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19th April 2018

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Kiwi Rail

Jacinda Ardern sets out Government’s transport plan, including nationwide fuel tax

KEY POINTS:

  • The Government has released its draft 10-year policy statement on land transport
  • A fuel tax increase of between 9 and 12 cents a litre has been proposed
  • Aucklanders face fuel tax hikes of about 20 cents a litre if the Government’s increases and a regional fuel tax are brought in
  • Funding on public transport will increase by 46 per cent
  • Funding allocated for state highways will be cut by 11 per cent
  • $4 billion will be allocated over 10 years to establish Rapid Transit, such as light rail, initially focusing on Auckland

Aucklanders face a double whammy of fuel tax hikes of about 20 cents a litre if central government fuel levy increases and a regional fuel tax are brought in, but Transport Minister Phil Twyford says he believes Aucklanders understand the need for it.

Auckland Council is expected to introduce about 10 cents a litre in regional fuel taxes to pay for its share of major transport projects and the Government’s new 10-year policy plan for transport proposes a further nationwide increase of 9-12 cents litre over three to four years.

That is to fund projects such as light rail in Auckland and other measures.

Twyford said he believed Aucklanders realised the gridlock that was happening now could not continue and it was not fair to ask those who lived in places like Levin and Whanganui to pay for all of Auckland’s transport woes.

Twyford said other cities would also benefit from rail and rapid transit options, as well as Auckland.

The Government’s new transport plan will cut the funding allocated for state highways by 11 per cent while an initial investment of $4 billion over 10 years will be ploughed into Labour’s plans for light rail in Auckland.

The overall plan

The Government has released its draft 10-year policy statement on land transport – the guide which sets how the Land Transport fund should allocate about $4 billion in funding each year.

It will see funding on public transport increase by 46 per cent to expand the routes available and subsidies for public transport.

On top of that, it sets a new class of Rapid Transit under which $4 billion will be allocated over 10 years to establish rapid transit investment, such as light rail, initially focusing on Auckland. That would ramp up over time.

About four times as much will be spent on expanding cycling and pedestrian pathways than under National.

The money for regional roads will double from about $90 million a year to $180 million a year in 2019/20 and up to $210 million for four years after that.

That comes at a cost for future large-scale motorway upgrades such as National’s policy of $10 billion for 10 further Roads of National Significance.

Instead, Twyford said there will be “targeted” improvements to state highways.

Twyford said it was an important step to making roads safer to reduce the road toll.

“We’re going to invest in what makes the most difference – regional and local roads and targeted improvements to the State Highway network.”

Jacinda Ardern and Phil Twyford answer questions about the proposal. Photo / NZH
Jacinda Ardern and Phil Twyford answer questions about the proposal. Photo / NZH

“The previous Government did not spend enough on road safety and instead wasted funds on a few low-value motorway projects. This has created an imbalance in what is funded with a few roads benefiting at the expense of other areas.”

One of Labour’s key election policies was to build light rail from the CBD to the airport and extend that to include routes to the central suburbs and West Auckland over the next decade and then to the North Shore.

It also wanted a bus rapid transit line from the eastern suburb of Howick.

The new statement sets safety as the top priority, followed by access, the environment and value for money.

That contrasts with National’s policy statement which had economic growth and productivity as the top priority, followed by safety and value for money.

Those with an interest in the plan such as local government, transport bodies and community groups have until May 2 to submit on it.

Petrol levy increases

Twyford said there would be petrol levy increases, but those would be at the lowest end of what National would have needed had its motorway proposals gone ahead.

He said the previous government had not disclosed that transport officials had advised it that petrol levies needed to increase to fund its plans for expressways.

“We’ve chosen to limit increases in petrol levies to the lowest end of [former Transport Minister] Simon Bridges’ range.”

Prime Minister Jacinda Ardern said Labour was seeking feedback on proposed fuel tax increases of between 9 and 12 cents a litre to fund its transport proposals.

Julie Anne Genter said making it safer for people to walk and cycle was also a priority. Photo / NZH
Julie Anne Genter said making it safer for people to walk and cycle was also a priority. Photo / NZH

She said National leader Bridges had been told that to meet National’s ambitions, they would need a fuel levy increase of 10-20 cents a litre.

Ardern said the Government was prioritising safety and investing in roads neglected by the former government.

“What you won’t see is investment in a small number of dual carriage highways while local roads and other transport options suffer.”

Twyford said over Easter eight people had died, the worst road toll in several years.

He said early work by officials suggested $800 million worth of safety improvements that could make a significant difference.

“This shifts policy priorities away from costly white elephants.”

He said transport spending in many regions had decreased under the previous government.

“Half of vehicle journeys are on local roads, yet less than 5 per cent of the funding has been spent on improving them.”

He said the rapid transit network would help free up roads.

“This is the first time spending on rapid transport will take place under the Land Transport Fund.”

It also proposed spending money on rail under the fund for the first time, saying Labour believed all forms of transport should be funded under it.

Phil Twyford said there would be petrol levy increases, but those would be at the lowest end of what National would have needed had its motorway proposals gone ahead. Photo / NZH
Phil Twyford said there would be petrol levy increases, but those would be at the lowest end of what National would have needed had its motorway proposals gone ahead. Photo / NZH

Walking and cycling a priority

Associate Transport Minister Green MP Julie Anne Genter said making it safer for people to walk and cycle was also a priority and it would provide safe cycleways that were separate from vehicle traffic.

The areas around schools would be a focus.

She said every day in Auckland a pedestrian or cyclist was hit by a car and injured or killed.

Regional Development Minister and NZ First MP Shane Jones said he was expecting some backlash from the regions because many had been “fed a line” that motorway upgrades would resolve their problems.

He said KiwiRail was a key part of NZ First’s plans on better freight and tourism offerings so he welcomed its inclusion under the plan.

The Government is also considering allowing coastal shipping to be funded under the fund.

Roads of national significance

Twyford said about seven of National’s Roads of National Significance which were already underway would continue – but the nine further RONS projects it had put up as an election policy were not funded and would not go ahead.

While some work would take place on those roads it would not be to the same extent.

Asked about the proposal to get four lanes through to Whangarei, Jones said he would prefer to see unsafe local roads fixed “rather than this pipe dream that by 2032 we were going to get four lanes through to Whangarei”.

He said the short-term focus was tidying dangerous areas and increasing rail.

Matt Lowrie from transport advocacy group Greater Auckland. Photo / Greg Bowker
Matt Lowrie from transport advocacy group Greater Auckland. Photo / Greg Bowker

Transport groups reply to Government’s new policy

Matt Lowrie from transport advocacy group Greater Auckland said the new plans so far look “very impressive”.

“It is a big step forward from what we have had in the past and giving focus on areas that have been lacking for quite some time – particularly around safety and public transport,” he said.

“The safety one is a big one. We have just had the worst Easter road fatalities for a number of years, and the death toll on our roads is increasing.

“That is a really concerning trend as it had been trending down for a long time before that, so we do need to improve our safety.”

Lowrie said the announcements looked to improve on former government policy.

“A lot of that funding for the last decade was pulled away and put into some really large motorway projects. While they are safe, they are very expensive and sucked a lot of funding away from the necessary projects that can actually help improve safety for a lot of people.

“What I think we are going to see now is a focus on a lot more areas which have actually shown to be working well, particularly safety, where we can safe peoples’ lives and reduce the number of people dying on our roads.”

Lowrie said it was also good to see a strong acknowledgement of public transport funding.

“Some of that is coming through in the form of rapid transit funding – which is light rail and busways – it is the high quality options that are key to driving up public transport use, which is going to make it easier to get around as well.”

Clive Matthew-Wilson, editor of the car review website Dog and Lemon, also described the policy as a welcome change of direction.

“The fact is we don’t need new motorways, we need to fix up the roads we already have. It is rural roads where people are dying and it is rural roads where the money needs to be spent so this is plain common sense,” he said.

“Also, the roads with the lowest road toll tend to be the ones with the best public transport systems so it is not just freeing up gridlock, it is actually likely to save lives.”

Although Matthew-Wilson did not agree with fuel taxes, calling them “misguided”.

This view was mirrored by the New Zealand Taxpayers’ Union who said the government’s proposal to increase fuel levies breaks Jacinda Ardern’s promise of “no new taxes”.

“Fuel tax is particularly harmful because of its regressive nature – the people it hurts most are poorer families living in fringe suburbs. This will ultimately mean less food on the table,” executive director Jordan Williams said.

“And as if fuel tax hikes didn’t sting enough, the Government is going to be using the revenue to fund cycleways and trams, at the same time they’re slashing funding for highways. In other words, drivers are paying more to receive less.”

Simon Wilson: 10 pieces of nonsense they’re talking about transport

Labour’s transport plan met with a roar of disaproval. But it was was clearly signposted and should have surprised no one.

1. There’s a difference between a tax and an excise.

Prime Minister Jacinda Ardern has argued this in Parliament and in various media, but it’s nonsense. Excise is another word for tax.

2. Raising the fuel excise does not count as a new tax.

In the 2017 election campaign Ardern promised no new taxes, and critics say this breaks that promise. Ardern says no. She argues that because the existing fuel tax has gone up by a few percentage points a litre most years, raising it in 2018 and beyond isn’t new.

The critics are right: a tax hike is a tax hike, whether or not it’s expected. Besides, although it’s likely a National government would have continued to raise the fuel tax, as it did in most years of its last term, we don’t know if that’s true.

3. The government is giving up on the regions.

National’s leader Simon Bridges and his transport spokesperson Jami-Lee Ross have both argued this in Parliament and to various media. Ross also says the government is “taking money from the regions to give to Auckland’s trams”. Commentator Matthew Hooton says the regions are having their roads neglected.

In fact, over 10 years Labour plans to spend $530 million on regional improvements, to National’s $425 million. It will spend $2.1 billion on state highway maintenance, to National’s $1.98 billion.

It’s true National would have spent more on state highway improvements: $4.6 billion to Labour’s $3.85 billion. But that’s because of its proposed new “Roads of National Significance” (RONS), most of which did not have a sound business case.

The government also has new funding still to announce for rail, which will target the regions, and it has that $1 billion a year regional economic development fund. It’s absurd to say Labour is giving up on the regions.

4. The government hates cars and it hates people in cars too.

NewstalkZB’s Mike Hosking said this. Perhaps he wasn’t being entirely serious, but he did say it.

What are the circumstances in which that might be true? Having a law to stop you driving? Taking away all the cars? Ensuring the roads are so congested that it’s pointless even to attempt to drive? Maybe just deciding to spend no more money on roads?

For the record, the new policy statement allocates 78 per cent of transport funding over the next 10 years to roads. To suggest that’s the policy of a car-hating government is an overreaction.

Public transport gets 21 per cent, and active transport (walking and cycling) gets a massive 1 per cent.

5. Aucklanders love their cars.

Hosking again, and yes, some do, but some not so much. Aucklanders use their cars a lot, and one reason is that very often they do not have a choice. The new policy is designed to create choice, to make non-car forms of transport more viable for more people.

The best example of why this will work is the Northern Busway, which now carries more than half of all peak-time commuters over the harbour bridge. Before it was built, critics claimed no one would use it. Because, that’s right, Aucklanders love their cars.

6. Using the Road Transport Fund to pay for rail or other public transport is theft.

National MP Judith Collins has argued this on Twitter and in Parliament. Hosking says the tax is “for roads and bridges”. In fact, it’s a tax to be spent on land transport.

Collins and Hosking might be on stronger ground if motorists did not benefit from spending on rail and other public transport. But they will. Better public transport is the key to addressing congestion on the roads. Once our PT network is citywide and efficient, many more people will leave their cars at home and those who don’t will benefit from that.

7. The government is prioritising the needs of tourists getting to and from the airport.

National’s Jami-Lee Ross told Parliament this. But a great many air travellers are not tourists, they’re locals. Moreover, the proposed light rail line to the airport will be a commuter line connecting Aucklanders with one of the biggest employment precincts in the city. Tourists will benefit, but they’re not the main reason for creating that line.

8. Light rail to the airport is the number one priority.

Transport minister Phil Twyford has announced this. But should it be? Light rail to the airport was an election talking point and it makes for a good headline. But the part of Auckland in most desperate need of good public transport is the east.

Rapid transit is proposed to link the airport to Puhinui and Manukau, and then Flat Bush, Botany and Howick. It will be a busway like the Northern Busway, to start. Twyford lists that project as number two, but he needs to ensure it gets an early start.

9. A congestion tax would be better than a fuel tax in Auckland.

Most economist-minded commentators say this. Fuel taxes are not especially fair, because the people they hurt the most are those least able to afford them. This makes them “regressive”.

In fact, fuel taxes are regressive in several ways. Poor people spend a higher proportion of their incomes on petrol, so the damage to their disposable income is more severe. They tend to drive vehicles that a less fuel-efficient, to live in outer suburbs and to have less access to efficient public transport, all of which mean they need to buy more petrol. And if they do shift work, public transport may never be available.

So, congestion charging on the motorways and in the city centre would be fairer: if you’re taking part in the worst congestion, you’ll have to pay for the privilege.

But congestion charging (like other forms of demand pricing) takes several years to set up. The last government seemed to favour it, but was in no hurry to get the work done.

That tardiness has fed the crisis we’re in today. Fuel taxes are proposed because they can be implemented quickly and easily, while we wait for a better approach to be developed. But those fuel taxes have to be used to fund the services that are needed most urgently: a much stronger public transport network in the poorer parts of the city.

10. We can’t do much about road safety.

Reducing the carnage on our roads is the top policy goal of the new transport framework, but many commentators mutter than maybe it just can’t be done.

The death rate on New Zealand roads has risen sharply in just the last few years: 253 in 2013 became 379 in 2017. Why? You can blame the cars, the roads, the advertising, whatever, but what it all comes down to is that, for many reasons, not enough of us drive safely.

There are many ways we can reduce the lethal consequences of that fact, and they are not all expensive. Putting a median barrier down the middle of all state highways, for example, would cost only half what the last government was going to spend on the proposed new East West Link between Penrose and Onehunga.

11. It’s all nonsense.

Pretty much everyone who’s complained has said this.

The government’s transport policy statement was clearly signposted during the election and should have surprised no one. It prioritises safety, goes some way to redressing a long-standing imbalance between roads for private use and public transport, slots into a larger framework for regional development and makes a serious attempt to address the crisis of roads congestion – especially in Auckland.

It’s transport, there are no overnight solutions and whatever we do will be complex and often expensive. But it’s not nonsense. And yet, although the need to develop and debate long-term strategy is obvious, the debate has been sound-bited into “punitive taxes”, “robbing the regions” and “penalising motorists”. None of those things are true.

How are we going to face up to the big difficult issues if politicians and commentators prefer the lazy option of easy trash talk?

Reopening of Napier-Wairoa rail delayed after heavy flooding

IMPACT: Damage sustained by the Napier rail line during heavy flooding last week is likely to delay the re-opening of the rail to Wairoa. Photo/Supplied.
IMPACT: Damage sustained by the Napier rail line during heavy flooding last week is likely to delay the re-opening of the rail to Wairoa. Photo/Supplied.

The reopening of the Napier-Wairoa rail line is expected to be delayed after heavy flooding last week left sections of rail “hanging in the air”.

Heavy rain and flash flooding last week damaged parts of the line, including one large wash-out affecting more than 100m of track, along with multiple smaller wash-outs, and debris such as trees on the line.

The impact of the weather event is still being assessed by KiwiRail, but it expects it may delay the re-opening of the Napier-Wairoa line.

Work on reopening the mothballed line had been under way for only 10 days when the rain hit.

Yesterday KiwiRail Group General Manager Network Services Henare Clarke said “for this to happen so soon after we started work is a setback, but we will overcome it”.

“The initial work that was already under way will continue while we assess the latest damage and come up with a plan,” he said.

“Where possible, we will look to combine the rebuild work that had already been programmed with the repairs to damage from last week’s severe weather”.

Parts of the rail line appear to have been shunted out of alignment. Photo/Supplied. Parts of the rail line appear to have been shunted out of alignment. Photo/Supplied.

Work began two days after the Government announced a $5 million contribution toward the line.

The first log train was expected to run on the line by the end of the year. While the damage was expected to impact the reopening, it was not known yet what any delay might be.

“This is a fairly complex process and inspections of the line are continuing, but we expect to have a clearer idea of the repairs needed in the coming week.”

This is not the first delay for the line – it was initially hoped to be opened by October 2017.

Hawke’s Bay Regional transport committee chairman Alan Dick said he did not see the need for an “inordinate” delay – as the funding had been granted, and the need for the rail was increasingly urgent.

“Other than these washouts, it’s been in pretty good condition.

“If the reopening of the line extends beyond the end of this year, it’s putting the whole deal in jeopardy, in my view.”

He also questioned how the washout was able to happen.

It appears when the Esk River broke its banks, the flooding pushed sections of rail out of alignment, or left parts “floating in the air”.

Eskdale resident Chris Geddis spotted a 30m section of Bay View rail which was running along unsupported, as the ballast underneath had been washed away.

A A “wall of water” left this Eskdale section of rail unsupported. PHOTO/CHRIS GEDDIS.

The shingle – meant to be underneath the rail line – was instead strewn over State Highway 5.

In a way it’s kind of funny, there’s supposed to be a wall of wood coming from Wairoa along it, and it was a wall of water that took it out.”

Last week’s deluge also led to the flooding of over 80 homes, and the closure of some roads for several weeks as debris is cleared.

Hawke’s Bay Regional Council had already set aside $5.4m towards the project. A spokesman said KiwiRail were responsible for the maintenance of the line.

KiwiRail freight moving along Kaikoura line again after big clean up

One of the slips along the Kaikoura highway at Jacob's Ladder after clearing and terracing.

One of the slips along the Kaikoura highway at Jacob’s Ladder after clearing and terracing.
 KiwiRail freight services are on the move again along the main north line between Picton and Christchurch after repairs to damage caused by former Cyclone Gita.

​Group general manager Todd Moyle said all four scheduled services ran last night after the work was completed by KiwiRail and North Canterbury Transport Infrastructure Recovery teams.

“Much of the work focused on clearing the debris flows triggered by the exceptional levels of rain. We have been able to largely restore the track to the same condition it was prior to the storm. ”

Loss of earnings and repair work on the line have been one of the causes of KiwiRail’s recent $193 million loss, with a revenue shortfall of about $25m attributed to the main north line.

Most of the freight carried on the main north line is general merchandise and commodities including malt and grain. Quantities were commercially sensitive, a spokesman said.

KiwiRail is restricted to night services to allow road crews to continue working safely during the day.

The highway is also back in action during daylight hours from 7.30am to 7.30pm with the Hundalees the most affected area, reduced to one-lane traffic.

Rainfall levels in the Kaikoura area during the Gita storm were the highest recorded since the November 2016 earthquake with one site showing 300 millimetres in 15 hours – more than three times the usual monthly average.

“Our teams also took advantage of the line being closed to bring forward other works. One of the temporary bridges put in to enable the early re-opening in September has been replaced with a new permanent structure,” Moyle said.

“Our teams will continue to focus on works that improve the reliability of the line and reduce transit times, so we can better support our customers and resume pre-earthquake levels of operations as soon as possible.”

About 300,000 cubic metres of material had been spread across 60 sites from Parnassus to Clarence, closing road and rail.

 – Stuff

Work underway already on Wairoa to Napier railway line

Two days after the Government announced it would put $5 million towards reopening the rail line, work is underway. Photo / Warren Buckland
Two days after the Government announced it would put $5 million towards reopening the rail line, work is underway. Photo / Warren Buckland

After years of planning with the regional council and Napier Port, KiwiRail yesterday wasted no time in beginning work to reopen the mothballed Napier to Wairoa rail line.

Just two days after the Government announced it would put $5 million towards reopening the rail line, contractors are already working away.

“Contractors will start cutting back vegetation at Eskdale and will be working north over coming weeks,” said KiwiRail’s acting group general manager, network services, Henare Clarke.

“A fortnight after that work on the line’s drains and culverts will begin.

“The first log train is expected to run on the line by the end of the year.

“This is a good time to remind people to expect trains or machinery travelling on the track at all times.

“It is six years since the line between Wairoa and Napier was in regular use, so people will need to take extra care around it now that work is under way.

“The work will see an increase in movements along that track. Everyone needs to expect trains and other rail vehicles using the line at any time from either direction.

“They should only cross the line at level crossings – to cross the line anywhere else is both dangerous and illegal.”

The work is funded through a $5m Government grant from its new Provincial Growth Fund.

Parliamentary Under-Secretary for Regional Economic Fletcher Tabuteau said a key component of the coalition agreement between Labour and New Zealand First was the establishment of a $1 billion-a-year regional development fund.

“This Government is committed to our regions and the Provincial Growth Fund demonstrates how serious we are about providing economic opportunities to all parts of New Zealand.”

Hawkes Bay Regional Council had already set aside $5.4m towards the project.

Council strategic development group manager Tom Skerman said the Government’s additional $5 million financial injection was huge validation and a boost for the project.

The council would now continue to work on commercial arrangements with customers who will use the line.

He said HBRC, KiwiRail and Napier Port wanted to ensure the introduction of additional funding would achieve the Government’s regional growth and network resilience aspirations.

Local Government NZ president Dave Cull said the country’s economic growth strategy needed to consider the nation as a whole and the Government’s commitment to much greater investment in regions was a welcome step.

“Ensuring our regions are equipped to meet the challenges ahead is crucial and the Provincial Growth Fund will be a significant tool in achieving this.”

Port and road groups support Taranaki rail network feasibility study

ANDY JACKSON/Fairfax NZ
A rail bike tourism venture had replaced locomotives on the Stratford Taumarunui line.

Port Taranaki has the facilities and infrastructure to make logs-on-rail practical and economically viable, its chief executive says.

Regional economic development minister Shane Jones last week announced the start of rail feasibility studies in Taranaki, Kawerau and Southland to improve rail connections in the three regions.

The focus of the $250,000 rail study in New Plymouth would be on forestry exports, Jones said.

More rail/road hubs, such as Smart Road hub, may be needed if the rail network was upgraded in Taranaki.

More rail/road hubs, such as Smart Road hub, may be needed if the rail network was upgraded in Taranaki.

The funding for the feasibility study is part of the coalition government’s $8.75m handout for regional rail initiatives from the provincial growth fund.

Port Taranaki had been in discussions with KiwiRail for the past 12 months about initiatives to develop a rail option for log exports, chief executive Guy Roper said.

KiwiRail locomotive at Stratford railway station transporting general freight.

MIKE WATSON/STUFF
KiwiRail locomotive at Stratford railway station transporting general freight.
 “We have been well across this and believe it is important to help drive regional economic growth, supporting the wider region that Port Taranaki services.”

Port Taranaki’s log volumes have been increasing with exports up 36 per cent in 2016-17, and 63 per cent for half year result to December 31 2017.

Last year 486,000 tonnes of logs were shipped from Port Taranaki.

The trend was expected to continue as demand from overseas increased, he said.

Port Taranaki had the on-site rail facilities and storage areas and could enhance berth access to maximise operations for rail, Roper said.

“It can be handled now. We have the rail line, storage, land available and exporter interest to quickly and effectively service not just the Taranaki region but the forestry industry in the southern region of the North Island.”

Bringing more logs to the port through rail would result in increased ship visits and also ease the pressure on the region’s roads, he said.

New Zealand Forestry Ltd Taranaki regional manager Cam Eyre✓ said the industry had been working on how to improve transport links within Taranaki for several years and the government’s announcement was a positive sign.

“We support the study and believe it would be positive for the industry if costs can be reduced transporting logs by rail from marginal forest areas,” he said.

Eyre said the volume of logs carried by rail would need to be high.

Any feasibility study would look at log prices and volume to ensure the rail network was sustainable, he said.

“A study would be a good start to draw a line in the sand on what the forestry industry can, and cannot do.”

Eyre was unsure if a new railhead was established and the network upgraded to carry more logs, whether it would mean less trucks on the road.

“It comes down to how much volume of logs can be transported on rail.

“It has to work cost-wise with the forestry owner, and not every log will go on a train.

“Until we have a robust rail network there will still be trucks operating on the road.”

Road Transport Industry Taranaki regional executive member Tom Cloke​ welcomed the study and believed it could create more work for the transport industry.

“There’s always been a place for rail but the study would need to look at the infrastructure needed and logistics in setting up a network,” he said.

“Any rail network would need a robust transport system to and from the rail head to load and deliver.”

To be competitive, rail would need to be able to shift a variety of freight, not just logs, quickly and efficiently, he said.

New Plymouth MP Jonathan Young said the study would need to focus on the cost benefit ratio for the Taranaki region.

“What the economic advantage is of putting more logs on rail is the big question mark,” he said.

“It will identify a number of shortcomings such as increased costs from double handling, and associated health and safety issues.”

In a press release KiwiRail chief executive Peter Reidy said rail helped reduce congestion on roads, cut carbon emissions, made roads safer and lowered spending on road maintenance and upgrades.

A recent study showed the costs savings totalled $1.5 billion, he said.

KiwiRail transported around 25 per cent of the country’s exports and played a critical role in regional tourism, he said.

Fonterra logistics network manager Andrew Cleland said the company worked closely with KiwiRail to ensure the network has capacity to support its transport needs.

“We are interested in the rail feasibility studies and look forward to reviewing the results with KiwiRail in due course,” he said.

 – Stuff

New regional development strategies “defying reason”

By Michael Reddell*

Earlier this week, Kiwirail released its most recent half-yearly financial result.

Once again, the taxpayer was poorer for their operations.

They make great play of a modest “operating surplus” but I rather liked this summary table from their latest Annual Report.

kiwirail

In other words, no returns to shareholders at all; in fact losses in one year of a third of the (periodically replenished) shareholders’ funds

Last year, they had operating revenues of $595 million, and an overall loss of $197 million (much the same as the year before).  So roughly a quarter of their overall costs are not covered by income.   As an organisation –  and with all due respect to the energies of individual employees (including the five earning in excess of $500000 per annum) – it has all the appearance of being a sinkhole, absorbing more of the scarce resources of taxpayers each year.

And before people start objecting that roads don’t make a profit, it is worth remembering that airlines do and coastal shipping operations do –  and, if they don’t, they usually go out of business.

An organisation that operates such large losses (acquiesced in by successive shareholder governments) clearly isn’t one that applies the most demanding tests possible to the question of whether individual lines should be opened or closed.  Occasionally people attempt to justify government intervention in this or that activity on (questionable) grounds that the private sector is applying too high a cost of capital.  But in this case, the state operator’s average return on capital (ie over all its operations) is substantially negative, and it has no expectation of changing that.

A few years ago, Kiwirail closed the Gisborne to Napier line.  Rail volumes had been low and falling –  some trivial portion of the volume that Kiwirail estimated would have been required to make the line viable.  But ever since, there have been people hankering for the line to be reopened.

And yesterday, as part of the first wave of projects approved under the new Provincial Growth Fund, the Minister of Regional Development announced that

“We’re also providing $5 million to Kiwirail to reopen the Wairoa-Napier line for logging trains, taking more than 5700 trucks off the road each year.”

In the more detailed material released with the announcement there is a suggestion that the Hawkes Bay Regional Council may also be putting in money.

There is no sign of any cost-benefit analysis of this proposal having been released at all. But we can assume that the proposal wouldn’t pass any standard (weak) Kiwirail commercial test since otherwise Kiwirail would have reopened the line without taxpayers’ having to chip in more money directly.

There used to be some logs/timber carried on the Gisborne-Napier line, but a reader pointed me to the numbers: in the final full three years of operation, a total of 327 tonnes of it.

There are, apparently, going to be a lot more logs to move in the coming years.  In the Minister’s words

“The wall of wood is expected to reach peak harvest by 2032 so reopening this line will get logging trucks off the road and give those exporting timber options that they currently do not have,” Mr Jones says.

“It makes sense to consolidate that timber in Wairoa and use rail to take it to the Port of Napier.

Except that apparently officials and Kiwrail had already looked at this option a few years ago.  In a report released only a few year ago it was noted that

“We note that Kiwirail was not convinced this would be finanically viable for users given the relatively short distance involved and the need to double-handle the logs.  Industry feedback has also indicated that transport of logs on rail across the study area was unlikely to be economic.”

Perhaps the economics has suddenly changed?  But, if so, where is evidence?  None was published yesterday.   We aren’t even told what assumptions are being made about how much of the logging business will be captured.

The Minister’s release also argued that there were climate change benefits from this move

“It will also mean 1,292 fewer tonnes of carbon dioxide released into the atmosphere each year.”

Even if this were relevant –  don’t we have an ETS supposed to deal directly with pricing emissions? –  and accurate (what assumptions are being made, including about the carbon costs of the double-handling?), it sound doesn’t terribly impressive.  A single 747 flying to London and back once apparently emits 1100 tonnes of carbon dioxide.

This is just one of the numerous projects the government is going to spend money on in the next few years.  I’ve only looked through the Gisborne/Hawke’s Bay list, and none of it fills me any confidence.   What, for example, is central government doing on this?

The Provincial Growth Fund will provide $2.3 million to redevelop the Gisborne Inner Harbour as part of a wider tourism investment programme.

If, as the Minister claims,

“Tairāwhiti is brimming with potential and untapped opportunities

you would have to wonder why the private sector, and the local authorities, don’t seem to think them worth spending money on.  (On my story, a materially lower real exchange rate would help quite a bit, but the government shows no sign of addressing that.)

A couple of weeks ago, I commented on the Minister of Finance’s underwhelming exposition of what the government was going to do to transform the productivity outlook in New Zealand.   The Minister noted

A major example of this is the Provincial Growth Fund developed as part of our coalition agreement with New Zealand First.  This will see significant investments in the regions of New Zealand to grow sustainable and productive job opportunities.

To which my response was

If it ends up less bad than a boondoggle we should probably be grateful.  It isn’t the sort of policy that has a great track record, and it is hard to be optimistic that one new minister –  with a vote base to maintain –  is going to transform the sort of flabby thinking around regional development presented at Treasury late last year.

Then again, the Secretary to the Treasury might quite like the idea of paying to reopen the Napier-Wairoa line.  I’ve told previously the story of Gabs Makhlouf, fresh off the plane from the UK, lamenting that the one thing New Zealand hadn’t sufficiently taken from the British Empire experience was to invest more heavily in rail (in response, assembled Treasury officials were not quite being sure where to look).

Sometimes economic policy in this country seems almost designed to defy reason and evidence in an effort to make us poorer, to hold back national productivity prospects.  Spraying around $5m here and $5m there –  $3 billion over three years, in some scheme reminscent of congressional earmarks in the United States – not backed, it seems, by any robust supporting analysis, seems just another  step along that path.

KiwiRail welcomes Government’s boost to rail

KiwiRail Chief Executive Peter Reidy says today’s announcements of new projects in the Provincial Growth Fund are a strong signal of the Government’s confidence in rail’s ability to drive regional economic growth for New Zealand.

“KiwiRail is committed to enabling sustainable and inclusive economic growth and the Government’s investment in promoting rail in the regions will enable us to step up that work.

“This investment is a vote of confidence in our customers and our staff.

“The projects announced today – the re-opening of the Wairoa-Napier line and the upgrade of the Whanganui line – are just the start.

“They are the projects that were ‘shovel ready’ and that we could begin straight away.

“The feasibility studies that were also announced today are an indication of the possibilities for future investment.

“We welcome this recognition of the contribution rail is making in adding value to New Zealand, not only through the efficient movement of freight and people, but in all of the areas highlighted in the recent Value of Rail report prepared by professional services firm EY.

“The benefits rail delivers include reducing congestion on roads, cutting carbon emissions, making our roads safer and lowering spending on road maintenance and upgrades.

“Together they add up to more than $1.5 billion per year, and they are a key reason for the Government’s financial investments today.

“Moving logs by rail takes pressure off the roads, and reduces greenhouse gases – each tonne of freight carried by rail instead of heavy trucks means 66 per cent fewer carbon emissions.

“The Wairoa-Napier road is not designed to cope with the growing volumes of logs now that the ‘Wall of Wood’ is coming on stream. Rail is the ideal way of getting that timber to overseas customers.

“We have estimated that using the Wairoa-Napier line to move the logs could take up to 5,714 trucks a year off the road, and reduce carbon emissions by 1292 tonnes.

“KiwiRail already transports around 25% of the country’s exports and plays a critical role in regional tourism.

“However, there is a lot of potential to increase that contribution, and KiwiRail looks forward to realising that potential.

“Today’s announcements are an important step in doing that,” says Mr Reidy.

KiwiRail shakes off impact of Kaikoura earthquake to post improved earnings

Kiwirail posted half-year revenue of $292.7m, down 1.9 per cent down on the previous year.
Kiwirail posted half-year revenue of $292.7m, down 1.9 per cent down on the previous year.

Disruption to South Island rail services caused by the November 2016 Kaikoura earthquake masked a continuation in improved operating earnings from state-owned railway operator KiwiRail in the six months to December 31.

The company reported an operating surplus of $15 million for the period, which would have come in at $40m once the one-off costs associated with the closure of the main trunk line between Picton and Christchurch were stripped out.

While quake impacts would still be felt in the second half of the current financial year, KiwiRail was still on track to deliver operating earnings of between $30m and $50m, said chief executive Peter Reidy.

In the previous comparable period, which included the first few weeks of the outage caused by the massive Kaikoura quake, KiwiRail reported operating earnings of $11m, or $23m underlying once quake impacts were backed out.

As always, the national rail carrier did not report a statutory profit on its activities, reporting a $193m loss for the half-year.

That reflects the fact that revenue earned “above rail” is always far lower than would be required to fully maintain the capital-intensive network.

However, the importance of maintaining a rail network for wider economic and national interest reasons means both the previous and present government accept KiwiRail will always make accounting losses.

The result for the half-year was achieved on revenue of $292.7m, 1.9 per cent down from the $298.3m recorded in the last six months of 2016, and reflecting the fact that the Kaikoura link was only restored in September 2017.

Operating expenses, at $277.4m, were 3.5 per cent lower than in the previous comparable period.

Ports revenue from KiwiRail’s trucking and rail services was up 16 per cent on the half-year, which chairman Trevor Janes said was a “strong result” when placed against overall container volume growth of 7 per cent nationally in the same period.

Forestry revenues rose 8 per cent as the so-called ‘wall of wood’ from maturing plantation forests starts to come on-stream.

Dairy industry and coal volumes rose, contributing to a 6 per cent increase in bulk freight revenue.

Poor weather and “significant and unexpected” repair costs on the company’s ageing South Island locomotive fleet contributed to a “messy” six months, Janes said.

KiwiRail was “working closely with the government on the urgent need for longer-term funding for the organisation, which is critical for efficient procurement, planning and safety”.

The Interislander ferries showed a 12 per cent increase in commercial vehicle ‘lane metres’ as more freight had to travel by road while the rail outage persisted, while passenger revenue rose 7 per cent and yields on vehicle crossings improved.

Reidy said KiwiRail was targeting operating savings of $7m this year, building on $45m of productivity improvements in the last two years.

Announcements relating to the revival of some mothballed regional rail services are expected when the government unveils detail of its $1 billion a year regional economic development fund, in Gisborne, on Friday.

Is it time for a Cook Strait bridge or tunnel?

The Cook Strait is a violent body of water. It’s an exception. Unlike other straits around the world, it has opposite tidal flows at either end. When it’s high-tide on the Tasman side, it’s roughly low-tide on the Pacific side and vice versa

Before the end of the last Ice Age, you might have been able to walk between the two islands – if there had been anyone around to do it. But for the last 20,000 years this strait has divided New Zealand in a way most countries have never known.

What if the country could become physically connected again? Is a Cook Strait bridge or tunnel pure fantasy?

What if the country could become physically connected again? Is a Cook Strait bridge or tunnel pure fantasy? Julian Lee ...

ROBERT KITCHIN/STUFF
There would be far more to gain than just the novelty of being able to take a 27 hour 2,000 kilometre drive from Cape Reinga to Bluff: an immense increase in traffic between the two islands, the untold billions saved in shipping and flying costs, the Marlborough and Wellington areas thriving and booming from increased commerce, the tourist dollars, the sheer convenience of replacing a three-hour ferry ride (and its associated on- and off-loading times) with a short drive.

It’s an idea that’s so outrageous even some of our more seasoned politicians have never heard it being raised before.

But Stuff pitched the idea to Transport Minister Phil Twyford.

Transport Minister Phil Twyford suggested a tunnel would be ruled out by the Alpine Fault and a bridge by the strait's ...

BRADEN FASTIER/STUFF
Transport Minister Phil Twyford suggested a tunnel would be ruled out by the Alpine Fault and a bridge by the strait’s rough waters.
 “This is the first time I’ve heard the idea. I know there is a successful tunnel between the United Kingdom and France, but I would have thought our faultline would rule out a tunnel. It is also a very rough stretch of water, and I’m no engineer, but I suspect that would rule out a bridge,” he said.

Judith Collins, who has National’s transport portfolio, was impressed by the idea, but pointed out an obvious flaw.

“Wow, this is a hugely ambitious and audacious idea. Where would be the fun of a Cook Strait pie in the middle of a howling gale though?” she said.

The idea of having a bridge or a tunnel between Wellington, pictured, and the South Island was raised seriously just ...

ROBERT KITCHIN/STUFF
The idea of having a bridge or a tunnel between Wellington, pictured, and the South Island was raised seriously just once by Premier Richard Seddon in 1904.

It seems to have been seriously raised only once by a New Zealand politician. A long time ago.

Hawke’s Bay Herald article from 1904 said that Premier Richard “King Dick” Seddon had been travelling all over the country bragging about how much money the Government had for grandiose projects, including a tunnel through the Cook Strait .

The unnamed reporter at the time felt it was inappropriate given the large loans New Zealand had taken from London. With a tongue-in-cheek, the reporter said that if Seddon told the public about the reality of the Government’s financial position, they might agree to his tunnel plan some time in the future.

One of the possible routes for a Cook Strait bridge or tunnel: Cape Terawhiti to the peninsula east of Picton, the ...

JULIAN LEE/GOOGLE MAPS
One of the possible routes for a Cook Strait bridge or tunnel: Cape Terawhiti to the peninsula east of Picton, the shortest route between the mainland and the North Island, 27km.
 These days something like 1.1 million people and 350,000 vehicles cross the strait every year with the two ferry companies, Interislander and Bluebridge. Should there be a drive option, many more would be guaranteed to use it – those who would normally fly or not take the trip at all.

With a bridge or tunnel, the prohibitively expensive and time-consuming trip from somewhere like Palmerston North to somewhere like Nelson becomes a drive that could be done in less than five hours.

Ask someone in the know and they will quickly explain that it is a pipe dream.

University of Canterbury structural engineering and materials professor Alessandro Palermo suggests that a "submerged ...

DUNCAN SHAW-BROWN
University of Canterbury structural engineering and materials professor Alessandro Palermo suggests that a “submerged floating tunnel” could be a better option for the strait.
 “I think given the geometry and the morphologies of the strait, a conventional bridge is not possible. The water is extremely deep and the cost will be prohibitive. Tunnelling will also be very expensive.”

That’s from University of Canterbury structural engineering and materials professor Alessandro Palermo – one of New Zealand’s top bridge specialists.

Palermo does have a proposal, but before that, what are we dealing with here? And most importantly, how much would these projects cost?

The Bluebridge and Interislander ferries, seen here in Picton, both take about three hours to cross the often violent ...

STUFF
The Bluebridge and Interislander ferries, seen here in Picton, both take about three hours to cross the often violent stretch of water.
 It is tempting to look at the strait’s narrowest point of just 22km for a potential crossing from Cape Terawhiti to Arapaoa Island in the Marlborough Sounds. That, however, means building a state-highway tier road through the extremely hilly country behind Karori all the way to the coast, another such road across undeveloped Arapaoa Island in the sounds, a bridge across the Tory Channel and another road to get back to State Highway 1.

A 27km bridge or tunnel from the cape directly to the mainland and bypassing Arapaoa, landing on the peninsula east of Picton, would still involve significant roadworks.

If, on the other hand, you wanted to build a link between the two closest developed points (Wellington city and either Picton or Blenheim), the distance is 64km to Picton and 65km to the shoreline just east of Blenheim.

The 2.4km Waterview Tunnel in Auckland, pictured, cost $1.4b, which equates to about $583m per kilometre. For a 27km ...

CALLUM MCGILLIVRAY/STUFF
The 2.4km Waterview Tunnel in Auckland, pictured, cost $1.4b, which equates to about $583m per kilometre. For a 27km tunnel, that’s $15.7b. For a 65km tunnel, that’s $37.9b.
 BRIDGE OR TUNNEL?

Bridges are much cheaper than tunnels. The catch? A bridge would have to withstand a highly turbulent Cook Strait, probable earthquakes and be high enough for ships to get through (or at least able to open up).

A 65km-odd bridge would be New Zealand’s biggest bridge by far. The current longest bridge is Canterbury’s Rakaia Bridge at just 1.8km.

One of the possible routes for a Cook Strait bridge or tunnel: Cape Terawhiti to Arapaoa Island, the shortest point ...

JULIAN LEE/GOOGLE MAPS
One of the possible routes for a Cook Strait bridge or tunnel: Cape Terawhiti to Arapaoa Island, the shortest point between the two islands, 22km.
 It’s so long, in fact, that if it existed it would be the sixth-longest bridge in the world.

But the cost of a bridge is not impossible for New Zealand.

The 38km Lake Pontchartrain Bridge in Louisiana, United States is the longest in the Western world. It cost roughly NZ$561m in today’s dollars. For a 60km-odd long bridge, that would be more than $1 billion.

Looking towards Wellington city - the starting point for a tunnel or bridge?

ROBERT KITCHIN/STUFF
Looking towards Wellington city – the starting point for a tunnel or bridge?
 The 55km Bang Na Expressway in Thailand, which would be closest in size to a Cook Strait Bridge, cost about NZ$1.9b in today’s dollars when it was completed in 2000. Both are a steal compared to the estimated $3.4b cost of Auckland’s City Rail Link.

Tunnels, on the other hand, are much more expensive.

The 2.4km Waterview Tunnel in Auckland cost $1.4b, which equates to about $583m per kilometre. For a 27km tunnel, that’s $15.7b. For a 65km tunnel, that’s $37.9b.

One of the possible routes for a Cook Strait bridge or tunnel: Wellington to Picton, the shortest route between two ...

JULIAN LEE/GOOGLE MAPS
One of the possible routes for a Cook Strait bridge or tunnel: Wellington to Picton, the shortest route between two developed centres, 64km.
 Stuff pitched the strait drive options to the New Zealand Transport Agency (NZTA). A spokesman pointed out that using the Waterview’s costing was probably not worth while.

“Waterview Tunnel went through rigorous business case and cost/benefit analysis. It’s hard to imagine a serious case for a Cook Strait tunnel that would be more than 10 times longer and three times deeper than Waterview and considerably more expensive.

Nonetheless the NZTA was open-minded.

“To the best of our knowledge there’s never been a serious feasibility study of a Cook Strait tunnel, nor has there been a need for it,” the spokesman said.

“The costs to build and operate such a tunnel would be huge, but anything is possible with unlimited time, money and expertise.”

There does not appear to be a simple way to work out how much tunnels cost.

The Channel Tunnel, or “Chunnel” connecting Britain and Europe has the longest undersea portion of any tunnel in the world – its total length is 50.45km, just shy of what would be required under the Cook Strait. The Chunnel’s lowest point is 75 metres below sea level – the strait averages almost twice that depth at 128m.

The Chunnel cost £9b at the time of completion in 1994 – something like $30b in today’s New Zealand dollars.

Japan’s Seikan Tunnel is 54km connecting the islands of Honshu and Hokkaido across the Tsugaru Strait, which is much deeper than Cook with a maximum depth of 200m. Japan, like New Zealand, is a shaky country. It cost around NZ$10b in today’s money.

Stuff pitched the idea of crossing the strait to Treasury. A Treasury spokesman said: “In a hypothetical situation such as what you suggest, the Treasury would provide analysis and free and frank advice to the responsible ministers.

“We would factor in a number of aspects, such as cost-benefit analysis, alternative options and solutions for whatever issue the project is intended to address, impact on the Crown accounts, the government’s capital spending allowances, project funding alternatives (eg government-funded, privately funded, a public-private partnership etc), broader considerations such as environmental and social impacts, and other matters.”:

The spokesman also said how much money was in the kitty for transport infrastructure projects: There is $3.4b available this year and another $3.4b next year, but in 2020 there will be only $3.1b and the following year just $2.7b.

In other words, even if the government were to spend 50 per cent of the country’s capital allowances for transport over the next four years, a tunnel starting from Wellington might not even get to the water.

ANOTHER SOLUTION

Having to choose between a bridge that could fall over in the next earthquake and a tunnel that could impoverish the entire country would be enough to make most Kiwis spit their tea out. But perhaps there is a third way.

Palermo, the engineering professor who wrote off the idea of a traditional tunnel or bridge, has another, more modern idea. A “submerged floating tunnel” – a tunnel that floats on or near the surface of the sea and is anchored to the ground.

One has never been built, but the idea is being developed and explored in places like Japan and the USA.

Palermo said sea currents, earthquakes and tsunamis are the main challenges, but: “I think the concept could be feasible. Construction will not be easy, but not far different than building an off-shore petrol platform. The bridge could be manufactured with innovative ultra-high performance concrete and segments of the tunnel prefabricated in a specialised precast yard.

“The great challenge will be the anchors, but it will not be more challenging than an off-shore platform.

“Given the flexibility of the tunnel, its response to earthquakes may not be so problematic and the anchors could be designed to accommodate big ground displacement generated by fault rupture.”

Palermo said the ultra-high performance concrete will reduce the amount of concrete required and guarantee long-lasting durability – perhaps more than a century.

“I also like the possibility to create within the tunnel an outlook with structural glass windows and turning it into an iconic tourist attraction.

“Moreover, it could have a negative carbon footprint (this means that it doesn’t have embedded energy costs) if the impact of currents could be turned into energy to be used for the tunnel or possibly sold out to Wellington and Marlborough.

“It will not have a strong environmental impact and I think it could be seen in the future, especially if there will be a take over with electric cars.”

Palermo said the concept is still being developed and costs are unknown.

The closest New Zealand has ever come to physically uniting the country seems to be a bit of political banter loosely attributed a politician more than a century ago. Seasoned politicians from our own time have not even heard the idea raised once in the halls of Parliament – not even in the back halls.

If New Zealand were to really bridge a 20,000-year-old gap over one of the more problematic stretches of water the world has to offer, it may be time, rather than money, that might be the best bet.

 – Stuff

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