New Trains: Who Pays?


The chairmen of the ARC and ARTA have requested a meeting with the transport minister to discuss the Government’s expectations for passenger rail in Auckland.

It’s suggested ratepayers may have to find another $20m a year.

This comes in the wake of the transport minister’s recent comments that Wellington and Auckland metro rail commuters would have to pay more of their share and the government’s signal it wants to move more of the cost of the rail network to users.

The ARC in moving forward the contract for Auckland’s new electric trains wonders about how the government’s new thinking on costs will play out.

A report from council officers to council members says that adding potential increases in track access and EMU loan repayment costs could add a further $20 million per year to money ratepayers would have to find.

“ Given the transition to the Auckland Council, it is clear that neither the ARC nor ARTA can make any commitment to long term arrangements for rail at this time.

“The arrangements are also matters which need to be worked through between the Government and the Auckland region rather than as part of the governance structure for the EMU Procurement Project (Auckland’s new electric trains).”

The report warns that any increase in track access charges and a requirement for the region  to repay the costs associated with the purchase of EMUs by KiwiRail could result in a “very significant increase in the requirement for rail operating subsidy.”

The ARC and ARTA have paid track access fees since 2003 at an average rate of $5 million per annum, 60% of which is paid from NZTA subsidy.  While it is not yet clear to what extent fees might increase, a threefold increase for example would increase the net cost to the region from approximately $2 million to $6 million per annum.

The report said that if the region were also to be expected to pick up 40% of the cost of repaying the loan to purchase the EMUs, the annual cost would be approximately $14.4 million.

The ARC has allocated $25.364 million in operating funding to ARTA for passenger rail services in the 2009/10 financial year.  Adding potential increases in track access and EMU loan repayment costs could add a further $20 million per annum to this amount.

No provision has been made within the ARC’s 2009-19 LTCCP for such an increase, nor does NZTA have additional funding to meet its 60% share of any additional costs.

Track access fees has become an issue

“The Minister’s statements clearly indicate that the Government expects an increased contribution from both the Auckland and Wellington regions towards the costs of operating rail passenger services.

“However, the specific framework within which the Government expects KiwiRail to operate, and how that framework applies to passenger and freight, is as yet unclear.  While the Minister notes that the Auckland and Wellington region must meet “actual fair costs”, it is unclear what those costs would actually include. ”

The Government’s intentions in respect of the arrangements for EMUs, and the wider framework which is to be applied to passenger rail, had yet to be clarified.  ”Further, a gap in funding is not the only factor which will need to be addressed; the way in which risk is allocated between the parties will also need to be carefully worked through. “





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