The government in New Zealand, through KiwiRail transport operator, owns and controls not only the rail tracks and associated infrastructure, but also the majority of the rolling stock. The government wants rail to compete on a commercial basis with other freight and passenger transport modes, with services funded from customer revenue as much as possible and rail investments providing a rate of return.
Rail is an effective mode of transport for high volume and heavy freight and carries approximately 15 percent of freight moved in New Zealand (when measured in ton-kilometers). The rail system also reduces the pressure on New Zealand’s roads and can provide safety, health and environmental benefits. National rail services are focused primarily on freight, particularly bulk and import/export freight, with limited tourism-focussed passenger services on some lines.
As announced, the Ministry of Transport’s focus over the short to medium term is to work to establish the appropriate governance, institutional, funding and legislative frameworks that will position rail to contribute positively to the transport system in the future.
The Ministry of Transport also aims to make the New Zealand rail market progressively safer.
In May, the government announced that New Zealand’s rail infrastructure will obtain the better part of USD 1 billion investment with money set aside to upgrade KiwiRail’s rolling stock and infrastructure, and Wellington and Auckland’s urban rail networks.
According to estimates, approximately USD 450 million are allocated to KiwiRail over the next 2 years to help restore the South Island Main Trunk Line and improve its rolling stock, ahead of a planned review of the state-owned rail operator’s capital needs in 2017.
“Restoring the South Island Main Trunk Line is a key priority for the government. KiwiRail has been making excellent progress clearing slips, obstructions, and reinstating the rail track so that this essential connection can open by the end of the year. Budget 2017 will support KiwiRail by making funds available for this essential reinstatement work to continue while their insurance claim is finalised”, New Zealand Transport Minister, Simon Bridges, explained.
“The government wants to put the rail network on a longer-term sustainable footing. In the year ahead, we will be conducting a wider review of KiwiRail’s operating structure and longer-term capital requirements”, Transport Minister Bridges added.
State budget documents reveal the accounting treatment of KiwiRail may need to change if its freight business no longer meets certain requirements and that would increase the value of its assets by USD 4 billion, compensating previous impairment charges which amounted between USD1 billion and USD 2 billion.
“The Budget funding announced will predominantly be invested in KiwiRail’s rolling stock and network to ensure the reliability gains of the past two years continue, and in Zero Harm initiatives to improve the rail safety. The plan to review the way rail is funded in the longer-term will offer more even certainty to our customers and to the transformation of the business”, KiwiRail Chairman, Trevor Janes, asserted.
Furthermore, another USD 98.4 million will be invested in Wellington’s metro rail network, while the first installment of the government’s rail investment to the Auckland City Rail Link was allocated USD 436 million. The government expects to cover half the cost of the network, which is estimated at between USD 2.8 billion and USD 3.4 billion.
This article was published in the June issue of the Railway PRO Magazine that analyses the latest and most important railway projects around the world.
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