In the 16 years since it was bought by the government for $690 million, KiwiRail has had several overhauls and turnaround plans worth billions of dollars.
Its ambitions as a successful, profitable operator of tourism, freight and ferries have often been derailed by disasters from earthquakes to cyclones, mine explosions and the collapse of key industries like coal mining.
The latest goal for KiwiRail under the multi-billion dollar 2021 New Zealand Rail Plan was to make its “above rail” business of trains and ferries commercially viable by 2025 and able to fund future investments, but that was contingent on significant ongoing government investment in the network, the “below rail” side of the business.
“It gave KiwiRail certainty for the first time that it would get specific allotments every year for three years and then having a wider 10-year outlook,” BusinessDesk infrastructure editor Oliver Lewis tells The Detail.
But the new Government is taking a different approach to the state-owned enterprise, making it clear that road users would not be cross subsidising rail through the National Land Transport Programme.
“That results in a massive reduction in the possible range of funds that KiwiRail can access in future years. And so there’s a lot of concern from the unions and others, (including) rail users, that this might result in more underutilised lines getting closed down or mothballed,” says Lewis.
Add to that the Finance Minister Nicola Willis’ bombshell decision not to pump another billion dollars into the Interislander mega ferries, sinking the project and leaving a question mark over KiwiRail’s future as a shipping operator.
“I get the impression that Government and officials are asking themselves this very question,” New Zealand Herald‘s Wellington reporter Georgina Campbell says.
Campbell has been following the dramas of the Interislander for several years and says she felt relief that KiwiRail was pursuing a plan to replace the ageing ferries, especially after the terrifying Kaitaki incident last year when it drifted towards rocks, endangering the lives of hundreds of passengers on board.
“That really scared me and so I always felt that at least there’s a plan to replace these unreliable ships. I feel like I’ve been brought back to that space; I’m nervous. The Government says they’re working on a plan but technically there is no plan B yet,” she says.
Willis will not commit to having replacement ships on the water by 2026, as was the plan for the first mega ferry, but Campbell sees that as a political risk.
“What happens if there is another Kaitaki incident in 2026 and they haven’t got new ships and this time the ship doesn’t narrowly avoid disaster? There are a few things up in the air but in my view I think there needs to be a plan in place and implemented by 2026.”
She says journalists and the public are in an information vacuum over the Government’s plans and the details of its decision not to fund the mega ferries. The “breadcrumbs” of information she has received show that a Ministry of Transport briefing floated the possibility of KiwiRail exiting the ferry service but more should be known about its future by mid-year.
Meanwhile, Oliver Lewis thinks the more likely option for KiwiRail is a retrenchment of the rail network with a focus on the main centres and the golden triangle of Auckland, Hamilton and Tauranga. But he’s keen to know more about New Zealand First’s stance on KiwiRail and future funding plans.
“I think there’s a signal from this Government that they don’t share the same enthusiasm as the previous government for investing a lot of money into rail which is slightly ironic because Shane Jones and Winston Peters were ginormous boosters of KiwiRail and secured a lot of funding for it when they were in the previous coalition.
“I’m not sure where their thinking is, why they’ve gone so quiet on rail in recent months.”
Check out how to listen to and follow The Detail here.
You can also stay up-to-date by liking us on Facebook or following us on Twitter.
The issue of kiwirail goes far deeper than a change in government. The demise of the rail ferries was not due to a change in government but a refusal to continually pay ever increasing and uncapped large sums of money for proposed and ill-planned port infrastructure (look at the fight over where to site the Wellington terminus). Kiwirail have been “upgrading” the wellington rail network for over 10 years and still there are failures and closures such that catching a train is a gamble. The line was originally built from scratch in half the time. The stations, serviceable for the last 50 years have been replaced at huge expense – but not the reliability of the trains (latest issue is the temperature in summer stopping the trains – come on! the temperature now is no different than in the past, so why was that not factored in when the lines were “upgraded”? The Wairarapa line has issues with a new length of track that is now unsuitable for the rolling stock. You couldn’t make a comedy of Kiwirail – it wouldn’t be believed. If it was a private company, the shareholders would have replaced the board.
Rail has been underfunded for decades.
Which is, to say the least, unfortunate, given the undeniable strategic importance of a electrified rail system (providing urban and inter-regional passenger services as well as freight transport) to the mitigation of and adaption to climate change.
Road transport is privately owned and run. Rail is publicly owned and run. Road transport has issues, just as rail does. We have an ideologically driven government that is funded by private individuals who seek private profit over public services. This is the real issue. Rail is by far over time a better option for transportation of goods and people; but why have the nation benefit when a few private individuals can make heaps? Rail is a massive success all over the world, except in ideologically driven NZ where (simply put) the ideology is private profit good, public benefit bad. That is the issue.
I am scared. For two reasons. It’s a big one.
First, there’s the responsibility that the Government has for ensuring our two islands are integrated and work together. There was a ferry plan in place and it was abruptly cancelled with no Plan B in place. A recipe for disaster. And now Simeon Brown is considering a far more expensive tunnel under Wellington.
Second, the Government has the responsibility for ensuring an effective rail system. They tried to shrug it off by selling rail overseas in the 1980’s. But it wouldn’t go away and their responsibility forced them to pick up the high cost of absent maintenance later. Meanwhile they starve rail of funds and put them all into roads. The cost of roads is huge, far exceeding what’s spent on building construction at all levels.
Proponents of rail transport simply ignore the realities on why limits on road transport were removed. Rail transport has never been run successfully as a business in NZ whereas Road Transport has been provided mostly by privately-owned businesses. Goods transported by Rail require road transport to and from a rail head. Take for example our Supermarket chains – no rail sidings run from their warehouses or to any supermarket but road transport serves them both. The overhead of loading/unloading multiple times for goods carried by rail can only be financially viable when shipping containers are used and there are few instances where this is viable for domestic freight.
Then there is the consideration of roads use by heavy transport vehicles. The Road User Charges they pay (in common with all road-related taxes) is not all used for roading maintenance (search on the National Land Transport Fund for detail).