KiwiRail faces future with its hand out

With its fleet of ageing ferries, age-expired locomotives and the need for replacement wagons, KiwiRail is building its case for a large taxpayer investment. David Williams reports.

It was in 2008, an election year, that Helen Clark’s Labour-led government bought back the country’s rail assets under the KiwiRail banner.

Finance Minister Michael Cullen said at the time that during negotiations with the previous owner, Toll, it become clear that buying the rail operating business, including the inter-island ferries, was the best way to increase investment in the industry. Running a commercially viable business would prove extremely difficult without government support, he said, adding: “In the months ahead, I will explore options for significant investments in new, modern rolling stock.”

Instead, Labour lost that election and the global financial crisis kicked in, leading to years of public sector belt-tightening under Prime Minister John Key. Yet, despite all the rhetoric about roads – especially those of national importance – the National government pumped billions into rail. According to The Listener, the previous government spent about $2.1 billion on network maintenance and upgrades, and $1.4 billion for commuter rail upgrades in Auckland and Wellington.

But it’s never been enough. While its freight and tourism businesses manage to make a small operating profit, the company traditionally needs more than $200 million a year to maintain its network. That network includes 3500 kilometres of track, 1322 bridges and 98 tunnels, as well as maintaining its “above-rail” assets.

KiwiRail’s latest half-year report said more than half of the company’s active locomotives in the South Island were bought before 1975. That reflects, KiwiRail chairman Trevor Janes wrote, “decades of underinvestment which has contributed to recent challenges” – including the 2016 Kaikoura earthquakes.

“A rail company cannot live from pay cheque to pay cheque, you need a longer-term focus.” – David Gordon

It’s in this context that KiwiRail started a review. In last year’s Budget, the National-led Government pledged $450 million over two years, on the proviso there was a probe into its operating structure and longer-term capital requirements. “The Government wants to put the rail network on a longer-term sustainable footing,” then Transport Minister Simon Bridges said, in the hope National could suddenly achieve what it had failed to do for years.

The focus of that review changed when Labour, New Zealand First and the Greens formed a Government. (Pre-election, Labour promised to build light rail from Auckland’s CBD to the airport and a passenger service between Auckland, Hamilton and Tauranga.)

KiwiRail’s group general manager of investment, planning and risk David Gordon tells Newsroom there’s now a greater focus on “What do you want rail to do?”, as opposed to simply how much will it cost. “A rail company cannot live from pay cheque to pay cheque, you need a longer-term focus. I think everyone understands that. The question is, what is the mechanism by which that’s done and then, obviously, what is the amount.”

One mechanism, announced in April, was a surprise petrol tax hike, something Newsroom Pro’s Bernard Hickey called the Government’s “politically riskiest move since its formation”.

In its policy statement on land transport, which sets transport priorities, the new Government sent a message by adding rail to the list of transport classes that can bid for money from a pot called the national land transport fund. (Auckland is set to get a $2.8 billion increase from the fund, to help pay for a $28 billion transport wishlist over the next decade.)

However, the policy statement said scope for rail funding is “very tight”, and limited to improving struggling urban rail services and contributing to new and existing “interregional” commuter services.

‘Rust never sleeps’

KiwiRail’s review is scheduled to run through the rest of this year. But Gordon says for the biggest-ticket items, which will cost the largest dollops of money, it wants to bring these to the Government’s attention earlier. Those include its locomotives and ferries, which are at “end of life”, and money spent in its freight business “just to remain relevant”. KiwiRail would also like to standardise its equipment and link its IT systems more closely to that of its customers.

The problem is, and always has been, how much money KiwiRail needs just to maintain its network. Two weekends ago, a big chunk of the Auckland network and almost all of Wellington’s network was closed for replacement works. In greater Wellington, five bridges are in various stages of replacement involving 70,000 railway sleepers.

“It goes on all the time,” Gordon says. “Rust never sleeps.”

KiwiRail has also become very good at sweating its big ticket items like locomotives and ferries. But you can only sweat them so much.

Off the back of a record summer season, KiwiRail’s general manager of strategic projects Walter Rushbrook says its existing ferries are at capacity at peak periods. It is considering whether it should buy or lease bigger ships to cope. That’s triggered wider conversations about transport links with the likes including port companies, regional councils and NZ Transport Agency, especially about the future of existing ferry terminals in Wellington and Picton. As Rushbrook says: “Bigger ships mean you need bigger wharves.”

 
Kaitaki is the largest vessel on Cook Strait with a capacity of more than 1300 people. Photo: KiwiRail

KiwiRail’s Interislander ferries – Kaitaki and Aratere, which it owns, and the leased Kaiarahi – are not expected to have cataclysmic failures as they age, he says. But they might become more unreliable. “The team works really hard to keep it going but it’s like an old car – it’s going to need increased amounts of love as it gets into its twilight years.”

Meanwhile, Gordon says about half of KiwiRail’s 100 locomotives are “age-expired”. New locos cost about $5 million. “You could do the maths there.” Wagons also need replacing – he didn’t hint at how many – standard flat-top wagons cost about $150,000-a-pop.

“So, yes, it’s in the hundreds of millions, absolutely.”

Surely that number could reach $1 billion, over time? Gordon says that as a stand-alone commercial proposition, rail in New Zealand has never been in a position to fund its underlying capital, of about $200-odd-million a year.

“On an ongoing basis, rail will require capital. You do the years long enough it’ll get to be a very big number.”

Asked when big chunks of Crown investment might be needed in KiwiRail’s ageing infrastructure, Gordon and Rushbrook both arrive on a rough timeframe of five years.

Turnaround comes to a screeching halt

Labour would do well to focus on the non-financial benefits of rail – such as carbon emission savings and easing congestion – if National’s record is anything to go by.

In 2010, it enacted a $750 million “turnaround plan” in the hope of making KiwiRail self-sustaining by 2021. The plan was shelved in 2013. A Treasury review found KiwiRail had made substantial progress but the plan had been based on overly optimistic revenue assumptions, inadequate progress in some areas and unexpected factors, like the global recession.

Hundreds of millions of Crown dollars continued to flow into the rail company. A commercial review started in 2014 found that New Zealand’s freight business would never be big enough for KiwiRail to be self-sustaining. By 2016, six years after the turnaround plan started, freight volumes had increased 14 percent, and KiwiRail’s share of import and export volumes had leaped 69 percent. Another 48 locomotives and 1300 wagons were bought.

So much was achieved. And then the Kaikoura quakes hit in November 2016.

In latest KiwiRail accounts, for the half-year, the company notes its insurance only covers loss and damage up to $350 million. The previous Government promised to meet any shortfall, including, in that last six-month period, a $40 million injection, while the company’s accounts took a charge of $134.1 million on its assets “for the capital cost of reinstatement incurred”.

Gordon says if Crown money is invested properly it can deliver on Government policy objectives. He points to Government investment in Auckland’s commuter rail network. In 2003, when Britomart station opened, patronage was about two-and-a-half million trips a year. Last August, the rail network celebrated recording 20 million trips in a single year.

Gordon: “I can’t see any reason to suspect that, post the City Rail Link and other things, that could be up in the 50s.”

Peters versus English

A question which seems more relevant in the last 24 hours is, what are the Government’s objectives? Yesterday Labour’s Justice Minister Andrew Little announced he was backing off repealing the controversial Three Strikes law because New Zealand First wouldn’t support it.

In terms of KiwiRail’s future, it’s worth repeating an exchange in Parliament in February 2015.

Bill English, the Finance Minister at the time, found himself defending his Government’s investment in KiwiRail – more than $1 billion over four or five years – under questioning from Finance and Expenditure Committee member Winston Peters.

Plugging capital investment gaps of between $150 million to $350 million a year was a concern, English agreed.

Peters asked English if he’d had any discussions about privatising the ferry service or putting in foreign ships or crews. No, English replied, adding: “This is a business where it’s a real challenge to get it to a sustainable basis, and we are now, I think, on about our third round of having a harder, deeper look at what drives KiwiRail costs and revenue.”

Peters, unsatisfied, pressed further, asking if any Treasury boffins had ever asked about the financial “disaster” happening at KiwiRail, the “almost daily stoppages” and whether it needed to go through the business with a fine-tooth comb. “Surely somebody said: ‘Look, alarm bells should be ringing here. What are we going to do about it?’”

Newsroom asked Peters, the Minister of State Owned Enterprises and soon to be acting prime minister, for his current view of KiwiRail’s operations and the likelihood of further Crown investment. His office didn’t respond.

KiwiRail welcomes Northland rail pledge

There is local support for rail improvements.
DANICA MACLEAN/FAIRFAX NZ

KiwiRail is welcoming the Government decision to investigate upgrading and expanding rail north of Auckland.

The initiative was announced by the Ministers of Transport and Regional Development as part of a package of Provincial Growth Fund improvements to help Northland’s economic and social growth.

They pledged $500,000 to examining the potential for rail improvements.

The coalition agreement between Labour and NZ First said the new Government would commission a feasibility study on the options for moving the Ports of Auckland, including giving Northport serious consideration.

Friday’s announcement did not mention the port specifically.

“We are looking forward to participating in the business case process. As the Government has indicated, KiwiRail has the ability to drive economic growth in the regions through our freight network, world-class tourism services and the passenger services we enable,” said KiwiRail chief executive Peter Reidy.

“Using rail also delivers a range of significant benefits including reducing carbon emissions and road congestion, making our roads safer, lowering spending on road maintenance and upgrades, and reducing fatalities.

“Every tonne of freight carried by rail is a 66 per cent emissions saving over heavy road freight.

“Northland’s rail lines are under-used and much of the rail infrastructure is old, reducing the speed at which trains can travel. The tunnels are not fit for purpose when it comes to container freight and considerable investment is needed to bring the rail line up to modern standards.

“If it proceeds, this work will allow for faster trains, larger modern sized containers and tourism services.”

KiwiRail currently runs one weekday return service to Auckland on the line predominantly carrying dairy and forestry.

– Stuff

Trains back on Wairoa – Napier line

Trains will be moving again on the Napier to Wairoa line for the first time in six years next Wednesday.

“The project to re-open the line will pass a significant milestone when a work train travels up to Eskdale from Napier delivering ballast,” KiwiRail Chief Executive Peter Reidy says.

“Having work trains running is an important part of getting the line open to shift logs by rail and take trucks off the road.

“The line is expected to be ready for logging trains by the end of the year.

“This is also a good time to remind people of the need to take care around the rail line. Because it has not been in use by trains, people need to be aware that trains will now be on the line, and that they need to be looking out for them,” Mr Reidy says.

There will be a ceremony to mark the return of trains at KiwiRail’s operations depot in Ahuriri.

There are good vantage points for members of the public who are keen to see the train as it passes at Meeanee Quay and Domain Rd at around 11.30am.

The line is being re-opened by KiwiRail using $5 million of funding from the Government’s Provincial Growth Fund, and will be used to transport logs to Napier. The work is expected to take two years to fully complete.

“This is an important project for the region, for New Zealand and for KiwiRail. It lifts the regional economy. It makes the roads safer by taking logging trucks off roads that were not designed to cope with growing volumes. It helps the environment by cutting carbon emissions,” Mr Reidy says.

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

Don’t lose track of rail freight limitations – David Aitken

Rail freight has its place but . . .

Rail freight has its place but . . .

OPINION: The Government has been talking about getting freight off the country’s roads and on to alternative sea freight and particularly rail freight.

Rail freight has its place and already its biggest customer is the road freight transport industry.

But it also has its limitations.

If Europe is any example, nothing much will change, despite the Government and KiwiRail’s best efforts. Trucks will always be required to deliver a large portion of the country’s freight demand.

While bulk freight can be transported by rail or sea, market demand in the freight industry will dictate how customers want their goods moved.

Since 2000 the European Union has provided policies and incentives to shift freight off the road to rail, coastal shipping and Europe’s extensive canal system.

They haven’t worked.

Road still carries about 75 percent of all Europe’s freight.

The total tonnage carried by rail and other modes has gone up but so has road freight, so the proportion each carries has remained about the same.

The market has continued to decide which form of freight to use, rather than incentives and tax breaks.

Improvements to rail infrastructure in Europe have only resulted in small increases in rail freight carried, so rail has been reluctant to make large capital expenditure, because the returns aren’t there.

The same is likely to apply to New Zealand.

Road freight will always be preferred for any perishable goods because it can carry out the task faster – apart from much more expensive air freight.

Road freight has greater service quality – quicker door to door delivery times and greater safety with less chance of damaged goods, which usually occurs when the freight is changed from one mode to another.

Even when rail or sea is used, trucks are often needed to get goods to the rail hub or sea port to start the journey and then pick them up to make the final delivery.

Highly competitive costs within the road freight sector make it more appealing to customers than the alternatives.

Road freight has flexible route choices. Rail and sea do not with only a few fixed routes.

Road freight will nearly always be used for the “last miles” as customers want door to door delivery.

Rail is only generally better when the type of goods (very large or non-urgent) can be shipped by train instead of road.

This occurs when a customer places all their business with a road freight operator who then decides the best way to ship it to meet deadlines or budget.

Improving New Zealand’s rail services and infrastructure will be taxpayer funded and subsidised. Improvements in road freight transport – newer fleet with cleaner emissions, less noise – are paid for by the trucking companies and their customers.

Rail will only ever handle a small proportion of the country’s total freight as 90 percent of road freight is done within metropolitan/urban areas where rail and sea are not an option.

With the increased investment in the rail sector, KiwiRail remain a commercial operating arm of the government, this is likely to require rail price increases to cover the investment costs, closing the gap between road and rail pricing, making the later less attractive to freight customers.

National Road Carriers is the leading nationwide organisation representing companies involved in the road transport industry. It has 1700 members, who collectively operate 15,000 trucks throughout New Zealand.

David Aitken is the chief executive of the  National Road Carriers Association

 – Stuff

Interislander ferries to Nelson for annual maintenance

KiwiRail’s Interislander ferry Kaiarahi heads across to Nelson at the end of this week, marking the start of an annual maintenance and inspection programme for all three ferries

KiwiRail General Manager Interislander Operations, Mark Thompson, says Kaiarahi will be in Nelson for in-water maintenance before sailing to Sydney for dry-docking.

“This year all three ferries – Kaiarahi, Aratere and Kaitaki – will undergo scheduled maintenance and inspections from mid- May until mid-August.

“Once the Kaiarahi returns into service the Aratere will then head to Nelson and onto Sydney. And finally, when Aratere returns, Kaitaki will then undertake survey and maintenance here in Wellington.

“We always carry out this critical work over the quieter winter months, so we minimise disruption to our freight and passenger customers. While each ferry is out of service, timetables will be adjusted so we continue to run services in the most important timeslots for our customers,” Mr Thompson says.

“For the six-week period that Aratere is away we will provide a road bridging operation, using road trailers and intermodal equipment to ensure uninterrupted transport of rail freight between islands.”

Kaiarahi will undergo maintenance including painting and steelworks, and inspections in Nelson.

“We chose Nelson for the in-water part of the programme because it has a good marine engineering resources and favourable weather at this time of year,” Mr Thompson says.

While in Sydney work will also be done to Kaiarahi and Aratere to make them more fuel efficient.

“Both ferries will undergo annual, five-year and 20-year surveys – the marine equivalent of warrants of fitness – on critical equipment and components. These are carried out by international surveyors.”

Govt’s electric train promise now off the rails – union

Radio NZ – The railway union is accusing the government of breaking a pre-election promise to stop the removal of electric trains from the North Island’s main trunk line.

no caption

Photo: 123rf.com

KiwiRail freight trains use diesel locomotives in Wellington, switch to electric units at Palmerston North, then back to diesel in Hamilton.

That’s because 1980s electrification of the main trunk line was never finished.

KiwiRail decided two years ago to replace its electric engines with diesel.

The Labour Party told the rail operator in August it would stop that plan, so the rest of the line could still be electrified.

It said removing the engines would make it virtually impossible to electrify the rest of the network.

KiwiRail said it has received no directive and is pushing ahead to get rid of the locomotives by April next year.

Transport Minister Phil Twyford said he was still talking with the company, but it was clear it could not afford to buy new electric engines.

“KiwiRail makes the case that they are dealing with the legacy of decades of under investment and that it’s very hard for them to justify on cost grounds, replacing the electric locos that are at the end of their life, with new electric locos,” he said.

Rail and Maritime Transport Union general secretary Wayne Butson said the electric engines were not at the end of their lives.

He said KiwiRail has not maintained them and all they needed was new wiring and electronics.

“At 30 years old they are some of the youngest locomotives in the KiwiRail fleet,” he said.

KiwiRail said it would take four years to get new electric engines into service, because they have to be made for New Zealand conditions, including its narrow track and tunnels.

But Mr Butson said the operator could buy a refurbished model of the same train for sale in Queensland.

“A group of engineers went from KiwiRail to Queensland, our understanding is that they said that these locomotives were immediately acceptable for our fleet,” he said.

Mr Butson said it was not clear why KiwiRail turned down the Queensland locomotives and the company had refused to give them a copy of the engineers report.

KiwiRail said while electric engines were cheaper to maintain, they were more expensive to buy and it estimated diesel engines were between 30 and 40 percent cheaper over the course of their lives.

It said having a more efficient service encouraged companies to use rail, rather than road, which reduced greenhouse gas emissions.

Minister for Workplace Relations Iain Lees-Galloway is to meet with staff from the electric depot in Palmerston North next week to talk about their futures.

Govt are repackaging National transport projects – MP

The National Party says the government has simply adopted its vision for transport in Auckland.

An Auckland Transport train passes by Mt Eden prison
An Auckland Transport train passes by Mt Eden prison Photo: RNZ / Diego Opatowski

The government launched its rejigged $28 billion Auckland Transport Alignment Project that will fund roads, rail, bus lanes and cycleways across the city over the next 10 years and is aimed at easing Auckland’s infamous congestion.

At the launch, Auckland Mayor Phil Goff made it clear the city must deal with its traffic problem.

“We have congestion, we are facing gridlock, it is costing us huge frustration and it is costing the country, not just Auckland, the country one to two billion dollars a year,” Mr Goff said.

Transport Minister Phil Twyford said the Auckland fuel tax and public private partnerships will help fund the projects and deliver a congestion-free rapid transit network.

“All over the world cities are retrofitting car-dependent urban areas with modern rapid transit systems.

“In Australia alone, there are light rail systems currently being built in the Gold Coast, in Canberra, in Newcastle, in Sydney and in Melbourne.

“Dozens and dozens of cities around the world are doing this because they recognise that cities of any scale cannot be either liveable or economically prosperous without modern rapid transit systems.”

National’s transport spokesperson Jami-Lee Ross said many of the projects are awfully familiar.

“I think the best part of it is that they’ve recognised that many of the projects the National Party were putting in place were well worth doing – they’ve agreed to do what effectively Simon Bridges announced in August last year,” Mr Ross said.

“So Phil Twyford’s adopting many of the projects that we were progressing – the key difference is, we wouldn’t have taxed the country more to subsidise those trams down Dominion Road.”

Mr Ross said some motorists will be hit hard by the new funding mechanisms.

“The worst part about this is that we’re seeing from Labour they’re happy to put up more taxes on the whole country – when it comes to the Penlink area, they want Rodney people to pay a regional fuel tax, increased national fuel taxes and they want to put the toll on top for Penlink.

“So, those people are being whacked three times for that particular road … but that’s the Labour Party for you.”

Act’s David Seymour said the government could have been more ambitious.

He said there needs to be extensive public private partnerships and electronic road pricing to complete the motorway network.

“We’re talking a second Harbour Crossing, we’re talking an underground tunnel to complete the Eastern Motorway without disturbing existing suburbs.

“Those are the kinds of radical developments that are required, so good on the government for what they’ve done but it’s simply not proportional to the crisis, it’s like setting a capuchin monkey on a gorilla,” Mr Seymour told RNZ.

Mike Lee: Trams to the airport is deluded folly

By Mike Lee

Light rail from the CBD to the airport risks being a costly failure.

Historian Barbara Tuchman’s acclaimed March of Folly — from Troy to Vietnam published in 1985 was about “the pervasive presence, through the ages, of failure, mismanagement and delusion in government — contrary to its own self interest”.

I think about Tuchman whenever the question of rail to Auckland Airport comes up. There could be no more graphic example of Tuchman’s thesis than the decision to rule out the possibility of trains servicing our airport.

Since NZTA and Auckland Transport took this foolish decision in mid 2016, mayor Phil Goff and now the Labour-led Government (cheered on by the Greens but not NZ First which favours heavy rail) have fallen into lockstep.

Auckland Airport is of critical economic importance to Auckland and to New Zealand — it is the premier gateway to the country. Despite hundreds of millions of dollars spent on road construction in recent years, congestion on the route to the city is already near where it was 10 years ago, chronic at peak times, periodically at gridlock. With airport passenger movements currently 19 million per year and predicted to increase to 40 million by 2040, this chronic congestion can only become worse — with dire consequences.

It need not be so. Following on from work initiated by the former Auckland Regional Council, in September 2011, a multi-agency study involving Auckland Council, Auckland Transport, NZTA, KiwiRail, Auckland International Airport Ltd, and GHD consultants, after examining light rail (trams), busway and heavy rail (electric train) options, concluded that a heavy rail loop from Onehunga 10km to the airport and 6.8km from Puhinui on the main trunk line would be the “most economically efficient” solution — providing a fast, single-seat journey from airport to downtown Auckland, including the future CRL stations; and in some cases with cross-platform transfers, all points on the rail network including Newmarket, Henderson, Glen Innes, Pukekohe, and ultimately Hamilton.

In 2012, this recommendation, after wide public consultation, became a commitment in the Council’s Auckland Plan: “route protect a dedicated rail connection in the first decade (2011-2020); construct in the second decade (2021-2030)” — (after the City Rail Link).

However these carefully laid plans were overturned by AT bureaucrats (none of whom had any experience with light rail) claiming a tram travelling from the CBD to the airport via Dominion Rd despite stopping at 20 tram stops and numerous intersections while keeping to a 50km/h speed limit would get to the airport within one minute of an electric train travelling up to 110km/h.

In late 2016 following the election of Phil Goff, the favoured Onehunga-Mangere rail corridor was deliberately blocked by AT when it demolished the Neilson St overbridge south of the Onehunga train station, placing the road across the rail corridor.

Melbourne is one major Australian city that does not yet have airport rail but it does have the most highly developed, sophisticated light rail system in the world. Unlike Auckland however, the Victorian Government is NOT planning on light rail for Melbourne Airport but heavy rail. This on the grounds that trains provide a faster, more predictable journey time and can carry a lot more people and luggage than street-running trams.

This week Australian Prime Minister Malcolm Turnbull announced a A$5 billion ($5.4b) Federal government contribution to building four dedicated heavy rail routes between Melbourne Airport and the CBD.

It would seem then there is a yawning gap opening up between the views of Aucklanders and our own political class. To most Aucklanders I speak to the idea of trams to the airport remains something of a joke — and now not so funny given the cost of $4b just for an airport and Westgate tram line. Aucklanders are being told they will have to pay for this not only in their rates but also in an extra fuel tax. Extraordinarily, on the advice of tyro transport ministers Phil Twyford and Julie Anne Genter this tax is to be imposed for a project that has no business case.

Light rail (trams) to the airport will be slower to build, provide a slower journey, serve a more restricted catchment and cost far more than extending the existing rail network. Why isn’t the Government capitalising on the huge strategic investment going into the City Rail Link?

Tuchman’s made up some rules on how government policy decisions qualify as a “March of Folly”. First the policy must be contrary to self-interest, (check); secondly a feasible alternative policy must be available (check); and finally the policy must be that of a group (not an individual insane ruler) (check).

The feasible alternative of connecting Auckland Airport to the electrified main trunk line at Puhinui has been costed by one recent study at around $750m. This rail corridor must be protected urgently before this option too is sabotaged.

There certainly is a role for light rail in Auckland as we max out bus capacity on our inner city routes — but light rail will be a hugely expensive failure as a rapid transit airport solution.

Mike Lee is an Auckland Councillor. He is a former director of Auckland Transport (2010-16) and a former chair of Auckland Regional Council (2004-10).

$28 billion funding package for Auckland roading and public transport projects unveiled

A $28 billion transport programme has been unveiled for Auckland in what’s been described by the Government and Auckland Mayor Phil Goff as the country’s largest ever civil construction programme.

Its backers say the work will help create a 21st century transport network for the city.

“Together, we will invest $28 billion over the next decade to unlock Auckland’s potential. We will be building vital projects including light rail, Penlink and Mill Rd, heavy rail and bus upgrades, safety improvements, and more dedicated cycle lanes,” said Transport Minister Phil Twyford.

The investments are made possible by a $4.4b funding boost resulting from the Auckland regional fuel tax (RFT), increased revenue from the National Land Transport Fund, and a new funding mechanism, Crown Infrastructure Partners, Twyford and Goff said at Newmarket railway station.

Earlier today, the Herald reported the Government will fund two major new roading projects in Auckland.

One is Penlink, in the north, providing a new connection between the Whangaparaoa Peninsula and the Northern Motorway. Motorists will pay a toll to use the road – a measure National has criticised as a “triple whammy” for motorists.

The other project is Mill Rd in the south, improving the connection from Manukau through Takanini to Drury.

Both roads have been favoured projects of the former National-led Government. But until today they did not feature among the key elements of the Labour-led Government’s transport strategy for the city.

Projects in the joint Government-Auckland transport programme, known as Auckland Transport Alignment Project (ATAP), include:

• Committed projects like the City Rail Link and Northern Motorway improvements.
• Light rail, or modern trams.
• Eastern busway (Panmure-Botany).
• Airport-Puhinui State Highway upgrade, including a high quality public transport link to an upgraded Puhinui railway station.
• Bus priority programme, to more rapidly grow Auckland’s bus lane network and support faster, more reliable and more efficient bus services.
• Albany-Silverdale bus improvements.
• Lower cost East West Link to address key freight issues in the area.
• Papakura-Drury motorway widening.
• First phase of the Mill Rd corridor.
• Penlink road (motorists will pay a toll to help fund this).
• Walking and cycling programme to expand the network and complete key connections, such as Sky Path.
• Significant programme of safety improvements.
• New transport infrastructure to enable greenfield growth
• Network optimisation and technology programme to make the best use of our existing network.
• Rail network improvements including electrification to Pukekohe, additional trains and other track upgrades.

“This plan is funded to deliver the projects we are committed to,” Twyford said.

“The previous ATAP report, released by former Transport Minister Simon Bridges in August 2017, had a $5.9 billion funding gap. National had no plan to fix that fiscal hole, which would have meant the projects they promised couldn’t have been delivered.

“This $28 billion plan will help ease the awful congestion that has been caused by a decade of under-investment. We will create a congestion-free rapid transit network and boost other alternatives to driving to help free up the roads, enable growth, and improve safety for drivers and others.”

Goff said: “ATAP balances the need to deal with Auckland’s immediate and pressing transport needs, as well as being transformational for the future.

“ATAP reflects the need for efficient roading for green and brownfield housing development, new transport corridors and major arterial routes. But as Auckland grows we need to move from a focus on roading to a more balanced approach that promotes public transport and active transport networks.

“Auckland has to contribute its share and the regional fuel tax allows us to do that. The more than $4 billion expenditure it unlocks is critically important to progressing a better transport system for Auckland.

“To raise the same sum from rates would result in a total rate increase of over 13 per cent this year. Alternatively, to do nothing would see Auckland become increasingly gridlocked.

“New forms of revenue such as an RFT to invest in our transport network and light rail to supplement buses, ferries and heavy rail are critical for an efficient and effective Auckland transport system. Auckland’s growth means additional investment in these areas is vital for us to tackle congestion problems,” Goff said.

“ATAP represents a significant increase in investment in our transport network, but we still need to find innovative ways to fund further development such as PPPs [public-private partnerships], special purpose vehicles or infrastructure bonds.”

ATAP includes $1.8b in funding for light rail. A work programme is under way to leverage sources of investment capital outside of ATAP for light rail, and an announcement will be made soon.

Under ATAP, Auckland is expected to receive 38 per cent of the National Land Transport Fund over the next decade, proportionate with the region’s growing share of New Zealand’s population.

However, Goff says that this “still falls short of Auckland’s projected 55 per cent share of the country’s population growth over the next decade”.

Read more, including the Auckland Transport Alignment Project documment and the video announcement from Phil Goff and Phil Twyford here.

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.”