Why having a Kiwi railway system is valuable
A simple dollars and cents exercise is not a good way to judge the true value of rail, writes KiwiRail chief executive Peter Reidy. KiwiRail wants to bring more facts to a discussion which is often passionate but not always well-informed.
THE cost of rail to New Zealanders and the value of rail to New Zealanders are two different debates. They are related, but they are not the same. This financial year, for example, taxpayers will contribute $210 million to KiwiRail. That is one very basic measure of the cost of rail.
Also this year, freight trains will replace an estimated 1.4 million trips that would otherwise have been required by trucks on our roads. That is a measure of the value of rail.
The benefits can also be measured in lower carbon emissions because of greater fuel efficiency than road transport, and reduced congestion on the roads.
It is estimated that in June alone, Wellington commuters avoided more than 650,000 car trips by taking a train.
Fewer vehicles on the road also means a likely reduction in accidents, and the need for fewer new roads.
Assessing the true value of rail is complex but KiwiRail wants to bring more facts to a discussion which is often passionate but not always well-informed.
It sometimes centres on whether the ‘‘old’’ Railways should ever have been sold and then whether the company should have been bought back.
The current management of KiwiRail is not interested in that discussion.
We acknowledge the company’s history but are looking forward, not back.
Currently there is not enough demand, and therefore revenue, for KiwiRail alone to cover the cost of maintaining New Zealand’s 4000km of track.
It includes more than 1500 bridges and 150 tunnels and there has been under-investment in the past. Our infrastructural costs largely explain the extra support needed from taxpayers every year.
Ministers have made clear that the current level of taxpayer support for KiwiRail cannot continue, so we are working hard to engage all staff in lifting the company’s performance.
I am pleased to report some success. Operational efficiencies have seen a 12 per cent improvement in fuel efficiency over the past year. That also lowers carbon emissions.
We will be looking for other savings too, and other ways of increasing revenue. We have, for example, property that has for too long returned only a peppercorn rental or none at all. The Government, on behalf of taxpayers, should be getting a better return on that investment.
And we are looking at our labour costs, and standardising our assets so that maintenance is simpler and more efficient.
I agree with Transport Minister Simon Bridges that it is worth investigating whether a stronger land transport system can come from a more integrated approach. That means that the various attributes of road and rail would be weighed and considered when making planning and investment decisions about transport. At KiwiRail, we think a more integrated land transport strategy would make more efficient and effective use of the significant investment that New Zealanders make in road and rail.
The reality is that we currently operate lines that are uneconomic.
To us, it makes sense that where there is minimal bulk freight to be carried, then trucks should do the work and where the bulk freight load is highest, trains should be preferred. It is about the need for road and rail to work together and ‘‘code-share’’ to determine the most efficient arrangement in the best interest of the Government’s business growth agenda, and in the best interests of New Zealanders themselves. However, those decisions are not for KiwiRail alone to make.
Recently, Treasury papers showed that ministers have considered various options for rail. The Government chose the status quo and we consider that to be an acknowledgement of the value of rail to New Zealanders.
The passengers who together make 12 million trips each year in Wellington and those who together make 13 million trips in Auckland – with the numbers growing in both centres – also understand that value.
So do freight customers whose products we carry – including 30 per cent of exports on their way to ports.
Rail is a useful and proven part of New Zealand’s transport infrastructure and on behalf of New Zealanders, KiwiRail is committed to taking the decisions that not only champion the value of rail, but increase it.