KiwiRail Boost But No Word On CBD Link


No mention of the Auckland CBD eail link in the Budget, announced this afternoon  -  but the Government is digging into its pockets for $250 million more for KiwiRail for its 10-year Turn Around Plan, as well as $88 million for Wellington’s Metro Rail.

The Budget commits more than $338 million to improving Wellington commuter rail services and supporting KiwiRail to become more commercially viable.

A funding package of $88.4 million over eight years for Wellington commuter rail will help transform Wellington’s rail services, according to Transport Minister Steven Joyce.

“This funding will go towards upgrading and renewing the remainder of the signalling and electric power equipment on the Wellington network.

“The Crown commitment, coupled with co-investment from the Greater Wellington Regional Council and previous investment from both parties, will transform the service into a modern reliable commuter option for Wellington.

“This work has been a long time coming and will go a long way towards easing the frustrations of commuters in our capital city,” Mr Joyce says.

The Budget also contains measures to help KiwiRail become a commercially viable rail freight business over 10 years.

KiwiRail receives the second $250 million tranche of the Government’s $750 million commitment to its Turnaround Plan over three years. The lion’s share of the $4.6 billion Turnaround Plan will be funded by KiwiRail itself from customer revenue during the 10 year plan. The money will be used to continue a range of projects, including new locomotives and wagons, and improvements to the network - particularly on the main trunk route and in the ‘golden triangle’ of Auckland, Hamilton and Tauranga.

Mr Joyce says the Turnaround Plan is about helping KiwiRail to become a more viable nationwide freight participant.

“The $4.6 billion turnaround plan combined with investment in the Auckland and Wellington commuter networks means the government is now overseeing a $7 billion investment in rail.

“This is a huge commitment. We are determined to improve the rail freight network, provide KiwiRail with the opportunity to become commercially viable and support the provision of modern, reliable commuter rail services in Wellington and Auckland.”

Finance Minister Bill English said the Government is investing about $12.2 billion over the next 10 years in New Zealand’s State Highway network and $3.8 billion through Transpower until mid 2015 to upgrade the national grid.

“Tackling bottlenecks in our broadband, transport and electricity networks is a Government priority, as is providing high-quality modern schools and other social infrastructure,” Mr English says.

KIWIRAIL: Another $200m

Capital spending outlined in Budget 2011 include\ds:

  • Broadband - $942 million to complete the Government’s funding for ultra-fast broadband and $28 million more to connect fibre to schools.
  • Rail - $250 million more for KiwiRail for its 10-year Turn Around Plan, as well as $88 million for Wellington’s Metro Rail.
  • Education - $109 million for:
    • Leaky building remediation work around New Zealand.
    • Advancing a public-private partnership at two new schools at Hobsonville, Auckland.
    • An early learning information system to improve information about participation.
    • A performance system in the Early Childhood sector, to develop a moderation tool for teachers for National Standards and to continue the School Network Upgrade Programme.





  1. BD says:

    $250million for rail is pocket-money especially over a 10 year period, but $12.5billion dollars on state highways over a 10 year period is a colossal waste of money.

    It just shows business cases that stack up high for public transport projects get rejected and National use the Christchurch Earthquake excuse to get away with it but State Highway projects don’t get rejected even if they have really low business case cost benefit ratios.

    This just comes to show that the government is out of touch to what us New Zealanders really want. We don’t want the same old crap we put up with 50 year ago, National seem to have this attitude about them:
    “Well we should have built this 50 years ago! Other countries did it so why can’t we”

    This attitude is what is holding NZ back as the government doesn’t realise that the 21st needs are different to the 20th century ones.

    I’m a bit disappointed with this years budget meeting but at the same time, i’m not surprised that the CBD link didn’t get a mention in the budget, but sooner or later the government will have to do something about it whether they like it or not. Because when the electrification is complete and 10 minute frequency get introduced, and a new Manukau rail service Britomart is going to suffer from severe congestion and the Auckland councillors will then pile heaps of pressure on the government to do something about it. As this will affect the economy as well. The government cannot go hiding their head in the sand forever saying that we need more 20th century solutions to solve problems that worked 50 year ago.

    Heck when they built the motorways in Auckland 60 years ago, the infrastructure was way advanced given NZ small population at the time, but this still didn’t take long to get congested, and the same will happen with the Motorways they are proposing.

  2. Matt L says:

    BD - One slight correction, it isn’t $250m over 10 years but $250m over the next year to contribute to Kiwirails 10 year plan. My understanding of it is that the government said it would invest up to $750m into Kiwirail as part of the plan to give a bit of a kickstart with the rest of the money needed to bring the network up to scratch coming from Kiwirail revenues. They gave $250 last year and this just sounds like a continuation of that.

  3. ingolfson says:

    Seen as an individual investment, it is a good thing, and should help.

    However, if one realises how old Kiwirail’s bridges are (most of them over 80 years old) and how old most of their locomotives and freight wagons are (30-50 years), then one should realise that any such sums of (comparatively limited) money currently being funneled into KiwiRail is effectively “emergency surgery” to keep the patient from dying in the coming years.

  4. Matt says:

    The money to KR is being misleadingly spun. It’s not adding another $250m to the $750m committed to KR’s turnaround plan, it’s $250m of the $750m committed to KR’s turnaround plan.

    The first thing I read about it gave me the impression that the commitment was now $1b, which it’s not.

  5. Jon R says:

    I like the claim that the Govt is spending $7B on rail, when infact new money is the paltry $250 million. The rest is from projects the previous Labour Govt signed off.

    The $4.6 billion turnover is supposedly self generation from KiwiRail itself…so no investment from the Govt. The $88 million for Wellington rail is spread over 8 years.

    Meanwhile billions are thrown into RoNS which mostly have poor BCR´s and of no advantage to NZ Inc.

    Got to move this Govt out this year as their transport policies don´t stack up. Nor do their tried and failed privatisation plans in that case either!

  6. Matt says:

    Jon, not only that, Key outright lied to the public when he said the changes in the Budget were going to be left until after the election. They’re rushing through the Working For Families and KiwiSaver changes tonight.

  7. Nick says:

    “This work has been a long time coming and will go a long way towards easing the frustrations of commuters in our capital city,”

    When is he going to wake up and realise Auckland is the powerhouse of nz or should be, and theres probably many times more frustrated auckland commuters. They need efficient alternative transport, and this might just unclogg his roads so his road freight can get to where its going.

  8. DanC says:

    Dear Mr Joyce.

    It has been brought to my attention that Auckland is at breaking point regarding congestion with public and private transport.

    Can I suggest (in this order)
    Bus stops installed above rail at Greenlane, Panmure & Mount Albert with frequent connection buses working along with the train times.
    A bus lane from Howick & Botany to Panmure train station
    A cycle route is built from Silvia Park to the CBD beside the eastern line rail.
    The CBD rail tunnel construction is started (no more studies lets just get on with it)
    Rail to the aiport.
    Third rail on the Southern line opening up express and national services.
    Rail freight connections from Auckland to Marsden point
    A new rail line from Manukau to Botany to Highland Park to Glen Innes.
    Rail to the North shore from Parnell, with stations at Auck Uni, Aotea, Wynyard Qtr…. all the way to Orewa

  9. Geoff says:

    I don’t think it’s fair to say $250m for rail vs $12.5b for roads, as that isn’t comparing apples with apples.

    The figures are $4.6b for rail and $12.5b for roads, both over ten years, and both largely funded by users.

    None of the “new money” was authorised by Labour.

    I’m really not sure why anybody was expecting this budget to allocate funding for the CBD link. Budgets don’t allocate money to non-existent projects! The key to funding the CBD rail link lies with AT. There are various funding mechanisms they could put in place, such as congestion charges, or parking levees, or even cutting their massive roading budget to boost the rail budget. I think both government and Auckland Council are equally to blame for inaction on the project.

  10. Giel says:

    Well said Geoff - I couldn’t have said it better.

    By the way as the Government is the shareholder of KiwiRail and KiwiRail, if it didn’t re-invest its “income” in its capital expenditure, would be expected, like any company, to pay a dividend to its shareholder then by logic the whole $4.3 Billion is Government money. It is more correct to say it is not all new Government money unfunded by users as Geoff alludes to. That is what the three tranches of $250 Million are in each of fiscal 2011, 2012, and 2013 - total $750 Million unfunded by users new money. So lets be honest about it and do the correct analysis that compares unfunded by users money for rail with unfunded by users money for road. If there is relative proportional gap that is what needs to be highlighted and I say if….

  11. Pim says:

    I wonder why labour are keeping their mouths shut about PT issues?

  12. Jon R says:

    Geoff , Giel, wrong again. NZTA is spending $1.5 billion per year more than it is collecting from users. So the $12Billion on RoNS is coming from poor old taxpayers like you and me. Nice big handout to the trucking lobby.

    Don’t forget road users, and the funds are also decreasing as data shows a long term trend of lower use of highways. Again, another reason why over spending on RoNS is crimminal.

    So, your $12billion is from taxpayers, Kiwirails expected $4.6 billion is from actual users. Again, the Govt is putting new money into RoNS, and a pittance into rail. Pathetic, no other 1st world country is doing this now.

  13. Giel says:

    Jon R - before saying wrong again - I would like you to tell us what we said was materially wrong. There is nothing I have posted on this blog has been materially “wrong” - some opinions (which people don’t have to agree with) yes but nothing materially wrong. We didn’t say all of Road funding came from users only that most did - just as it is for Rail.

    In regards to the KiwiRail freight argument the reality is that Rail has about 8% of freight volume measured by tonnage in NZ or 15% of NZ volume measured by Net Tonne Kilometres (NTK) - product of distance and net weight summed by individual hauls - (rail hauls on average much longer than roads). Shipping has about the same freight NTK share as Rail and Road has most of the rest (around 70%). By simple calculation Rails “new money” funding proportion is about the same relative to Net Tonne Kilometres, as Road. Coastal Shipping gets NOTHING!! And that is before all the public good and user benefit for Road investing to non freight users of the Road network – ie Assumes that all that “new money” in Road was for the benefit of freight trucks which clearly it isn’t – can the same be said of the new money in non metro Rail? Maybe to some degree – but arguments there are more about externality benefits to non Rail users than actual direct user benefits as in the case of Road. Reality is that many more people have direct access to Road use than Rail use and for very good reasons.

    The trouble with many that support Rail is their analysis often does not stand up to close scrutiny. That is the very thing we criticise Road supporters of doing. Can’t we do better than that? Explain why in analytical terms I am wrong - I can prove why I am right and that Rail at the current time is NOT getting a raw deal in regards to Road as far as freight network funding goes. It used to get a raw deal (from 1990 to 2004) but certainly isn’t at present and is in now catch up mode. These are golden times for rail – there isn’t a time in recent (read last 40 years) when central Government has been so pre-disposed to Rail funding. I challenge you to demonstrate otherwise – analytically and not with just opinions. I agree Labour started the ball rolling (good on them) but National hasn’t stopped it either – in fact they have added momentum with approving Turnaround Plan funding (new money). What makes you think Labour would have given more money?

    Your assertion that no other developed country is investing heavily in Road relative to Rail is not correct - Australia and USA for example are investing many $Billions each in state and federal highways - that is a fact. Rail freight network funding by those countries Nationa l/Federal Governments is proportionally much lower compared to Roads than NZ currently. The same is probably true (in most cases but not all) of urban Rail. NZ is a small country with only 4 Million people - I think if you look at the facts Rail in this country funding wise is now doing quite well.
    I support Rail but will only ever do it with a strong supporting argument with supporting analytical detail - not just with ideology. The rest as far as most of the rest of the world is concerned is irrelevant and seen as a purely rail centric view of the world which to most people is just simply irrelevant!

  14. Patrick R says:

    Giel, great to have your knowledge here on the site. I have a bit of a different take on the way I think we should be making investments as a nation. I’m sure you’re right that there is proportionality in the transport spend, but to me this is the problem. In my businesses I make investment decisions based on where I wan’t to be not just to keep things exactly as they are, year after year… kind of a definition of stupidity in many ways, well unless our society was perfect and our economy robust and perfectly balanced…?

    Nothing but road transport has been invested in for so long it seems clear to me that we have a very unbalanced and vulnerable system. And one particularly vulnerable to external shocks especially oil price instability. I personally would be using the NLTA to rebalance the whole system quite aggressively towards electric powered urban mass transit and rail [and shipping] freight nationally. I take the uncompetitiveness of rail as a sign of it’s recent history of underinvestment, not that it means that it can’t work at all.

    For example:
    To spend 2+ billion on a road parallel to two others that are not overcrowded, while turning the existing rail line into a recreational cycleway instead of investing a smaller sum in its viability, looks like a very shortsighted destruction of the nation’s resilience and infrastructure diversity.

    To argue for a proportional spend is to argue against anything ever changing, but also a country is a particular kind of business anyhow, I think there needs to be a greater sense by the custodians of nation of what they are building and leaving to the next generation and not just running the place like a K Mart for quarterly balances.

    This is not an argument for keeping rail out of fear or nostalgia, but to invest properly in it with an eye to the future ideal shape of the nation, with a prudent resilience built into transport, not eggs in one rather delicate looking basket. And, of course, with even more pressure on KR to perform if we put more responsibility their way.

    To my amatuer eye it looks like the private motorist funds the bulk of the NLTF, especially general and local taxes also fund roads so it seems that the road freight sector is the bigger recipient of subsidies of all.

  15. millsy says:

    KiwiRail/Auckland WILL get the loop. Trust me. this is just being dragged out in the time honoured way that things get dragged out.

  16. Patrick R says:

    Millsy, I agree, and I think there may well be some twists yet this year…. The election games have only just begun……

  17. Giel says:

    Patrick R Thanks I do get the impression that things are changing and momentum growing in a positive way. These websites are very important for building consciousness on such issues. Ten years ago before blogs and the Internet were so widespread Rail had a weak voice and the Road Transport Forum had all the political clout. You had some lone voices like Bob Stott of Rails magazine promoting the level playing field for Rail and that was it. He was a pioneer but largely on the fringe. Now it’s like the dam has burst and it’s all good. Long may these robust discussions continue. People are taking notice I think.

    I too think the CBD tunnel will happen sooner than later as millsy says - just a process that takes time.


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