Govt forced KiwiRail to backtrack on locomotives decision, documents show

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

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

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

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

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

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

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

Labour Party MP Phil Twyford.

Transport Minister Phil Twyford Photo: RNZ / Mei Heron

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Infrastructure Minister Shane Jones launches the New Zealand Infrastructure Commission

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Hydrogen opportunity for NZ transport hubs

Hydrogen could play a key role reducing emissions from heavy trucks using the country’s major transport hubs, Refining NZ chief executive Mike Fuge says.

Hydrogen is challenging to store and transport, he says. Establishing a national distribution network would be difficult, just as it would be for heavy electric trucks.

But he says there is an opportunity to use hydrogen at transport hubs around the country, like at Northport – the refinery’s neighbour at Marsden Point – which has fleets of very heavy trucks travelling to and from it daily.

“There’s an opportunity, with the right sort of assistance, to turn those trucks to hydrogen,” he told BusinessDesk.

The Marsden Point oil refinery is the country’s biggest maker of pure hydrogen and has just completed a major upgrade of that capacity. It has 40 years’ experience making and using hydrogen and wants to use that as the country works to reduce emissions from the transport fleet.

Refining NZ has spent several months working on a new long-term strategy which it plans to lay out mid-year.

Fuge told investors today that the company is committed to a profitable refining business remaining at its core.

But he said the company is also looking at how it can leverage its existing assets and technical skills to play a part in the country’s energy transition.

“We see ourselves having a very active role to play.”

Many New Zealand firms are trying to assess the potential of hydrogen as a low-emission fuel for transport or industry.

Ports of Auckland has hired global energy consultancy Arup for a hydrogen pilot to test its suitability as a fuel for its straddle carriers and tugs. Hiringa Energy is working with TIL Logistics to test its potential in trucking and warehousing, while Pouakai NZ last year sought a loan of up to $20 million from the Provincial Growth Fund to test the feasibility of a combined power, hydrogen and fertiliser plant in Taranaki.

Earlier this month, Concept Consulting said hydrogen could be a good fit for return-to-base trucking operations, or for never-leave-base applications like forklifts and port cranes.

But it doubted hydrogen would be economic for industrial processing due to the volume of power needed to split it from water – in the case of electrolysis – or the high cost of capturing and storing the carbon emitted when it is made conventionally from hydrocarbons such as natural gas.

The high cost of public infrastructure also made hydrogen problematic as a fuel for long-distance trucking, Concept said.

Fuge said converting the refinery’s hydrogen-making to a clean process over time could provide a material reduction in emissions and the firm would be interested in working with the government to help make that happen.

Fuge says New Zealand’s fuel standards are already high, so offer relatively little scope for further emissions reduction.

Electric vehicles will replace more of the petrol fleet and that is less of an issue for the refinery, given its production is biased towards diesel and jet fuel, he said.

Biofuel currently needs a carbon price of about $400 a tonne to be viable, he said, but long-term the firm could bring its expertise into that sphere, particularly wood-based processes making fuel from cellulose.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• Todd Moyle is acting chief executive of KiwiRail.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Maintenance affects South Port

New Zealand Aluminium Smelter is restarting the fourth potline, which has been closed for six years, following a rise in metal prices, which could mean more product handling for South Port. Photo: Gerard O'Brien

New Zealand Aluminium Smelter is restarting the fourth potline, which has been closed for six years, following a rise in metal prices, which could mean more product handling for South Port. Photo: Gerard O’BrienSouth Port at Bluff is predicting a 10% downturn in revenue for its full year ahead as it grapples with repairs and maintenance, likely to cost it $750,000 to just over $1million off its profit line.

For its half-year to December, the port posted a revenue boost to almost $21million, but that was undermined by repairs and maintenance costs to date, including the five-yearly dry-docking of the port’s tug Hauroko, which cost $838,000.

However, additional cargo across the wharves is expected from the recently opened Mataura Valley Milk plant in Gore and potentially from New Zealand Aluminium Smelter, which has reinstated a fourth production potline and accounts for about a third of cargo across the wharves.

South Port shares were unchanged yesterday at $6.50, and are up more than 8% on a year ago.

Revenue for the six months to December grew 7.4% to $20.9million, while after-tax profit declined about 7% from last year’s $4.9million, to $4.55million.

South Port chairman Rex Chapman said increased maintenance expenditure on the port’s infrastructure and floating plant would continue to have an impact on profitability for the rest of the year, but he was confident the annual 26c-per-share dividend of the past three years could be met again.

‘‘Over the coming months it is expected that there will be a number of fluctuations in each bulk cargo category; however, by year end the total volume is forecast to be in line with budgeted expectations,’’ he said in a statement.

South Port declared a fully imputed interim dividend of 7.5c per share, the same as last year.

Container volumes are tracking 10% ahead of last year and hit a record 19,800 and total cargo activity rose 1%, or 18,000 tonnes, from 1.75million tonnes last year to $1.77million tonnes.

Chief executive Nigel Gear said revenue was up by 7.4% due to a favourable cargo mix, strong performance in the warehousing division and increased marine activity.

‘‘Bulk cargoes continue to be the backbone of the business.

‘‘Volumes were comparable to the same period last year with the exception of fertiliser, down 34,000 tonnes and stock food, up 22,000 tonnes.’’

For its full-year trading, South Port issued guidance yesterday that its full-year earnings should fall in the range of $8.6million to $8.9million, down on last year’s record $9.66million profit.

While log volumes were similar to last season, Mr Gear said there had been a slowdown of exports to India and recent volumes were impacted by poor ground conditions in some Southland areas which hindered harvesting.

Those two factors were expected to result in a 10% reduction in log exports, he said.

Operational highlights for the six months included completion of Mataura Valley Milk’s infant formula plant in Gore and its initial export through Bluff on the Mediterranean Shipping Company line in November last year.

The fourth potline at New Zealand Aluminium Smelter (NZAS) was officially opened on December 6, 2018.

Once fully operational, the potline would consume an additional 60,000 tonnes of alumina and increase aluminium production by 30,000 tonnes per annum.

‘‘Over the coming year, South Port will be working with NZAS to determine whether there are additional services the port can provide to handle and/or pack any of this finished cargo into containers for export through Bluff,’’ Mr Gear said.

There was also new export of containerised medium density fibre board, which was packed at the port’s three-year-old Intermodal Freight Centre.

During the period, there was increased handling, packing and storage of meat, fish and dairy products in both the cold store and dairy warehouses, he said.

Of the dairy sector, Mr Gear said although New Zealand milk supply had increased this season, a production decline in Europe and Australia had ‘‘impacted positively’’ on Fonterra’s global dairy auction prices recently.

NEW NZ DRY DOCK A BASIS FOR NEW INDUSTRY – KIWIRAIL

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(BusinessDesk)

Ports of Auckland goes driverless to boost container numbers

In the high-tech equivalent of “look Mum, no hands,” Ports of Auckland’s new 70-tonne straddle carriers will hurtle around at up to 22km/h, without anyone at the controls.

This Luddite’s nightmare means no human contact with the container from the time the truck driver unscrews his twist locks to just before it is hoisted by crane and deposited on a ship. For imports, it will be the same process, only in reverse.

As the port sees it, public opinion is against expansion through further reclamation, so the only way to improve productivity is through technology.

The system is now being tested, with empty containers stacked high to act as a barrier in case something goes wrong.

And something going wrong doesn’t really bear thinking about: fully laden, the port’s new carriers weigh in at 100 tonnes – not easy to stop in a hurry.

When the project is complete, the port’s 27 new blue carriers will be involved in an elaborate dance to get containers on and off ships, with the process controlled by software at head office.

“It feels funny when you see this giant machine coming straight towards you,” says the port’s automation project manager, Ross Clarke.

The Auckland Council-owned port is under pressure from New Zealand First to relocate to Whangārei, and the Government is conducting a comprehensive upper North Island logistics and freight review to ensure New Zealand’s supply chain is fit for purpose in the longer term.

The review will guide the development and delivery of a freight and logistics strategy for the upper North Island. This includes a feasibility study to explore moving the location of Ports of Auckland, with consideration to be given to Northport.

Clarke says the new straddle carrier technology, alongside the port’s three new cranes that arrived last year from China, is seen as a game changer.Can we resuscitate our struggling sharemarket?

Automation will increase its terminal capacity from just over 900,000 TEU (20-foot equivalent units) a year to 1.6-1.7 million, the port says.

Auckland will be the first New Zealand port to partially automate its container terminal.

At the same time, the port says the straddle carriers will save as much as 10 per cent on fuel use. There should also be less impact on neighbouring communities as they will require less light and will not make as much noise as conventional, manned carriers.

The new Konecrane carriers will deliver more capacity because they can stack four containers compared to just three for the existing carriers. This, combined with changes to the terminal layout and past reclamation work, is expected to increase capacity by 80 per cent.

They come with a positioning system called Locator – a type of ground-based GPS that boasts an accuracy of plus or minus 3cm.

Clarke says that given its constrained area, something had to be done to grow the port.

Auckland's new automated straddle carriers can stack containers four high. Photo / Leon Menzies
Auckland’s new automated straddle carriers can stack containers four high. Photo / Leon Menzies

“If we didn’t do something to increase that capacity then the business’s throughput, and therefore revenue and profit, would be capped.

“We can’t expand the footprint of the terminal – the public have been clear about that,” he says.

“Dwell times” – the time it takes for exports inside terminal gates to be loaded onto a ship and imports onto a truck or train – are already low by world standards.

“So the only other avenue to increase the storage capacity is to stack more densely and we are going up with automated machines.”

Automation means stevedoring roles will go, but Clarke says the number of jobs lost is likely to be less than the original estimate of 50.

“The chances are that with the new cranes, and the increased throughput, the reduction in jobs might not be that much at all,” he says.

“Implementing automation helps fund the investment in the new technology. Reducing jobs was never the ambition – it’s just an outcome.”

Clarke says the port has trouble recruiting enough staff to deal with current demand, and there are vacancies it can’t fill.

“With the business growing, and the number of unfilled jobs that we have at the moment, the actual level of redundancies might be quite small.”

The high-tech carriers will initially work with the port’s new, $60 million, 82.3m high cranes which weigh in at 2100 tonnes apiece, against 1200 and 1300 tonnes for the older cranes.

The port says that with these new cranes, and the new deepwater berth they will sit alongside, the port will be able to handle the biggest ships coming to these shores.

They can lift four containers at once, weighing up to 130 tonnes combined, a New Zealand first. The current cranes can lift two containers, weighing up to 65 tonnes.

The new cranes can service ships carrying more than 11,000 TEU, which the port expects will offer some “future-proofing” against increases in the size of ships.

Ports of Auckland is only the second port in the world to automate as a “brownfields” development – most automated ports are built from scratch.

Clarke says maintaining the port’s day-to-day operations while the project is underway has been a big challenge.

Initially the northern third of the terminal – where the new cranes are – will be automated while the southern part will continue with manned straddle carriers.

Once it is satisfied that the technology is working to plan, the port company will complete the rollout for the rest of the terminal.

The first stage goes live in February next year, followed by the second stage in April.

Clarke says that by the middle of 2020, the port should have a fully operational automated container terminal.

NZ Herald

MPS TOLD $200M NORTHPORT RAIL LINK ‘CRITICAL

14/2/19

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Works start on a notorious stretch of SH1

Works have started on one of the worst accident black spots on State Highway One.

No caption

Photo: The Wireless / Luke McPake

Starting tonight, contractors will be felling trees and removing vegetation in the Dome Valley, north of Auckland.

New Zealand Transport Agency (NZTA) said crews would be working overnight from 7pm to 6am, to minimise traffic disruption.

The job will take about two weeks.

The work will clear the way for major safety improvements along a 15km stretch from Wellsford to north of Warkworth, and includes widening, right-hand turning bays and flexible road safety barriers.

The winding road through the Dome Valley is notorious for crashes.

NZTA is advising motorists travelling between Northland and Auckland to plan ahead and allow extra time for their journeys.