Fuel tax cut a wasted opportunity

Future of inter-regional train travel in New Zealand

A focus on the sustainable funding of any new passenger rail infrastructure, including its operation and ongoing maintenance, was discussed in Infrastructure New Zealand’s submission to an inquiry into the future of interregional passenger rail

Submissions closed recently for an inquiry opened by Parliament’s Transport and Infrastructure Select Committee.

Committee Chair Greg O’Connor says he had hoped interested New Zealanders would take the time to have their say and help them better understand inter-regional passenger rail and its future in New Zealand.

The Inquiry terms of reference were quite wide ranging as the Select Committee sought stakeholder and the public views on aspects such as:

• Passenger rail viability in underserved communities, especially where prior rail links have been disestablished, and those communities currently advocating

for improved rail links; • Viability of passenger rail sitting alongside

KiwiRail’s freight network; • Existing inter-regional passenger rail, such as the Capital

Connection, and how these services work between local and regional councils and central government; • Integration of regional rail into existing local

public transport networks; • Investigating the climate and emissions reductions possibilities of passenger rail, and how this links to VKT (vehicle kilometres travelled) reduction targets in the

Emissions Reduction

Plan.

recent protest action around Wellington with a group wanting to restore rail, there are many people passionate about rail.

In its submission, Infrastructure New Zealand is supportive of passenger rail as a mode which can contribute to our zero carbon emission goal.

However, the development of new inter-regional passenger rail services and supporting infrastructure needs to be considered as part of the wider planning for rail and the land transport system, in terms of the existing priorities, funding availability, and resource capacity.

It is important that these existing national and regional planning and prioritisation processes continue to be adhered to.

Infrastructure New Zealand believes that government should stick to its current priorities for rail, particularly focussing on ensuring that the mass transit systems in Auckland and Wellington can operate reliably and provide a zeroemission alternative for the huge numbers of current and future passengers.

It considers that there are clear urgent priorities now for New Zealand rail infrastructure and services focussing on the two metro operations in Auckland and Wellington which will take some time to fully address and bring the track infrastructure back up to an acceptable standard again.

A significant proportion of the value of rail is generated from urban areas where over 100 million passenger trips are taken annually on Auckland and Wellington Metro services.

Both the Auckland and Wellington Metro systems have significant upgrades underway after decades of neglect.

The recent announcements of the significant Auckland metro network closures in 2023 to undertake urgent essential work are a result of under investing in maintenance of the track and its foundations. This historical poor asset management is now resulting in significant work to modernise the rail network.

The other immediate focus should be ensuring the rest of New Zealand’s rail network is resilient and able to be used reliably to increase the amount of freight carried by train. Shifting increasing volumes of freight from road transport to rail will also significantly reduce our emissions.

Infrastructure New Zealand welcomes the investigation of key interregional rapid rail between Auckland and Hamilton and a possible extension to Tauranga already tasked to Te Manatū Waka / the Ministry of Transport and other partner agencies.

Inter-regional rail services are extremely expensive, not only in terms of initial capital, but ongoing services and maintenance costs. Infrastructure New Zealand considers it vital that other zero emission technologies and service alternatives are properly considered which could achieve the same, or better outcomes for the environment and for the communities being served.

However, inter-regional rail has the potential to play a larger role in our transport system where it is costeffective. Infrastructure New Zealand recognises that existing inter-regional rail services, Te Huia and the Capital Connection, are not meeting customers’ travel needs, particularly outside the normal daily commutes.

Post-covid passenger travel patterns are different with much more remote working and less travel for face-to-face meetings in many sectors.

Traditional travel patterns are changing with more passenger demand for travel outside the commuting peaks and the need to provide travel solutions for a wider section of the population who are not travelling interregionally for a 9-5 job. These changing customer dynamics need to be assessed as part of any future services also.

Fuel tax cut a wasted opportunity

While the world moves to phase out fossil fuels and advance transport infrastructure, New Zealand is spending over a billion dollars just to maintain the status quo

A25-cent tax cut on every litre of fuel may seem like a welcome initiative given the spike in global oil prices, but it comes at the cost of over a billion dollars in lost tax revenue. That money has to be made up for from somewhere, as revenue collected from fuel taxes is essential for funding roads, public transport and walking and cycling initiatives.

Finance Minister Grant Robertson says he will ‘reprioritise’ other funding to make up the billion-dollar shortfall.

It took a cost of living crisis for the Government to find more money for transport, a sector that has been crying out for funding for years. Yet, a billion dollars later and New Zealand’s transport infrastructure will be no better off once the fuel tax cut ends in January 2023.

Worse still is that the consumer has hardly been better off either. Until recently, intended savings for the consumer have been mostly absorbed by fuel companies looking to make a profit. The price of crude oil hit its peak in early March, yet the cost at the pump continued to trend upwards in the months that followed.

This only changed in July once Energy Minister Megan Woods learned that fuel company profit margins had more than doubled, rising from 22 cents a litre to 45 cents a litre. This left the consumer a mere two cents better off.

Woods says fuel companies are expected pass on the fuel tax cut to consumers rather than pocket it for themselves.

Even if this does happen, the fuel tax cut is still not

an equitable solution to the cost of living crisis. Businesses that use more fuel are clearly the biggest benefactors. A good portion of the fuel tax cut’s billion dollars is going towards those businesses, yet they will have nothing to show for it.

When New Zealand is trying to cut its transport emissions, that billion dollars could have gone towards helping businesses transition to cleaner energy, provide them with alternative transport options and reduce their dependency on oil, cutting their expenses in the process.

That same approach could have been taken with transport initiatives for the public, Green Party Transport Spokesperson, Julie Anne Genter says.

“Subsiding fossil fuels by making petrol and diesel a little cheaper for half a year doesn’t make sense in 2022, when we need to make the transition to cleaner transport.

“The Government could have used that money to save and transform the ailing passenger rail network and reduce our reliance on fossil fuels in the first place.”

The first three months of the fuel tax cut alone could have future-proofed rail in the lower North Island, she says.

With a bit more investment, the lower North Island could have hybridelectric trains and improved train infrastructure. The $762 million business case has been put together by Horizons Regional Council, Greater Wellington Regional Council and Waka Kotahi, who have already committed more than half of the money.

“Government investment is not only needed to help this service continue running, but to cope with growing demand. By 2025, just three years from now, it’s predicted that the Wairarapa line will have exceeded its passenger capacity, and by 2030, the Manawatū line will be in the same boat,” Genter says.

“The Government can prevent this from happening by coming to the table with a mere $350 million, which will at least quadruple the services to Manawatū and double the services to Wairarapa.”

Making public transport free and investing in it, rather than just subsidising fares, is another more progressive initiative the Government could have taken to address the cost of living crisis instead of a fuel tax cut.

By and large, New Zealand’s public transport is expensive, unreliable and inefficient. This was an opportunity to turn things around, create a worldclass public transport system and offer people a better alternative once driving their car became too unaffordable.

Instead the Government has kicked the can down the road and opted to keep New Zealand’s outdated transport model on life support. The fuel tax cut is just holding the country back.

Sooner or later, New Zealand will have to future-proof its transport system and leave fossil fuels behind. The cost of living crisis was the perfect opportunity to kickstart this process, but it is a good crisis that has sadly been wasted.