Billions invested in rail - a special report

June - July 2021 Billions poured into rail revival

The Government has committed $1.3b for rail in Budget 2021, building on previous Budget investments of $1.2b in 2020 and $1b in 2019, but where is all the money going?

Budget breakdown

Budget 2021’s $1.3 billion for rail includes: • $722.7 million to continue the commitment to replace locomotives and wagons • $449.9 million to support investment in track and supporting infrastructure • $87.3 million to support essential maintenance of KiwiRail’s existing assets such as locomotives, wagons, ferries, and IT • $85 million to develop domestic rail workshops at Hillside in Dunedin.

This builds on the Government’s revitalisation of rail, which has included: • Re-opening the Wairoa to Napier line • Building a third main line in Auckland (Wiri to Quay Park) • Extending electrification from Papakura to Pukekohe • Future rail stations at Drury to support housing development • Future-proofing Auckland’s City Rail Link • Bringing the rail line north of Auckland back up to scratch to help move freight • Getting 15 new electric trains onto Auckland’s growing network • Starting Te Huia – the Waikato to Auckland commuter service • Starting work towards a Palmerston North Regional Economic Growth Hub • Double tracking the rail line between Trentham and Upper Hutt • Saving the Wairarapa line from deteriorating with critical maintenance work • Bringing in new wagons and trains to replace aging assets. This is an outstanding level of investment from the Government which is truly revitalising rail, KiwiRail Chief Executive Greg Miller says.

The Government says it is delivering on its commitment to invest in rail and develop domestic rail workshops to create jobs as part of the COVID-19 economic recovery plan.

“Investing in critical infrastructure to boost jobs and the economy is a key part of the Government’s recovery plan,” says Transport Minister Michael Wood.

Miller says KiwiRail has already replaced its aging North Island locomotive fleet, and this latest tranche of funding will fully cover the cost of purchasing new electric shunt locomotives

and replacing South Island locomotives, many of which are more than 40 years old.

“It’s allowing us to build a new hub for maintaining South Island rolling stock at Waltham (Christchurch), and we will build a new facility at Hillside Workshops (Dunedin) to assemble wagons in New Zealand.”

Instead of buying readymade wagons from overseas, the new Dunedin facility will allow wagons to be assembled locally.

Wood adds that investing in rail workshops in Dunedin and Christchurch will create around 445 good local jobs and help boost jobs in the civil engineering and construction sector through the wider supply chain. These will also create apprenticeships and help upskill KiwiRail’s workforce.

“As a result of Budget 2021, more than 600 contractors will be needed to upgrade and build the new facilities, particularly in the South Island, and local businesses will be needed to supply building materials,” Miller says.

“The investment also means that KiwiRail will be taking on around 200 more employees – for ongoing track maintenance and renewal work across the country and wagon assembly at Hillside. We have committed to 10 per cent of new staff being apprentices or trainees.

“This all means money going back into the regions, and helping New Zealand recover from the economic impacts of Covid-19.

“But it’s also important for the future of KiwiRail and its customers. When we have new locomotives and wagons, and a rail network that is up to standard, we will be able to provide more reliable and timely services to our freight customers to better meet their needs.

“We know there is more demand for rail freight than we can currently provide with our aging assets.”

Wood points out that COVID-19 supply chain disruptions have reinforced the importance of having a resilient and reliable rail freight network.

“The new locomotives, wagons and critical track maintenance from the Budget will help us move more freight efficiently, reducing emissions and congestion. "On average, every tonne of freight moved by rail produces at least 70 percent less carbon emissions compared with heavy road freight. This helps with New Zealand’s crucial transition to a low carbon economy.”

Imported trains vs locally assembled

$219,800

per wagon if assembled locally

$196,800

per wagon if imported

KiwiRail expects to assemble over 1,500 wagons over the next three years at the revitalised Hillside workshop, costing the country an extra $34.5 million.

Railways and Maritime Union national secretary Wayne Butson argues the benefits outweigh the cost. "This government has commissioned reports, we've participated in studies and it's very clear that if you compare what Hillside can, could and will do against what our purchase decisions in the rail industry have been like over the past 10 years, we're going to end up with far superior products," Butson told RNZ. "We have a railway that is absolutely saturated with dog-and-lemon Chinese-manufactured locomotives that were full of asbestos, even though it was promised they wouldn't be, and they are as unreliable as hell. At any one time, there's about 40 of them out of service getting repaired - almost half the fleet."

KiwiRail Chief Executive Greg Miller adds that the investment is supporting the local economy with 250 construction jobs needed for the rebuild. Wagon assembly itself means KiwiRail will take on 45 staff for new roles in producing wagons, instead of importing them fully assembled. “KiwiRail is also committed to ensuring at least 10 per cent of our new intake to our workforce are apprentices or trainees. Bringing them together in our new facilities at Hillside will create a strong culture of learning and wider opportunities for development.

“Having mechanical and wagon assembly together also creates synergies by being able to share some infrastructure and to grow skills. Once we’re producing wagons here, it will be a strength to the company to have the very people who assembled them, still here to service and maintain them.

June - July 2021 10 year rail plan gives pipeline certainty

Rail will now be funded from the National Land Transport Fund, the same pot used for road infrastructure and paid for by road taxes

Rail provides $1.7 billion to $2.1 billion in value to New Zealand each year, according to an Ernst and Young report. The report shows that commuter rail saves 26 million car trips in Auckland and Wellington each year. Rail freight keeps 24,000 trucks off New Zealand’s roads and reduces transport CO2 emissions by around 2.5 million tonnes each year. "Rail has an essential role to play in our transport system given increasing freight volumes, road congestion and road maintenance costs and the need to reduce emissions,” says KiwiRail Chief Executive Greg Miller.

“The beauty of the Rail Plan is that for the first time KiwiRail has certainty about investment in the network.

“For us, that means we can recruit staff and take on apprentices knowing that a 10-year pipeline of work is in front of us.

“It also gives us certainty about procurement because we know there will be investment in the network. The Rail Network Investment Programme (RNIP), which will be released mid-year, will set out the

detailed work programme.

The RNIP will be the basis of funding requests through the National Land Transport Fund, which freight rail now has access to. This is the same pot used for road, walking and cycling infrastructure, funded by revenue collected from fuel excise duty, road user charges, vehicle and driver registration/licensing and road tolling.

“The change in the pot rail is funded from, coupled with the release of the Government’s 10-year NZ Rail Plan, should put us on track towards a longer-term sustainable pipeline of rail infrastructure work,” says Civil Contractors New Zealand Chief Executive, Peter Silcock.

“Our rail infrastructure has suffered from under-investment in recent decades, so the country’s capability and capacity to build and maintain rail has also been run down.

“In less than three years, the Government has announced more than $5 billion in rail investment, including investments in

Early beginnings

Starting in the 1860s, rail engineers designed a rail network that could operate across swamps and rivers, rugged mountains and dense forests, progressively connecting otherwise isolated communities and industries to the world. By 1880, New Zealand Railways (NZR) was operating more than 1,900km of track, and carrying almost three million passengers and 830,000 tons of freight a year.

The Golden Age

The first half of the twentieth century was a ‘golden age' for rail. By the 1920s New Zealand Railways (NZR) was carrying more than six million tons of freight and 28 million passengers a year - a remarkable achievement for a nation of just over a million people. Almost everyone travelling between major centres took the railway. Trains also delivered schoolchildren to the classroom, suburban workers to factories and offices, and thousands of day-trippers to beaches, parks, shows and racecourses.

Decline

From the 1950s, rail's central role in the daily life of New Zealanders began to erode, as travellers opted to drive or fly rather than use passenger trains. Branch lines around the country were progressively closed and deregulation of the transport industry saw rail’s market share of freight transport drop significantly. Following years of ownership changes from 1993 when the Government sold New Zealand rail to an international consortium, rail was returned to public ownership in 2008.

Renaissance

With the new millennium came renewed enthusiasm for rail – globally and here in New Zealand. Concerns about green-house gas emissions and fluctuating petrol prices, changing global freight trends and growing congestion on our roads has led to a revival of rail, and recognition of its natural advantages moving freight, tourists, urban passengers within major cities and regional commuters to work in the city.

A brief history of rail in New Zealand

safety, locomotives, wagons and port freight rail.

“But the brakes have been on when it comes to seeing investment translate into long term projects because rail funding has, until now, been decided annually.

“If New Zealand is to go full steam towards new rail infrastructure, prospective workers need confidence there are long term opportunities in rail, and employers need surety that there is enough work on the horizon to warrant investing in training and developing workers, equipment and plant.

“The decision to make the National Land Transport Programme and Fund “mode neutral”, incorporating rail alongside road investment and walking and cycling investment, will help to ensure longer term thinking and go some way to providing the confidence industry need.

“However, it will also stretch the Fund further. The Government will need to consider how it can ensure the Fund is sustainable, particularly when its core funding mechanisms – fuel excise duty and road user charges – are being eroded by the move to electric vehicles.

“Coming up with a sustainable funding solution is a big question. We need answers soon if the Government is to guarantee the long-term viability of the Fund that is so crucial to the work we all do on our transport infrastructure.”

National’s Transport spokesperson Michael Woodhouse is concerned that putting more money into rail projects will mean there will be less for important road safety improvements and much-needed upgrades.

“National supports a multi-modal approach to transport. We’ve always invested heavily in rail and public transport, but we funded rail directly from the Crown," says Woodhouse.

“Labour should fund rail commitments directly, making sure fuel taxes can pay for much needed roading improvements.”

Te Huia - a missed opportunity or the start of something great?

The limitations of New Zealand's rail infrastructure mean we are still far away from high-speed inter-city rail throughout the country, but the Te Huia service linking Auckland and Hamilton may be a key first step

The $98m service has the potential to replace up to 73,000 return car trips annually, helping to ease congestion and reduce climate emissions from transport.

Transport Minister Michael Wood says it gives commuters a real choice between being stuck in traffic or travelling by train. “Carriages have free Wifi, air conditioning, and plenty of tables and power points, so passengers can use their travel time productively."

But when the train takes 1 hour 40 minutes to get from Hamilton to South Auckland's Papakura, it is easy to see why weekday patronage has been abysmal.

Getting to Auckland CBD requires catching a separate train, adding another

hour onto that journey and another train fare. This means the average worker would spend over 5 hours travelling at a cost of $47 each day. "We’ll continually monitor the service to make improvements, and more stops could potentially be added in the future,” Wood says.

These improvements need to happen sooner rather than later if Te Huia is to be a viable service. Greater Auckland has made a list of recommendations.

Extend services to Puhinui

While it would be ideal to get services into Britomart, that’s not something that will be possible in the short term due to capacity constraints and that diesel trains aren’t allowed in there anymore. There’s are also capacity constraints north of Puhinui until the 3rd main is completed. However, getting services to Puhinui, which is due to reopen in the next few months, should be feasible and would do a couple of key things.

Those travelling further north into Auckland would have the ability to transfer to either a Southern or Eastern line train, making that transfer easier. It would also enable those from the Waikato to make a single transfer to access the airport or Manukau.

More Services

On weekdays there are currently just two services to Auckland in the morning and two back to Hamilton in the evening and there is one service each way on a Saturday. It’s just not enough and you better hope you don’t run late, or worse there’s an issue on the Auckland network, and miss your train.

There clearly need to be more services, including

more on weekends and some that enable trips from Auckland to Hamilton in the morning. With the current trains available even just bouncing them back and forth between Auckland and Hamilton, say every two hours, would make it much more useful.

More Stations

The only stop between Hamilton and Papakura is in Huntly. Yet there are a number of communities along the route, including some seeing a lot of growth, that also should be being served too. In particular Tuakau, Pokeno, Te Kauwhata and Ngaruawahia. Combined those four towns are home to about 20,000 people so represents a substantial increase to the possible catchment and combined with more services we might even start to see some commuting from them to Hamilton.

Speed improvements

At about 1 hour 40 from Hamilton to Papakura the service averages at just 64km/h over the 105km distance. Once they’ve finished fixing the tracks in Auckland there really should be a focus on getting it faster, which likely requires Kiwirail upgrading the tracks.

If it was possible to get the average speed up to 80km/h it would bring the travel time down by about 20 minutes and would start to become time competitive with driving.

Case study: Rapid rail in Malaysia

The Malaysian rail network was once remarkably similar to New Zealand’s, originally developed by the British in the colonial era. But while New Zealand has not progressed very far beyond this, the Malaysian government did a comprehensive overhaul of its rail to turn it from an an ailing freight line into a higher-speed rapid rail route. This project was impressive in its extent and outcomes, Greater Auckland reports.

They electrified and double tracked the whole line, purchased brand new narrow gauge electric tilt trains and a new depot to keep them in, upgraded stations, eased curves, rebuilt the trackbed to high speed standards, grade separated road crossings, fixed all the drainage along the way, built one major tunnel to bypass a mountain range, and combined that with a new viaduct to skip a particularly windy section of route. This was topped off with a new branch line into the city of Butterworth to access a new terminal station.

Today a 400km trip between Kuala Lumpur and Butterworth takes just 4 hours. The journey took almost twice as long before the upgrade.

Clearly a fantastic improvement, but what of the cost? Obviously this scale of comprehensive upgrade isn’t cheap. In total, the whole package of tracks, electrification, stations, trains, depots and crossings for 400km cost the equivalent of around $7 billion NZ dollars, or about NZ$18m per kilometre.

What does this mean for New Zealand? Given the similarity of the train and track systems between the two countries, it’s reasonable to expect we could do a full electric rapid rail overhaul for about the same cost.

That is a very significant chunk of money, but it would buy not only a regional rapid rail system with frequent electric passenger trains running at fast average speeds between Auckland, Hamilton and Tauranga, it would also fix up and electrify the main freight routes of the North Island. A relative bargain compared to some of our highway projects.

The future of Te Huia

Greater Auckland's analysis of the Ministry of Transport's original Hamilton to Auckland Intercity Connectivity Interim Indicative Business Case indicates the Te Huia service is meant to be much more than it is today. The report comes up with a shortlist of four scenarios which, if any are implemented, paint a promising future for the service.

Scenario A – Electrified 110km/h

Electrify to Hamilton with a maximum speed along the route of 110km/h. This option is expected to cost about $2.2 billion and would see a total Britomart to Hamilton City journey time of just under two hours (113 minutes).

Scenario B – Electrified, realigned up to 160km/h

This goes a step further by including some corridor improvements to enable speeds of up to 160km/h. This is expected to cost about $5 billion and would reduce the end to end travel time to an estimated 88 minutes, or just under 1½ hours. This would put it at about the same speed as driving off-peak.

Scenario C – New dedicated 160km/h corridor

Using the same 160km/h top speeds, this takes the step of delivering it via an entirely new corridor.

They estimate it would shave an extra 9-minutes off the journey for time of 79 minutes, but a completely new corridor comes with a hefty price tag of $12.2 billion.

Scenario D – New dedicated 250km/h corridor

This scenario looks at what if we built that new corridor in Scenario C with standard gauge tracks with trains capable of up to 250km/h.

At $13.6 billion this doesn’t cost all that much more than C but would save an additional 10 minutes on the journey for a total time of just 69 minutes.

One of the issues with this however is that standard gauge track would only be between Southern Auckland and Hamilton so users would still have to transfer to an express service to get through Auckland.

What successful light rail looks like for Auckland

The Government’s new light rail establishment unit represents an opportunity to rethink the wider transport and development vision for Auckland to tackle congestion, carbon and housing affordability challenges, says Infrastructure New Zealand Policy Director, Hamish Glenn

The Government has set up a new Establishment Unit to evaluate options for rapid transit between the city centre and Mangere. The new unit will sit inside Waka Kotahi and be led by an independent chair with a governance board comprising representatives from Auckland Transport, Auckland Council, Ministry of Transport, Kainga Ora and Waka Kotahi itself.

It is expected to report back to the Government towards the end of the year on mode, route, costing, funding, financing, value capture and delivery entity.

This is an ambitious timeline and the new Transport Minister deserves credit for moving quickly to address questions over the future of the project.

While some were hoping for the announcement of a shovel-ready project, the Minister says he wants to be absolutely certain that the plan we move forward with is the right one. That is why this fresh start is involving Aucklanders and doing the work alongside them.

The unit is expected to engage communities left out of the previous process. It will be important to engage not just communities but the industry which will be required to deliver light rail and which has endured several years of uncertainty.

Early clarity will be important for the financial community in particular who will need to understand what the Government’s appetite is for private sector involvement.

Essential to the success of the Unit and its ability to develop a project which endures political cycles will be a broad mandate which answers major outstanding questions about the future growth and development of Auckland.

Recently released ATAP analysis found that congestion and carbon emissions both worsen under current transport plans and there remains no evidence that housing can be delivered at a price point Aucklanders can afford.

What is the transport network that Auckland needs to be a competitive, equitable and sustainable economy?

What does a transport system which achieves a net zero carbon New Zealand in 2050 look like?

Where and when will competitive land supply which enables affordable housing be unlocked?

If the Establishment Unit can answer these questions and demonstrate that light rail between the city centre and Mangere is an essential component then public concerns with the project will quickly dissipate.

This project is a test case for the future of integrated transport and development in New Zealand.

Other major cities in New Zealand will be watching the progress of the Unit closely as will the domestic and international infrastructure sector.