Some ostensibly good news for Kiwirail today, as Transport Minister Steven Joyce just announced $250m in the upcoming budget, and potentially an additional $500m the next two budgets, as part of a “turn-around plan”. He said the Government was committed to retaining and improving the rail network so that it could cover its own costs within ten years.
Of course, Kiwirail is actually making a modest profit, according to the half-year report, however it’s not enough to cover the cost of capital improvements, which are necessary after decades of under-investment by private owners.
In Thursday’s Budget we are almost certainly going to find out about the closure of several rural lines that don’t meet Joyce’s strict revenue requirements – which will mean more heavy trucks on already dangerous roads, greater fuel dependency, and higher greenhouse gas emissions.
The overall approach is very short-sighted. The Minister’s focus is entirely on revenue, and completely ignores that his other transport policies, such as heavier trucks and the billions he is spending on Roads of National Significance, will actually make it harder for Kiwirail to be a profit-making business.
Since 1993 the National and Labour governments have invested roughly $14 billion in road maintenance and renewal and only $2 billion in rail improvements, so it is not surprising our railway lines are carrying less freight than the trucks on our roads.
Closing lines now, instead of spending money on maintenance, will lead to higher costs in the future. For example, the Rotorua to Waikato line was “mothballed” in 2001 because it needed less than $2 million in repairs. Then in 2008 when a tourism operator investigated reopening the line they found so many sleepers and tracks had been stolen it would cost about $10 million to repair and reopen the line.
Also worrying are the veiled threats he has been making about passenger rail in Auckland and Wellington. It’s far from clear where the money will come from to pay down the interest on the loan for Auckland’s electric trains. If Regional Councils are forced to raise funds through increasing user charges, this may encourage commuters to take their cars instead, which will cause the usual problems in terms of congestion in the short term.
Rail could have a significant future in New Zealand, but as long as the Government keeps making policy decisions that subsidise and favour private cars and road transport, we will be paying more for transport overall.