Rail has been an integral part of the New Zealand transport system for more than 150 years, delivering goods and people around the country efficiently, safely and sustainably.
The past year has seen an unprecedented level of rail development underway, as KiwiRail sets out on the pathway back to profit following decades of neglect.
Thanks to extraordinary Government support, we are now seeing the largest rail capital projects underway since World War II. This will enable KiwiRail to translate all customer demands into services and underpin our pathway back to profit.
This is a watershed period for KiwiRail, as we swing into development mode alongside business as usual. The Government has made a huge commitment to rail, and the investment that is being made in our network and in our rolling stock is positioning us well for the future.
Currently, 92 per cent of freight in New Zealand does not travel by rail. The reason is simple. Our rail lines and our freight systems are so run down that it has taken a huge level of commitment from both the Government and from our team to start moving the company into a position where it can return to profit. The truth is there is far greater demand for our services than we are able to supply.
The way rail has been funded in the past has resulted in short term decision making. That means we have not been able to translate current demand into growth due cost cutting resulting in lack of drivers, locomotives, wagons and fully usable track. Those decisions have resulted in higher track and machinery maintenance costs, higher repair costs and higher costs from driver shortages that knock on to cause freight service limitations and increased costs from overtime, travel and accommodation.
Our strategy to return to profitability and deliver a good return to our shareholders is threefold. We aim to run more services, get the equipment we need to be able to grow capacity, and put in place the technology that will enable us to track freight, and track profit and loss centres.
Not only does moving freight by rail produce 66 percent fewer emissions than road freight and help reduce congestion by taking commuters in and out of our cities and long and short haul freight around metropolitan and regional New Zealand, it also offers road maintenance cost savings.
Government funding that will be a key enabler for KiwiRail included the Government’s funding announcement of $897 million in January that enables work to begin on building a third main Wiri to Quay Park that will ease congestion, and electrification of the network to Pukekohe so commuters have a seamless, faster ride in to Auckland. Wellington will get $211m to overhaul services and amenities on the Wellington, Wairarapa and Palmerston North network and beyond.
This came after Budget 2019 saw the Coalition Government announce more than $1 billion in funding, including $375 million over two years towards:
A further $331 million was announced over two years for:
The Budget also allocated $300 million via the Provincial Growth Fund for rail projects.
Existing work already underway includes the $196 million Wellington metro upgrade. We began double tracking at Trentham, the bottleneck in the region’s commuter rail service in order to speed up commuter journeys. Most of the network shut down over Christmas as about 150 KiwiRail and NZTA staff and contractors installed foundations for new masts for overhead power lines, building underpasses, upgrading level crossings and barriers, replacing rail and sleepers and improving slope stability and drainage. This work was made possible because of nearly $300 million in earlier Government funding to encourage commuter growth and reduce road congestion and wear and tear, by making the rush hour commute more reliable.