Thursday 14th February 2019
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Economic growth in Northland is akin to that in Waikato and the Bay of Plenty during the 1970s and 1980s and will need investment in rail to support the region’s growing export industries, MPs heard today.
KiwiRail acting chief executive Todd Moyle said Northport is the only port in the country without a direct rail link. He says it is "critical" the government builds a 20-kilometre spur extension to link the Auckland-to-Whangarei line to the port at Marsden Point.
This potential new line is only an element of a wider project. KiwiRail is feeding into a business case the Ministry of Transport is aiming to complete by May on options for upgrading the rail link from Auckland northwards, Moyle told Parliament’s transport and infrastructure committee.
KiwiRail chair Greg Miller told MPs the development of dairying, forestry, pulp and paper and horticulture in Waikato and the Bay of Plenty 40 years ago was matched by government investment in road and rail to get that production to port.
Those same activities and industries are “migrating” to Northland and now is the time for the Crown – through KiwiRail – to put in place the infrastructure to support the considerable growth underway.
“The ‘North of Plenty’ is kind of like the Bay of Plenty for the next decade on,” he said.
KiwiRail has spent the past three months on geotechnical studies for a potential route from Oakleigh, on the North Auckland Line south of Whangarei, to Northport at Marsden Point. But the cost, estimated at about $200 million, is only a fraction of the expected $2 billion bill that could be required to bring track, tunnels and bridges on the rest of the Auckland to Northland line up to standard to handle major freight volumes.
Funding for the spur line study was provided from the government’s Provincial Growth Fund, overseen by NZ First member and Regional Economic Development Minister Shane Jones.
NZ First has also driven an investigation into the feasibility of relocating Ports of Auckland to Northport. That is being considered by a five-member working group tasked with developing a broader strategy to better integrate transport logistics chains in the upper North Island.
Challenged on the prioritisation of the Northland project, Moyle told National MP Paul Goldsmith that the funding of a business case for a third heavy rail track on the main line between Wiri and Westfield in South Auckland is being separately funded through the National Land Transport Fund. Adding capacity to this section of the southern line is considered critical to meeting both freight and commuter growth through Auckland.
MPs were briefed by the Auditor-General’s office before the meeting. Independent MP Jami-Lee Ross said that briefing didn’t leave him with a lot of confidence that the broader machinery of government understands how Provincial Growth Funds are being allocated and accounted for.
He particularly questioned a $50 million working capital allocation KiwiRail has received and $80 million provided for tourism opportunities.
Moyle said $135 million has been received for specific projects, including a regional freight hub at Palmerston North and upgraded rolling stock for the company’s TranzAlpine and Coastal Pacific tourism services.
The $50 million of working capital will be used to restore track on regional routes that are otherwise in decline.
David Gordon, group general manager for investment and planning, said the PGF funding was enabling the company to bring forward investments that had a “compelling” business case.
“These were items which didn’t just come out of the ether. These are things we’ve been thinking about for a long time.”
KiwiRail, bought back by the government in 2008, has been hamstrung for decades by a lack of capital to maintain the country’s 4,000-kilometre track network and invest in new engines and more flexible rolling stock to remain competitive.
Ageing trains and tracks have seen speed restrictions placed on many routes, further reducing the competitiveness of freight services.
The previous government provided additional capital in two-yearly blocks - $450 million for the period through to mid-2019 – while it struggled to find a longer-term funding solution.
While the company’s financial performance is improving, Moyle said capital injections from the Crown being essential for the foreseeable future.
Miller said rail globally is enjoying a renaissance, both in tourism and because of the considerable returns rail freight provides by reducing road congestion and emissions.
KiwiRail’s growth plan for the next decade will be a critical part of delivering those benefits here, he said.
However, decades of under-spending will take a long time to correct. How that is funded is up to the government, he said.
“What matters to us is that it is a long-term funding model for the benefit of our primary exporters and domestic freight customers. Sustainable funding, rather than being a political football, is the ideal outcome for us.”
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