“The Upper North Island Supply Chain Study has focussed solely on rail and this does Northland no favours,” says Annabel Young, Executive Director of the NZ Shipping Federation, talking about the Interim Progress Report of the study group. “Their rail-centric view has blinded them to the opportunities available to Northport that are not dependent on rail.”
A dry dock in Whangarei would be a win-win for both the city and New Zealand as a whole; but in the interim report it gets a scant one-line mention. The lack of a dry dock is hurting this country due to the environmental and financial costs that have to be incurred when our coastal shipping operators are required to dry dock their vessels off-shore in Singapore or Australia. There are already cases where overseas ships are avoiding New Zealand due to the toxic combination of high biosecurity cleanliness requirements for a vessels hull and secondly, the inability to clean a ship in a dock that does not fit in the Devonport dry dock.
We note that the interim study assumes that cargo landed in Northport would need to be moved by rail which ignores the obvious possibility of movement by sea, as is done now in many other parts of the world using smaller domestic coastal ships and barges.
This first report sets up a paradigm where rail is deemed to be the only answer. The Federation believes it may be asking the wrong questions.
The New Zealand Shipping Federation began in 1906 and is the key representative body for New Zealand’s coastal ship operators.
An inland port in west Auckland and a vehicle importing and servicing centre at Northport are among a dozen potential transport investments a working group is considering to improve freight handling in the upper North Island.
The group, formed last year, has spent the past eight months talking with users and imagining how the existing ports at Auckland, Marsden Point and Tauranga – and the road and rail links between them – could be reconfigured to provide the best options for long-term growth.
It plans to report back to the government in June with options and complete more detailed costings and recommendations in September.
“There are a large number of infrastructure options that may have a part or full place to play in changes to the upper North Island supply chain which will be considered,” chair Wayne Brown says in a progress report filed with Cabinet’s Economic Development Committee earlier this month.
“For example, in evaluating one of our options that involves moving some of Ports of Auckland’s freight task to Northport, we will consider potential infrastructure that may be required to support this,” the group says.
They include: “a spur to Northport, which we understand the current government is investigating; upgrades to the existing North Auckland Line; potential short-term operational changes, such as moving freight through Auckland on the commuter network at night; potential long-term new infrastructure requirements such as a new rail line out west of Auckland to avoid congestion in the Auckland public transport rail network and connect through to the current inland freight terminals; and the potential establishment of new inland freight terminals.”
The Upper North Island Supply Chain study was the result of a pre-election pledge by NZ First to move container operation from Ports of Auckland to Northport by 2027.
While there is broad consensus that Auckland’s port will be increasingly constrained by the city’s development around it, there is no agreement as to how soon change is needed, how much freight could be redirected through Tauranga or Northport, and how that would be achieved.
As recently as 2016 a study group recommended work start assessing Manukau Harbour or the Firth of Thames as long-term replacement options for Auckland. Last August, Port of Tauranga chief executive Mark Cairns said there wasn’t yet sufficient freight volume in Northland to warrant the relocation north. Port of Tauranga owns half of Northport.
Auckland and Tauranga are the country’s two largest container ports. With Northport, they handle about half the country’s exports and two-thirds of its import volumes.
Tauranga and Auckland, controlled by Bay of Plenty Regional Council and Auckland Council respectively, compete for freight. They considered a merger in 2006 but talks collapsed the following year. Ports of Auckland has a 20 percent stake in Northland Regional Council-controlled Marsden Maritime Holdings, Tauranga’s partner in Northport.
The working group noted submitters’ views that the “interwoven” nature of the three ports’ ownership had prevented them being developed in New Zealand’s best interests and had resulted in some inefficiencies and “duplication” of resources.
“We will be considering the current ownership structure of ports and whether a change may be needed to ensure interests are aligned to deliver the best outcome for New Zealand,” the group says.
“Councils were somewhat open to a change in port ownership as long as they preserved their income and value of the port to their community.”
Ports are long-term businesses. The working group is canvassing issues in 10-, 25- and 50-year timeframes.
Scope is also important. Freight operators argue Northport, west of the Marsden Point oil refinery, could meet growth on Auckland’s North Shore, rather than replacing Ports of Auckland entirely.
Short-term options could include establishing a distribution centre at Silverdale or Orewa; imports and Northland products could be trucked there overnight – avoiding congestion on SH1 – for day-time delivery into Auckland.
Northport already plays a similar role. Structural components for some major Auckland building projects are stored there for just-in-time delivery to avoid congestion in the CBD.
Car imports have already been identified as a potential early change. Ten hectares of new space at Northport could provide storage for 10,000 cars. Auckland currently receives about 300,000 cars annually, each of which spends close to three days on its wharves.
Northport started operating in 2002 and is largely a blank canvas. Its 49-hectare footprint can be expanded to 75 ha, while its berth length can be more than doubled to 1,390 metres. The port lies next to 180 ha of commercial and industrial land controlled by shareholder Marsden Maritime.
But it has limited capital for development and no rail link. KiwiRail and the Ministry of Transport are investigating a $200 million, 20-kilometre spur line, but that is probably more than six years away even if there was a prompt decision to proceed.
The existing line from Swanson to Fonterra’s Kauri dairy plant north of Whangarei also needs upgrading at a cost of another $500 million to carry larger and heavier container traffic. KiwiRail has previously estimated the total bill – including upgrading rail capacity from South Auckland – at about $2 billion.
The working group noted its “fundamental” belief that there is “no point making further investment in Northport without investment in, and development of, the train line to Auckland.”
OPINION: The first instalment of the Government’s trio of reports on re-shaping how the Upper North Island ports work, suggests that Peter Jackson’s Lord of the Rings movie trilogy will look like a snapshot compared with what lies ahead.
A 2017 New Zealand First policy to shift the vehicle import trade from Auckland to Northport by this year, as a prelude to re-locating the city’s port, begat – thanks to co-alition politics – the more cautious “Working Group undertaking the review of Upper North Island Supply Chain Strategy”.
Shifting the balance of work between the ports, and building major new transport links would be the country’s biggest-ever infrastructure undertaking – possibly five or more times the current champ, Auckland’s $4.4 billion City Rail Link.
Taken at face value, the picture painted of the current state of the Ports of Auckland, Port of Tauranga, and Northport at Marsden Point, shows a flawed regionally-owned port sector with duplication and competition possibly at the expense of the national interest.
Auckland dominates imports, Tauranga exports, both have 40 per cent of their container traffic empty in one direction, while Northport is a distant minnow, with limited access and 70 per cent owned by the other two.
What began as a plan to free Auckland’s waterfront from an ugly industrial port, to the benefit of Northport, is now as much, if not more, about the transport links between the ports and centres in the upper North Island.
A line highlighted in bold print in the 21-page report, points to the scale of making any change.
“We fundamentally believe that there is no point making further investment in Northport without investment in, and development of, the train line to Auckland.”
Call that billions of dollars, who knows how many, 2 or 5? The report doesn’t say.
Done properly it involves a crosstown section through southern Auckland, a third freight line through the commuter rail-dominated suburbs, electrification and double or triple tracking from West Auckland to Marsden Point with new tunnels along the way and presumably fleets of car-carrying wagons and handling facilities.
Future instalments of the trilogy will explore changing the ownership structure of ports, looking at the low-tax status enjoyed only by Auckland, and getting a clearer picture of future trade patterns.
Who knows what the future of the private motor car will look like in 20 years’ time, when the multi-billion investment needed to relocate the vehicle import trade, is ready to deliver.
The three-part study is an important piece of work, taking a long-term view on making possibly major structural change in transport links in the upper North Island, and its ports.
Part two outlining some options is said to be due as early as June, and part three – recommendations – in September, perhaps unhelpfully a month before the local body politicians who own Auckland’s port, and most of Tauranga’s and Northland’s, face re-election.
The interim report already casts doubt on the idea of building a new super-port either in Auckland’s Manukau Harbour or the Firth of Thames, hinting better use of the three ports may be the answer.
“We consider the issues not insurmountable,” concluded the working group’s interim report optimistically.
What it did not say was, nor are they likely to be simple, anything less than eye-wateringly expensive, and hugely complex.
Moving some or all of Auckland’s port out of the city and revitalising Northland’s port including building a rail line between the two are some of the options canvassed in a new report.
However, Auckland Mayor Phil Goff has warned against the potential loss of income from Ports of Auckland if it were moved or downsized, saying if the annual $50 million dividend was lost it could lead to a 4 per cent rate rise.
The first of three progress reports by a working group tasked with investigating New Zealand’s upper North Island supply chain strategy outlines key information about the country’s three main ports: Ports of Auckland on the city’s waterfront, Northport at Marsden Point near Whāngārei and Port of Tauranga.
The ports are critical to New Zealand’s freight task and together account for half of the country’s total export volume and two-thirds of its import volume, in tonnes.
Port of Tauranga handled the highest volume of all New Zealand ports (in tonnes) and was the most successful of the three upper North Island ports having capitalised on rail infrastructure provided to the Bay of Plenty region by the Government.
“We will therefore be considering whether similar investment in Northland would provide similar results for the region and Northport,” the working group said.
The report, released by Associate Minister of Transport Shane Jones, noted that overall imports are expected to increase across all upper North Island regions while exports will increase initially before declining at Northport and Port of Tauranga, largely because of projected decline in log exports.
However, it said roading and rail in the Northland region was so lacking that the working group “fundamentally believe there is no point making further investment in Northport without investment and development of the train line to Auckland”.
“… it is generally agreed that the lack of rail infrastructure and connectivity to Northport has hindered Northland’s economic development.”
Ports of Auckland occupied 77ha of Auckland waterfront with a book value of $735m, though this was thought to be well below valuation of comparable industrial land.
“This excludes the massive social, cultural, environmental and economic value that would be created by transforming this property into a globally iconic waterfront,” the working group said.
Stakeholders including the ports, shareholders and the road freight and shipping industries named several issues surrounding the current port system including:
• They are competing and not co-operating;
• Lack of rail infrastructure and port connectivity had been a brake on Northland’s economic development;
• Unanimous support for a fully functioning rail system to the ports;
• Concerns over duplication of port and inland port assets;
• Congestion was the main problem for freight operators.
Options to make the three ports work better included the Northland to Auckland rail spur, a second route between Auckland and Tauranga, a freight corridor through West Auckland, a West Auckland inland port, an expanded or moved Southdown inland port, a new mega port in the Firth of Thames, a vehicle servicing and import facility at Northport and a New Zealand dry dock.
Goff welcomed the report but said it did not present an analysis of options, the business case for each and the impact of each option on Auckland, the region and the country.
“The relocation of the Port out of Auckland’s city centre has some clear advantages.
“It would ultimately open up 77 hectares of central city and harbourside land and wharves for alternative and potentially more valuable uses.
“As in other international cities, it could enhance the attractiveness of Auckland as a place to live, work, enjoy and to visit. It would also reduce congestion caused by freight movement and pollution from associated activities.”
However, he said as a city of 1.7 million people making up 35 per cent of New Zealand’s population, Auckland needed to have the most cost-effective and efficient way of delivering goods and services to its people.
“Vital to the decision of moving Auckland’s port is the impact of each alternative location on Auckland consumers and businesses.”
Aucklanders needed to know whether and how much alternative port sites added to costs for the city, Goff said.
“We also need to ensure that the working group on the supply chain strategy considers the value of the investment Aucklanders have made in their port and the dividend return they get from it which in past years has been $50 million – equivalent to a 3 to 4 per cent rate increase if that dividend is lost.”
Port of Tauranga chief executive Mark Cairns said the progress report identified well-known issues such as the need for increased investment in road and rail networks and the historic financial under-performance and inconsistent reporting by some ports.
He said Port of Tauranga challenged some of the “facts, assumptions and implications” in the interim report, and were hopeful they will be addressed before the next report.
“For example, the report states that the Bay of Plenty and Waikato have benefitted from rail infrastructure and investment provided by the Government at no capital cost to the end user.
“This ignores the $267 million in rail costs paid by Port of Tauranga since 2010.”
National’s Transport spokesman Paul Goldsmith claimed the interim report showed a “thinly disguised preference for massive investment in rail between South Auckland and Northport, leading to a shift of activity away from the Ports of Auckland to Northport”.
“It also seems to be peddling the concept of a nationalised ports monopoly in the upper North Island. There is no evidence or analysis to back up the suggestion that such a nationalised monopoly would be more efficient than current arrangements.
“There is no evidence to suggest the billions it would cost to upgrade rail from Auckland to Whangarei, plus building a new spur to Marsden point and a new freight line across Auckland, would be the best use of scarce transport resources and would lead to a better outcome for exporters or consumers.”
Goldsmith said the Government was “quite right” to be inquiring into the efficiency of freight movements across the NOrth Island and planning for the long term future.
“We support careful and considered planning of future investment. Which is why National has supported the Government’s planned Infrastructure Commission to advise on such things. The direction of this report, however, undermines the Infrastructure Commission approach.”
A second report outlining advantages to changing from the status quo, international comparisons and a long-term view will be presented to Cabinet in June.
The final report with recommendations for future development and strategy will be presented to Cabinet in September.
Upper North Island ports by the numbers
• Exported 3.25 million revenue tonnes in one year, mostly logs as well as kiwifruit, steel and woodchip;
• Imported considerably lower amount of 311,000 tonnes to June 2018.
Port of Tauranga
• Accounted for 43 per cent of New Zealand’s total export volume in year to June 2018;
• 55 per cent of exports are wood and paper products, majority of which are logs.
Ports of Auckland
• Second largest container port after Tauranga, Ports of Auckland is significant for imports because of the population it serves – 35 per cent of New Zealand’s population.
• Largest importer of vehicles. In year to June 2018, Ports of Auckland handled almost 300,000 cars, a 43 per cent increase from 2014.
• Ports of Auckland and Port of Tauranga have an import-export imbalance – Auckland has higher imports and Tauranga higher exports. It means about 40 per cent of 20-foot containers stand empty.
An artist’s impression of a port-less Auckland. Graphic/Stop Stealing Our Harbour
New Zealand First appears as closed-minded on the Ports of Auckland as the other vested interests, who are either opposing change or advocating for alternatives.However dysfunctional those charged with providing vital transport infrastructure can be, they somehow always manage an instant massed-wagon-circling at the very mention of reform.
The Government is about to receive reports on both the future location of the Ports of Auckland and the feasibility of upgrading Northland’s rail. Labour’s support partner, New Zealand First, is fervently committed to moving some of Auckland’s port business to Northland, saying it will relieve our biggest city of congestion and bring much-needed growth to the north. For the coalition, this could become a make-or-break issue.
Unfortunately, NZ First appears as closed-minded on the issues as the other vested interests, who are either opposing change or advocating for alternatives, such as Tauranga, the Firth of Thames or Manukau Harbour.
Because of the complex governance and ownership issues of Ports of Auckland and other potentially affected ports and public entities, any Government changes will be extremely hard to negotiate. The choices available will also be sandbagged by the virtual impossibility of getting any case for new or restored rail to stack up financially.
However, the biggest hurdle will be patch protection – not just from commercial interests, but also from public agencies who too quickly forget the wider obligation that their state-conferred monopoly status puts on them.
Chief interested party is Auckland Council, which owns 100% of the Ports of Auckland. It has consistently defended its right to the port’s undiminished annual dividend of more than $50 million – to the point of vowing to build a multistorey waterfront car park for more revenue.
Mayor Phil Goff is adamant the port is essential to Auckland’s future. However, this assertion is debatable, given that a city such as Sydney survives very well with its harbour reserved for cruise ships and cargo sent to Port Botany, Wollongong or Newcastle.
Loss of port revenue would, however, doubtless force Aucklanders to pay for the loss with even higher rates, for benefits mostly accruing outside its boundaries. This would be unfair, especially to those on low incomes, and so politically dangerous that no sane administration would cause it to happen.
Perhaps a better starting point would be to regularise, even centralise, the haphazard patchwork of ports ownership. This would inevitably land the Government with a fat compensation bill, but the existing potpourri of local body, port-specific and private shareholders is a barrier to efficiency. Intra-agency competition and multiple interests – Auckland part-owns Tauranga’s and Northland’s port as well – further occlude the picture.
The National Party’s policy of treating the ports as discrete commercial entities immune from state interference is recklessly hands-off. But, by the same token, Aucklanders may be incensed at seeing their port asset commandeered, especially with NZ First so blatantly using Northland as its electoral base.
Yet, Auckland’s port must somehow be restored to being part of the national ports network. Aucklanders, used to the city’s infamous congestion, would be the first to agree it remains an international embarrassment that a prime waterfront site is used to store second-hand cars. Moving the port would unlock 77ha of superb shore land.
Northland’s Marsden Point tempts as an existing deep-water port, which, with a suitable rail spur from the Auckland line, could handle the business. Tourist and even commuter growth could ensue. Yet, there are other considerations, including the likelihood that moving the port to Northland would hugely increase congestion in Auckland, since most goods exported out of it are produced south of the city and would have to pass through it. Even if some of the goods went by train – and the expense of building rail tracks could itself prove prohibitive – the trains would be more frequent and longer, causing frustrating delays at level crossings. There are also the climate-change considerations, with increased emissions from transporting freight over longer distances.
In New Zealand, 99.7% of all imports and exports travel by sea, so the ports issue is not trivial. Any changes to these assets will affect, for better or worse, numerous other sectors and projects, not least the still-uncosted light rail to Auckland Airport. The sheer complexity and political risk may simply end in inertia. But everyone concerned has a duty to approach this debate with the country’s best interests at heart.
Tauranga’s port will continue to “flourish” regardless of whether Auckland’s port moves, city leaders say.
But some warned infrastructure investment was needed to make that happen.
The comments come as the Government is poised to make a big call on whether or not to shift Auckland’s port to the economically-deprived region of Northland.
It followed New Zealand First leader Winston Peters vowing to move Ports of Auckland up north in 2017 and a Labour-led coalition Government leading a study into the three Upper North Island ports with a focus on moving Ports of Auckland to Northport at Marsden Point.
An interim report on that study by a working group headed by Wayne Brown, a former Far North mayor, had been provided to ministers and was due to go to Cabinet shortly.
Ports of Tauranga chief executive Mark Cairns said nobody had seen the recommendations yet, but he believed Tauranga’s port would continue to perform well whatever the outcome was.
He believed the port’s strong growth would continue due to Tauranga’s location as the origin of a majority of the goods exported out of the port are located south of Auckland, not north.
The port owned a half share of Northport, he said.
Tauranga mayor Greg Brownless said if the shift happened, it would not happen for some time.
Tauranga’s port would become busier if it did, due to its good reputation throughout Australasia, he said.
He did not think any increase in activity at the port would be short-lived as it had the capacity for double the number of containers currently moved there.
Congestion caused by inadequate roading would become an issue if Tauranga’s port did get busier, so investment into the city’s state highway, roading and rail network would be vital to cater for any increased freight activity around the city, he said.
He said the port would need to ensure the benefit would be shared with the community.
Bay of Plenty Regional Council regional transport committee chairman Stuart Crosby said it was too early guess what the impact would be, but he was confident Tauranga’s port would continue to operate successfully regardless of what happened up north.
“We have the best operating port in Australasia and it will continue to flourish in the future.”
The Government, however, did need to invest “billions of dollars” in infrastructure to keep up with the port’s development.
OPINION: The future of Auckland’s downtown port deserves careful and unemotive consideration – the problem is, it will become entangled in two elections in the next two years.
The big question is, should all or part of Ports of Auckland’s current operations go elsewhere, either to existing upper North Island ports, or to a brand new port?
Before the 2017 general election New Zealand First pledged to move the whole thing to Northland by 2027 – with the vehicle import trade gone this year.
A working group led by former Far North mayor Wayne Brown has finished an interim report after canvassing the views of major stakeholders on the futures of the three major upper North Island ports, but it has yet to go to cabinet, and is described as “non-decision-making.”.
A more substantial “final” report from the group is expected in September, a month before local body elections.
That is expected to be only the end of the beginning of the debate, signalling the investigations needed if the idea is to be pursued.
Those who were at an early meeting involving Brown and Auckland mayor Phil Goff, described the tone as “interesting”, and the pair clashed publicly even before that meeting.
Goff is navigating a tricky political path, having himself campaigned in 2016 on moving the car trade, and eventually the port, but now having to defend the interests of ratepayers who own Ports of Auckland through the council.
The mayor has quickly filed away a report he commissioned in 2017, hoped to show the economic argument for shifting the vehicle trade out of Auckland.
The report by NZIER in fact found the gain of reclaiming part of the waterfront to be $115 million, but the net cost of losing the trade to be around $1 billion.
If the Brown group report is delivered in the run-up to the local body elections it risks fuelling political posturing on an issue needing no urgent decisions.
Ports of Auckland is working to ensure it can do its job for another 30-40 years within its existing footprint, and even then no one knows what new technology, or trade patterns might extend that.
Automation of the container terminal alone will nearly double the capacity it has today.
Ugly though the port might be, it directly employs about 500 staff, pays $68m in wages, and chips a $51m annual profit into council coffers.
In short, it may never have to move, but there are arguments in favour of it doing so, and releasing prime waterfront land for more public enjoyment.
Any huffing and puffing this year over the port might pale against what could happen next year, as the parties in the coalition government return to their individual stances in the run-up to the general election.
NZ First will want to show progress on its 2017 pledge, with both leader Winston Peters and list MP Shane Jones – who oversees the port work – wanting to keep faith with their Northland supporters.
Labour’s influence in the cautiously worded work now underway suggests less enthusiasm for a rush to undertake the biggest infrastructure project the country has ever seen, in relocating all or part of a port, with the roading and rail links needed.
Of all the policies the NZ First Party brought into this coalition Government, the wildest and wackiest was to move the entire port of Auckland to Marsden Pt. The Labour Party agreed only to commission a feasibility study the idea of moving the port and left open the choice of alternative sites. Winston Peters, hoping to hold the Northland seat, promised to move the whole operation to Northport, but the coalition agreement merely directed Northport be given “serious consideration”.
The feasibility study led by former Far North District mayor Wayne Brown is reported to have produced an interim report for the Government and its tentative suggestions ought to be interesting. The fact that ministers will receive at the same time a report on upgrading the railway from Auckland the Marsden Pt suggests Northport is the preferred alternative for at least some of Auckland’s imports.
Doubtless there are countless ways that goods shipped to or from New Zealand could be better shared between various ports, not only for more efficient handling and distribution but also to stop the Auckland port encroaching ever further on the Waitematā harbour.
Doubtless too, the companies running ports would quickly find a more efficient use of them — within the constraints on Auckland — if Ports of Auckland Ltd had commercial shareholders.
Its nearest rivals, Port of Tauranga and Northport, are majority owned by their local bodies but also have tradeable shares which has resulted in a degree of cross-ownership. Tauranga has a stake in Northport, as does Ports of Auckland Ltd. But PoAL is entirely owned by the Auckland Council which has been averse to any of its business going to other ports.
Total public ownership has been a mixed blessing for Auckland citizens. While the council collects all the port’s dividends it suffers a conflict of interest when Aucklanders oppose the port’s further expansion. Despite a long campaign to stop the port company extending wharves for the latest cruise ships, the council is allowing moored “dolphins” and walkways to extend Queens Wharf.
Mayor Phil Goff did not exactly welcome news this week that an interim report of the feasibility study has arrived on ministers’ desks. “Any decisions on the future of Ports of Auckland should have the agreement of the council,” he said. “We accept that at some point the growth of freight into Auckland will outgrow the land available…..” Citizens opposed to further harbour reclamation would say that point was reached some time ago. Goff said the same when he stood for election.
“However, the port is also a critical lifeline of freight into our city,” he says now. No it is not. Freight from any other port could reach Auckland, making room for cruise ships within Auckland port’s existing harbour footprint.
Most of Auckland’s port is unlikely to be going anywhere. The feasibility study should be looking at rationalising the use of all New Zealand Ports but it should not suppose politicians can best decide where freight goes. The Hawke’s Bay Regional Council is planning to partially float its port at Napier. If the Auckland Council did likewise it would see the city’s interests more clearly.
Economic growth in Northland is akin to that in Waikato and the Bay of Plenty during the 1970s and 1980s and will need investment in rail to support the region’s growing export industries, MPs heard today.
KiwiRail acting chief executive Todd Moyle said Northport is the only port in the country without a direct rail link. He says it is “critical” the government builds a 20-kilometre spur extension to link the Auckland-to-Whangarei line to the port at Marsden Point.
This potential new line is only an element of a wider project. KiwiRail is feeding into a business case the Ministry of Transport is aiming to complete by May on options for upgrading the rail link from Auckland northwards, Moyle told Parliament’s transport and infrastructure committee.
KiwiRail chair Greg Miller told MPs the development of dairying, forestry, pulp and paper and horticulture in Waikato and the Bay of Plenty 40 years ago was matched by government investment in road and rail to get that production to port.
Those same activities and industries are “migrating” to Northland and now is the time for the Crown – through KiwiRail – to put in place the infrastructure to support the considerable growth underway.
“The ‘North of Plenty’ is kind of like the Bay of Plenty for the next decade on,” he said.
KiwiRail has spent the past three months on geotechnical studies for a potential route from Oakleigh, on the North Auckland Line south of Whangarei, to Northport at Marsden Point. But the cost, estimated at about $200 million, is only a fraction of the expected $2 billion bill that could be required to bring track, tunnels and bridges on the rest of the Auckland to Northland line up to standard to handle major freight volumes.
Funding for the spur line study was provided from the government’s Provincial Growth Fund, overseen by NZ First member and Regional Economic Development Minister Shane Jones.
NZ First has also driven an investigation into the feasibility of relocating Ports of Auckland to Northport. That is being considered by a five-member working group tasked with developing a broader strategy to better integrate transport logistics chains in the upper North Island.
Challenged on the prioritisation of the Northland project, Moyle told National MP Paul Goldsmith that the funding of a business case for a third heavy rail track on the main line between Wiri and Westfield in South Auckland is being separately funded through the National Land Transport Fund. Adding capacity to this section of the southern line is considered critical to meeting both freight and commuter growth through Auckland.
MPs were briefed by the Auditor-General’s office before the meeting. Independent MP Jami-Lee Ross said that briefing didn’t leave him with a lot of confidence that the broader machinery of government understands how Provincial Growth Funds are being allocated and accounted for.
He particularly questioned a $50 million working capital allocation KiwiRail has received and $80 million provided for tourism opportunities.
Moyle said $135 million has been received for specific projects, including a regional freight hub at Palmerston North and upgraded rolling stock for the company’s TranzAlpine and Coastal Pacific tourism services.
The $50 million of working capital will be used to restore track on regional routes that are otherwise in decline.
David Gordon, group general manager for investment and planning, said the PGF funding was enabling the company to bring forward investments that had a “compelling” business case.
“These were items which didn’t just come out of the ether. These are things we’ve been thinking about for a long time.”
KiwiRail, bought back by the government in 2008, has been hamstrung for decades by a lack of capital to maintain the country’s 4,000-kilometre track network and invest in new engines and more flexible rolling stock to remain competitive.
Ageing trains and tracks have seen speed restrictions placed on many routes, further reducing the competitiveness of freight services.
The previous government provided additional capital in two-yearly blocks – $450 million for the period through to mid-2019 – while it struggled to find a longer-term funding solution.
While the company’s financial performance is improving, Moyle said capital injections from the Crown being essential for the foreseeable future.
Miller said rail globally is enjoying a renaissance, both in tourism and because of the considerable returns rail freight provides by reducing road congestion and emissions.
KiwiRail’s growth plan for the next decade will be a critical part of delivering those benefits here, he said.
However, decades of under-spending will take a long time to correct. How that is funded is up to the government, he said.
“What matters to us is that it is a long-term funding model for the benefit of our primary exporters and domestic freight customers. Sustainable funding, rather than being a political football, is the ideal outcome for us.”
KiwiRail says it is pleased with work undertaken to date on a potential extension of its rail network to Northport at Marsden Point.
The firm began geotechnical work in late October on a route for a 20-kilometre spur line from Oakleigh, running east toward Marsden Point.
The final drilling was completed today and further exploration work will continue this year, acting chief executive Todd Moyle said in a statement.
“Our investigations have focused on areas where the most significant engineering works would be needed,” he said.
“Concurrently we are looking at how we can upgrade the North Auckland Line between Auckland and Oakleigh. The tunnels on that line are old, low and narrow. We have had two significant derailments on the line in recent months due to a lack of funding for maintenance. It has been unable to carry passengers for the past year and freight options are restricted.”
Deputy Prime Minister Winston Peters and Regional Economic Development Minister Shane Jones visited the drilling site today.
New Zealand First has driven an investigation into the feasibility of relocating Ports of Auckland to Northport. That is being considered by a five-member working group tasked with developing a broader strategy to better integrate transport logistics chains in the upper North Island.
The cost of the new spur line was estimated at $100 million a decade ago. Bringing the Auckland to Northland line up to standard to handle major freight volumes has previously been estimated at more than $2 billion.
Jones, a list MP, lives in Northland and is a fan of rail. Tourism and freight projects of state-owned KiwiRail have so far received close to $90 million from the Provincial Growth Fund he oversees, including funding for the Northland spur study.
KiwiRail chair Greg Miller says significant agricultural and horticultural investment going into Northland will require an efficient supply chain.
The Provincial Growth Fund will allow a renewal of regional rail and there is a growing acceptance of the wider benefits rail brings by taking trucks off roads, reducing road maintenance costs and improving road safety, he says.
“There is a long way to go in Northland but we are heartened by what we have found so far.”