zealand. They will provide a seamless journey between the islands without the need to unload rail wagons on to road trailers for the trip across the strait, and then reload them on the other side.

Getting freight off the road and on to rail is not only good for KiwiRail, but also good for the country – carrying freight by rail results in 66 per cent fewer carbon emissions compared with heavy road freight, and also means fewer heavy trucks on the roads. That means safer roads, and lower spending on road maintenance.

Our next step is to begin the detailed work setting out what we require in the new ships and terminals then seeking expressions of interest from shipyards to provide the final costing for our detailed business case approval. All going well, the first of the new ferries will arrive around the end of 2023.

We’re confident the decision we’ve made is the right one for KiwiRail, and the right one for New Zealand.

• Todd Moyle is acting chief executive of KiwiRail.

KiwiRail shakes off ‘Kaikoura effect’ with big jump in freight

KiwiRail's Coastal Pacific service resumed in December 2018.
KiwiRail’s Coastal Pacific service resumed in December 2018.

KiwiRail is back on track with a lift in freight and profits after the main north line between Picton and Christchurch was repaired following the 2016 Kaikoura earthquakes.

Freight volumes will increase further this year with the reopening of the Napier to Wairoa line for forestry wagons, and more work on a line to Marsden Point in Northland.

New luxury tourism trains are on the way thanks to a $80 million boost from the Government’s provincial growth fund, KiwiRail acting chief executive Todd Moyle said.

KiwiRail’s new commuter service will be running between Hamilton and Auckland next year, and it’s making progress buying two new rail ferries for Cook Strait to begin service in 2024. 

Moyle said the company was shaking off the effects of the Kaikoura earthquakes. 

The operating surplus of $16.3m for the six months ending December 2018 was 7 per cent ahead of the previous corresponding half-year period.

Interislander ferry Aratere.
RICKY WILSON/STUFF Interislander ferry Aratere.

“It will take some time to get back to where we were before the main north line was closed but we’re seeing increased demand.

The Coastal Pacific scenic train resumed service a few weeks ago with strong bookings throughout the summer.

The Interislander service reach record satisfaction levels at 94 per cent and an award at a Direct Ferries ceremony in London.

KiwiRail’s improved financial result benefited from the “wall of wood” and other freight sectors, with overall revenue up 12 per cent to $328m on the previous corresponding period.

Regional Economic Development Minister Shane Jones at an event marking the reopening of the Napier-Wairoa railway.
LYNDA FORREST Regional Economic Development Minister Shane Jones at an event marking the reopening of the Napier-Wairoa railway.

Domestic freight jumped 30 per cent, forestry 15 per cent, bulk freight 8 per cent, and tourism up 8 per cent on the Great Journeys of New Zealand rail and ferry services.

KiwiRail had overcome enormous challenges over the past two years, restructured operations, network services and rolling stock teams for greater efficiency, Moyle said.

“That has seen improvements in network reliability, a plan to rejuvenate our aged locomotive and wagon fleets.”

Moyle said KiwiRail’s improvements were also good for the environment.

“The more freight we get onto rail, the fewer trucks we have on New Zealand roads which increases safety for everyone, reduces carbon emissions and means less road maintenance for taxpayers.”

KiwiRail was dealing with a legacy of under-investment from successive governments and the infrastructure still required a lot of work, Moyle said.

“The Government has seen we are in catch-up mode and is willing to invest for the good of New Zealand.”

The company faced increased costs from regulation, compliance and investments commitments.

NEW NZ DRY DOCK A BASIS FOR NEW INDUSTRY – KIWIRAIL

A dry dock to handle the country’s biggest vessels is affordable and can form the basis of a new marine servicing industry, KiwiRail chair Greg Miller says.

Establishing a new facility will reduce the increasing cost and risk shippers face getting regular surveys completed at ports in Australia or Singapore, he said.

The new ferries the firm plans to introduce from 2023 – 230 metres long and 30 metres wide – “actually sets the stage” for the project, he said. KiwiRail is keen to be a catalyst and initial discussions with other shippers have been positive.

The key, he said, is to integrate the new dock with other existing facilities. The resulting hub could then provide a full range of marine services.

“It’s nowhere near as big and scary as we think – if we get it right,” Miller told BusinessDesk.

“I’ve got a really good idea of the costs and they don’t scare us.” He wouldn’t provide an estimate.

Dry docks operate at Lyttelton and at Devonport in Auckland. But both are old and neither are large enough to cater for the increasing size of the country’s ferries, coastal carriers and some ocean-going fishing vessels.

Port Marlborough has spent several years campaigning to establish a floating dry dock at Shakespeare Bay and previously estimated the cost at up to $80 million.

Last year, the New Zealand Shipping Federation urged action on the project, saying it was open to any location that is affordable, can provide 24-hour, seven-day operation, has access to other wharves and is deep enough for use by international vessels.

It told the government’s working party on a supply chain strategy for the upper North Island that the only feasible sites are Whangarei and Shakespeare Bay.

Miller wouldn’t be drawn on the location of the facility, development of which may still be five to 10 years out.

Yesterday, he told Parliament’s Transport and Infrastructure Committee that the limited dry dock capacity is causing a loss of productivity.

Increasing coastal shipping around Australia is making it harder for New Zealand vessels to access facilities there. Getting to and from Singapore adds to time and cost and also adds considerable risk to scheduling.

Miller said New Zealand fishing companies are also designing vessels to fit the local facilities, reducing their ocean-going capacity and their efficiency.

The Devonport dock can handle vessels up to 170 metres in length. Miller said there are probably 14 local vessels that could use a larger facility now and he could see that figure getting to 20 “pretty easily”.

Beyond that there is additional scope to gain business from international shipping lines that currently can’t get vessels serviced here.

“We could build an industry,” he said. “We are going to really pursue a location and an opportunity for that.”

(BusinessDesk)

MPS TOLD $200M NORTHPORT RAIL LINK ‘CRITICAL

14/2/19

Economic growth in Northland is akin to that in Waikato and the Bay of Plenty during the 1970s and 1980s and will need investment in rail to support the region’s growing export industries, MPs heard today.

KiwiRail acting chief executive Todd Moyle said Northport is the only port in the country without a direct rail link. He says it is “critical” the government builds a 20-kilometre spur extension to link the Auckland-to-Whangarei line to the port at Marsden Point.

This potential new line is only an element of a wider project. KiwiRail is feeding into a business case the Ministry of Transport is aiming to complete by May on options for upgrading the rail link from Auckland northwards, Moyle told Parliament’s transport and infrastructure committee.

KiwiRail chair Greg Miller told MPs the development of dairying, forestry, pulp and paper and horticulture in Waikato and the Bay of Plenty 40 years ago was matched by government investment in road and rail to get that production to port.

Those same activities and industries are “migrating” to Northland and now is the time for the Crown – through KiwiRail – to put in place the infrastructure to support the considerable growth underway.

“The ‘North of Plenty’ is kind of like the Bay of Plenty for the next decade on,” he said.

KiwiRail has spent the past three months on geotechnical studies for a potential route from Oakleigh, on the North Auckland Line south of Whangarei, to Northport at Marsden Point. But the cost, estimated at about $200 million, is only a fraction of the expected $2 billion bill that could be required to bring track, tunnels and bridges on the rest of the Auckland to Northland line up to standard to handle major freight volumes.

Funding for the spur line study was provided from the government’s Provincial Growth Fund, overseen by NZ First member and Regional Economic Development Minister Shane Jones.

NZ First has also driven an investigation into the feasibility of relocating Ports of Auckland to Northport. That is being considered by a five-member working group tasked with developing a broader strategy to better integrate transport logistics chains in the upper North Island.

Challenged on the prioritisation of the Northland project, Moyle told National MP Paul Goldsmith that the funding of a business case for a third heavy rail track on the main line between Wiri and Westfield in South Auckland is being separately funded through the National Land Transport Fund. Adding capacity to this section of the southern line is considered critical to meeting both freight and commuter growth through Auckland. 

MPs were briefed by the Auditor-General’s office before the meeting. Independent MP Jami-Lee Ross said that briefing didn’t leave him with a lot of confidence that the broader machinery of government understands how Provincial Growth Funds are being allocated and accounted for.

He particularly questioned a $50 million working capital allocation KiwiRail has received and $80 million provided for tourism opportunities.

Moyle said $135 million has been received for specific projects, including a regional freight hub at Palmerston North and upgraded rolling stock for the company’s TranzAlpine and Coastal Pacific tourism services.

The $50 million of working capital will be used to restore track on regional routes that are otherwise in decline.

David Gordon, group general manager for investment and planning, said the PGF funding was enabling the company to bring forward investments that had a “compelling” business case.

“These were items which didn’t just come out of the ether. These are things we’ve been thinking about for a long time.”

KiwiRail, bought back by the government in 2008, has been hamstrung for decades by a lack of capital to maintain the country’s 4,000-kilometre track network and invest in new engines and more flexible rolling stock to remain competitive.

Ageing trains and tracks have seen speed restrictions placed on many routes, further reducing the competitiveness of freight services.

The previous government provided additional capital in two-yearly blocks – $450 million for the period through to mid-2019 – while it struggled to find a longer-term funding solution.

While the company’s financial performance is improving, Moyle said capital injections from the Crown being essential for the foreseeable future.

Miller said rail globally is enjoying a renaissance, both in tourism and because of the considerable returns rail freight provides by reducing road congestion and emissions.

KiwiRail’s growth plan for the next decade will be a critical part of delivering those benefits here, he said.

However, decades of under-spending will take a long time to correct. How that is funded is up to the government, he said.

“What matters to us is that it is a long-term funding model for the benefit of our primary exporters and domestic freight customers. Sustainable funding, rather than being a political football, is the ideal outcome for us.”