Yesterday Kiwirail released their annual results and once again they lost a significant amount of money – $167 million for the year. The shortfall obviously has to come from the Government. They were also keen to point out that the main reason for the loss was the cost of maintaining the rail network which includes 4,000 kilometres of track, 1500 bridges and 150 tunnels.
As sure as night follows day the truck lobby were quick to complain about Kiwirail getting government support.
The argument put forward by KiwiRail won little sympathy from the main trucking lobby group.
Ken Shirley of the Road Transport Forum accused KiwiRail of seeking special treatment, and he said the company should stand on its own feet.
“No business can say that they can only conduct themselves if they have an input from the taxpayer,” Mr Shirley said.
“They have to look at their whole pricing methods, they have to look at their management of their assets and they have to organise their business.”
That’s quite a bit rich coming from the trucking industry which is heavily subsidised by tax and ratepayers. But just how much support do they get. Below is some information from the NZTA and Ministry of Transport on his.
The three year National Land Transport Programme identifies where funding comes from and where it is spent. It predicts that over the 2015-18 period of the current NLTF over $2.7 billion in funding for transport will come from local council rates which goes towards paying their share of non-state highway projects. These are of course the roads that most trucks need to use on their journeys to get to the doors of their customers
Then we have the National Land Transport Fund – the place where fuel excise duty (FED), road user charges (RUC) and vehicle registration fees go. As the graphic shows road user charges – of which the largest contributor will likely be trucks – are expected to contribute about $4.3 billion in funding while other road users contribute $5.5 billion. Lastly there are other sources of funding which go towards projects such as the government’s regional State Highway programme which is funding a number of projects directly from general taxes.
The Ministry of Transport also have information on who pays for what and where it goes. Helpfully it also breaks RUC by heavy and light vehicles (less than 3.5 tonnes). It shows that heavy vehicles make up about 4% of the NZ vehicle fleet but pay about 26% of the taxes raised. The reason for this disparity is that heavy vehicles cause significantly more road wear.
As the charts below show taxes from Heavy RUC pay for about 23% of State Highways and 25% of local roads.
With those numbers in mind let’s turn attention to one of the biggest projects coming down the pipe – The East-West Link. As we know a near motorway quality road is proposed along the northern side of the Mangere Inlet. Auckland Transport and the NZTA say the early indicative costs are $1 billion however I believe they’re now pushing up around $1.5 billion. The reason this project is getting so much attention is primarily due to the strong lobbying from the Truck and Business lobbies. They argue that the new almost-motorway is needed to free up truck movements making it quick and easier for them to operate.
Given the truck lobby are so adamant Kiwirail shouldn’t get any help from the government and the East-West Link is primarily being built to improve freight movements I look forward to the announcement that the trucking companies are paying the full cost of this new mega road.
Of course we know not all trucking companies share the view that Kiwirail shouldn’t get any help. Mainfreight has long been a supporter of having a stronger of rail network. Richard Prebble – the former leader of the ACT party and a person with an infamous history in the history of rail in NZ – has called for it to have more investment. That is in part from him seeing the value in it as a director of Mainfreight.
Just to be clear I’m not saying we should go and start charging truckies for all projects but surely it’s about time they dropped the “we’re not subsidised” act.
One positive to come out of all of this news about Kiwirail is it appears the government are coming around to the idea of having the NZTA manage the freight network
State-owned KiwiRail is pressing the NZ Transport Authority to take over funding the national railway network and believes it has Transport Minister Simon Bridges onside in a way not true of his predecessors, Gerry Brownlee and Steven Joyce.
In comments at KiwiRail’s annual public meeting, chairman John Spencer and chief executive Peter Reidy highlighted the inclusion of a new top priority in the NZTA 2015-2019 statement of corporate intent to “integrate road and rail to improve freight network productivity” as a sign the government is coming round to the need for an integrated approach to road and rail network investment.
This is positive to hear as it’s a position that seems to be almost unanimous across a broad spectrum.