Today’s KiwiRail announcements make it clear that the transport arrangements in New Zealand are a mess. The various streams of funding, the lack of comparison of projects of different modes, the competing subsidies and our Benefit to Cost Ratio (BCR) process, are all contributing to some very poor outcomes. We should have great transportation links in New Zealand as only us and the USA have hypothecated transportation taxes, i.e. the money from transportation taxes gets spent on transport.
I think we need to realise both the trucking freight industry and the rail freight industry are subsidised in New Zealand (trucking more so than rail) and we are not comparing apples with apples projects-wise, in my opinion the following things need to happen if we are to get better transport outcomes in NZ:
- Ontrack needs to be taken out of Kiwirail and placed under the NZTA. Currently capital rail projects are competing with general Treasury funds (i.e. Health and Education) for funding rather than the monies from National Land Transportation Fund (NLTF) even though the NLTF pays for subsidies for public transport as road users receive most of the benefits. Surely it makes sense for us to decide who gets funding from the NLTF by comparing upgrades to the North Auckland Rail Line against Puhoi to Wellsford and the Waterview SH Tunnel to the CBD rail tunnel? Instead of Puhoi to Wellsford against the Waterview Tunnel, but the CBD rail tunnel against vote Health? If we then want a greater acceleration of transportation spending the Government can simply add Treasury funds to the NLTF.
- We need to accept that a public body must control the public transport network in our cities with private operators limited to operating tendered routes. Even the bastion of the hard right-wing the World Trade Organisation (WTO) accepts this in principle by saying an entire city’s network should be operated by a single company on a tendered contract (the fact that this doesn’t work too well either is beside the point). Amending the Public Transportation Management Act (PTMA) back to a fully deregulated state would be a massive mistake as full deregulation did not work here, as it continues to not work in the UK outside London.
- We know that Rail receives a $90 million dollar subsidy a year, but we need a review to calculate the amount trucking companies are subsidised and then work to eliminate both within 10 years.
- A review of the true costs of parking with recommendations for costs to be internalised as much as reasonable within 10 years.
- Our BCR process is based on the UK and USA models both of which have (or will soon have) changed in the last 10 years, we need to review this, especially the principal (or more accurately the value) of “time savings” and the lack of acknowledgement of the principal of “induced demand” which is almost always underestimated and perceived as a good thing. They should also take into account more accurately the cost to our Environment, our Health system and our Economy via deaths, that is caused by each transport mode. And ensure funding generally follows a highest BCR first model.
I think all on the left and right want better transport spending and I think having a system that can more accurately evaluate all projects in a region against each other with an truer estimation of costs, both capital and ongoing, which then compete for one pool of funding, going forward is needed as oil becomes more rare.
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All this leads to the rather uncomfortable question of whether it was a good thing after all for the government to buy KiwiRail in 2008. Imagine if they’d just stuck with Ontrack looking after the tracks, and we might have seen a lot of this money announced today going into track upgrades rather than into new locomotives and wagons.
Or, alternatively it would still be going into subsidies for Toll, or we’d not have a freight rail system at all….. you never know!
Um, Jarbury – from my untutored reading of the news, I would expect that quite a few of the issues & delays that occur in the rail system have to do with crappy and outmoded rolling stock too. Same as in Auckland commuter rail. So why would some investment into rolling stock be a worse choice?
Like you can’t have a functioning road system without functioning vehicles, you need both track & stock (and Hillside needs some love, after the snub by their own bosses over the EMUs).
Max, I guess my point is that if KiwiRail hadn’t been bought back by the government, it’d actually be the private owner’s responsibility to renew the rolling stock. So public money wouldn’t have to be spent on it, and could instead be directed to track upgrades solely.
I’m not saying that buying back KiwiRail was a bad idea, just that lumping KiwiRail and Ontrack together has its problems, and that before 2008 things were perhaps a bit simpler in that respect.
With Toll ownership there was no guarantee that lines would remain open so the govt rightly did not want to give them large amounts of money for upgrades. It is much easier for them to subsidise themselves. Toll also wanted the govt to subsidise new locomtives as well as track upgrades.
Also todays announcements don’t make clear if this money is a crown grant, or a loan, or both.
I suspect most new locomotive and wagons will be funded by Kiwirail themselves through a loan. Thats what happened for the Chinese locos and Tranz Scenic carriages that were announced as govt investment in last years Budget.
Then money for track upgrades will come from the crown, I certainly agree this should actually come from the NLTF with a transparent process for allocation.
I think you’ll also find this business plan is in place of the $90 million subsidy.
“So public money wouldn’t have to be spent on it,” – Well, it isn’t now either. Remember all that talk about most of the money coming out of operating revenues anyway.
What you want in terms of road funding subsidy etc will never happen. Might as well get used to it. Every time the government (usually National) tries to put roads onto a more equitable funding system, the opposition (usually Labour) screams blue murder. Look at the row over Auckland Transport CCO right now. Those left wing politicians want to be in control of the roads and fund them from rates. They will always oppose any move to put roads on the same funding basis as rail. So it will never happen.
There is no right or wrong over buying back Kiwirail, it really was unnecessary but it was a big political nod to the Rail union which is a key Labour affiliate. Toll have an excellent track record in rail and they kept it free of political meddling, but Labour still had to find a way to shaft them.
Swampy, I think the criticisms of the Auckland Transport CCO are a little more complex than that. Here are my considered thoughts on it: http://greaterakl.wpengine.com/2010/03/23/reflecting-on-the-auckland-transport-cco/
And National removed the ability to equitably fund transport, by saying that NLTF funds were banned from use for rail capital projects. That is the opposite of your assertion.
National wants to be sure road sourced funding is spent on roads, because Labour wanted road users to pay for rail which is unreasonable. I remember when it was a big big deal that petrol taxes were being diverted to the consolidated fund to pay for general government expenditure. I don’t remember if they still do that but I cannot see how anyone would argue that subsidising rail freight traffic from road users is equitable.
The main criticism of the Auckland Transport CCO is, in a nutshell, that the local councils have limited control over its operations. Joyce wants them to be depoliticised the way that NZLT is.
If you are talkin about reviewing them it seems they already do, that is what the STCC report is all about apparently…
Secondly I think moving Ontrack to NZTA and opening the NLTF might be as simple as a Ministerial decision (most likely a simple Act of Parliament)…
How are you going with reading that STCC Jeremy? I’m trying to avoid having to read it myself….
Oh, and while you’re at it, feel free to read NZTA’s economic evaluation manuals so I don’t have to as well 😉
That is a weekend task methinks…
On part 2, I’ll just ask LS and Riggles and add some “left”…
@Swampy “Toll have an excellent track record in rail” !!!
Toll don’t run any railways anymore, the rail business is now part of Asciano. This is the same company was about to close Tasmanian railways until the govt bought them and agreed to invest hundreds of millions.
The have also been closing regional rail terminals in various parts of the Australia and doing anything they can’t stop competitors starting new services.
They were probably closing down Tasmanian railways for the same reason. No money in it. Why did it need a government subsidy, same as NZ uneconomic.
Why is it a big deal when they close down regional terminals. Same reason. No money in it. The nz Government gave them a monopoly. Cullen signed that with his eyes wide open.
These are weaselly arguments. No substantive rebuttal.
The last thing we need is Ontrack becoming part of the “Ministry of Roads”!
The impression I get from NZTA is that they’d love to do more sustainable transport stuff, just that the politicians keep on taking away the money for such projects and throwing it at motorways. So I wouldn’t be too unhappy about rail coming under NZTA’s umbrella.
@swampy I don’t want to get into a truck vs. rail debate but please consider the following costs currently not paid by trucks, which if trucks did pay, would massively increase rail’s viability:
– Externalised costs
Poor urban form leading to:
Lower property values
Lower quality of life
– Hidden capital costs
The power of four (damage increases exponentially as weight increases) this means roads have to be built many times thicker to handle trucks than they would be if they just had to handle private vehicles… Do trucking companies pay these costs – no
– Ratepayer subsidies
The STCC report that said while RUCs do cover most of the damage do to roads they overpay to SHs and underpay to local roads, a direct subsidy from ratepayers to trucking companies
– Deaths
The NZTA estimates the cost per death caused by our roads is $1,400,000 (it is over $5,000,000 in Aussie):
400 road deaths
500 emissions deaths
900 x $1,400,000 = $1,260,000,000
– Environmental degredation
e.g. ALPURT, I’ve seen the cuts there, a disgrace
– Air pollution
Just because we aren’t paying for it up front doesn’t mean it doesn’t cost us, mainly through higher health costs
I hope you aren’t referring to me as a weasel there…
Jeremy:
Quite how trucks lead to poor urban form is beyond me. Be careful of counting externalities for one mode in one industry, you might find there are positive externalities as well and other industries become a bigger issue. STCC case studies seem to show that rail’s environmental benefits are not conclusive, and in one case were negative over trucks.
Yes roads are built thicker, but essentially this is a one off capital cost for renewal every 30 or so years. Do they pay this? Yes according to the MoT cost allocation model (not on local roads, but these don’t compete with rail fundamentally anyway). Do railways in NZ pay their long run replacement costs for infrastructure? Not remotely.
Yes ratepayers pay for local roads, but so what? Railways are about long haul freight, which means state highways. If you wanted to recover the heavy vehicle attributable costs for local roads from RUC, the increase would be around 20%, but to be fair it would only be charged electronically on local roads – state highways would be cheaper. The net effect may be worse for rail.
Railways are not casualty free either, and on a per vehicle km basis they aren’t that great. Road deaths are hardly predominantly attributable to heavy vehicles. Emissions deaths are seriously questionable (the study that found this was full of holes, and fuel standards have changed so much it will have improved significantly). However, you could argue that many fatal accidents happen at home, medical misadventure will dwarf the road toll. However in NZ ACC exists, socialising all such risks. Now you can unpick road deaths if you like, but to be fair do it across the board (and besides. given the passenger kms moved by car, the road toll is not particularly significant.
ALPURT is considered to be built to a high environmental standard, but any new infrastructure will have a significant impact on the land under it. The question is, so what really? As long as the landowner is compensated and the impact is managed, it isn’t a cost upon you.
The air pollution costs of road transport in NZ pale into insignificance compared to solid fuel heating. 86% of Canterbury’s pollution is from home heating, and the serious smog in Timaru, Nelson and even Napier at times in winter has nothing to do with transport emissions. Only in parts of Auckland is it an issue, and it is getting better in part due to improved engines and fuel standards. I’d argue strongly though that the greatest benefits in reducing pollution are from congestion. A few decades ago rail was seen as a serious contributor to pollution in Wellington, in the age of steam locomotive (for Thorndon).
However, monetising all of this probably wont make a huge difference to road freight vs rail, bearing in mind that most of the road freight business couldn’t be carried by rail. Besides locations nowhere near a railhead, you have freight consigned over relatively short distances (rail needs between 150-250km to really be competitive no matter what) and small lots. The time is long past for freight to be sitting in a freight shed awaiting enough going to the same location (maybe waiting for days) to fill a few wagons, be railed halfway, shunted onto another train, railed to the end point, sit in the yard for a day or so, and then trucked to the final destination.
The Swiss recently relieved the railways of being LEGALLY obliged to carry any freight anyone asks it to carry between any two points. It used to be that the Swiss Federal Railways would be required to carry any size of consignment, but it was proving ridiculously expensive whenever anyone was consigning simple box loads. It was not environmentally friendly to use railways to shift less than a wagon load, especially if it was partly filled and would sit idle for ages until someone had to pick it up (a loco) empty. So now the railways in Switzerland are only required to agree to move a minimum of a wagon load!
Roads in general lead to poorer urban form outcomes…
“Do they pay this? Yes according to the MoT cost allocation model”
Please explain this to me, I really don’t see how unless you are saying the over payment of RUCs to SHs not only covers maintanance and the extra thickness required and has there been a report calculating exactly how much thicker the roads need to be..?
I was expecting a lot from ALPURT due to the enviroduct and the tunnel, the environmental damage was astouding to me that with the RMA this could ever be approved… I care because of many reasons, surface water runoff with heavy metals into the water table, etc…
So we need to fix air pollution from a number of sources doesn’t mean we should write off the cost associated with road transport, and we don’t run steam trains in Wellington anymore so I don’t see the relevance of that point…
I don’t think anyone wants freight to sit around or go back to the 150 kms laws…
Sorry Scott but nothing dwarfs the road toll, it is the single largest cause of injurous death in New Zealand. Fatal accidents in the home and occupational deaths are each less frequent, although still a major public health issue. Furthermore, in the age range from 18 through to 55 (when people are most productive economically) it is the single largest cause of death, beating out cancer, heart disease or anything else (Suicide among males in the 18-35 bracket beats road trauma, but this is pipped out overall by the relative lack of suicide among females of the same age).
In terms of injuries we have the capability to prevent, road traffic is the worst culprit of wasted lives in any developed nation.
Also your suggestion that “on a per vehicle km basis (trains) they aren’t that great” is unsubstantiated. Rail has the lowest mortality rate and the lowest morbidity rate per passenger-kilometre of any mode of land transport. That makes it the ‘most great’, athough arguably it is only the best of a bad bunch.
“Quite how trucks lead to poor urban form is beyond me.”
Read any of Joyce’s recent speeches where he argues that slamming massive new or widened motorways through our cities is to a big degree because we need to keep freight moving.
Also, in a more down-to-home example: I concept-design road intersections, and I do a lot of commercial development. One of the most difficult things to fit in are the tracking paths of articulated trucks. They end up creating immensely sized intersections with little human scale (just look at Parnell Rise / Stanley Street for example, or any other intersection that has to cater for a lot of trucks). This makes it a) hard to cater well for pedestrians, and b) the truck turning circles are so large that it encourages the smaller cars to speed through these huge radii provided. This obsession with (large) trucks IS an issue for our urban form indeed.