For almost as long as this site has existed, we have bemoaned the double-standard between funding arrangements for road and rail projects. Whereas road projects had a regular budget – through NZTA – and therefore could be planned with confidence many years ahead, rail investments always needed to be made through ad hoc processes and had no long-term funding certainty. This meant that major rail investment decisions over the years, like double-tracking the Western Line, electrification and City Rail Link, were all made only after tortuously long processes with specific arrangements.
This system for rail funding means that the planning of required future investments has also generally been neglected – or undertaken in a way that very much focuses on the short-term. The only exceptions to this, such as the Auckland Rail Development Programme or City Rail Link, are very high level and/or have been led by local government. Often the argument put forward for this ad hoc approach was based around NZTA’s funding being from road users, but this made little sense as rail delivers significant benefits for road users (around $1.4 billion a year of congestion relief benefits according to this report) and NZTA has long contributed to rail service operating costs. In short, rail has essentially been sidelined from the transport planning process, contributing to a poorly integrated transport system.
Fortunately, the government has been working on fixing this problem pretty much ever since they came into power. It seems like quite a lot of work was done through the Future of Rail review, which has led to development of a new and more integrated planning and funding approach for rail. Key components of this new system include the New Zealand Rail Plan as well as the NZ Rail Legislation Bill.
The NZ Rail Legislation Bill had its first reading in parliament last year and is now open to submissions – which close at midnight on Friday. You can have a read through the whole bill here, but what it does is summarised below:
The objective of the Land Transport (Rail) Legislation Bill is to implement a new planning and funding framework for the heavy rail track network (the rail network) owned by KiwiRail. This new framework involves bringing planning and funding of the rail network under the land transport planning and funding regime set by the Land Transport Management Act 2003 (the LTMA).
Under the proposed rail planning and funding framework, funding for the rail network will be channelled through the National Land Transport Fund (NLTF). A statutory rail network investment programme (an RNIP) will be established, which the Minister of Transport will need to approve in consultation with KiwiRail’s shareholding Ministers. This will allow the rail network to be funded from the NLTF.
These changes will also ensure enable track user charges to be established through regulations. This will ensure track users contribute to the costs of the rail network in a fair and transparent way.
Key changes proposed by this Bill include:
- implementing a new planning and funding framework for the heavy rail network owned by KiwiRail.
- the rail network funded from the National Land Transport Fund and give Rail Ministers decision-making rights on funding rail network investments.
- amendments the LTMA and the Land Transport Act 1998 to implement the new framework, and bring the planning and funding of the rail network under the land transport planning and funding regime set out in the LTMA.
Generally the bill is an important step towards a more integrated transport planning and funding system and is worth supporting for that reason alone. But reading through the details and background of the bill, it seems like it’s really only a step towards a fully integrated approach to rail funding and planning. In short, while NZTA will be required to make a funding contribution to rail projects (which means there will be a more stable source of funding that doesn’t require ad hoc government decision-making on a year by year basis), the planning of rail networks will still occur through a somewhat independent process of everything else – both through the NZ Rail Plan (of which a draft was published last year) and this new document called the Rail Network Investment Programme.
This ‘partially integrated’ approach was considered alongside a more integrated option in the development of the legislation.
Even this more integrated option – which would have given local government more influence over the development of the rail network investment programme and the prioritisation of rail investments – feels like it still treats rail too separately from the rest of the transport planning process, but it certainly would be better. I hope that KiwiRail and the other transport agencies work extremely closely together to develop the network investment programmes.
At its first reading the bill was opposed by National, with their transport spokesperson Chris Bishop essentially stating that they felt the status quo was OK:
So that brings me to the third point, which is why we don’t support this bill. The first point is we don’t believe the case for change has been made. And the Minister really didn’t make a very strong case for change. We think the status quo is fundamentally satisfactory. Road users pay for roads and the maintenance of existing roads through fuel taxes and road-user charges and the users of rail pay for the use of the rail network through a State-owned enterprise (SOE), which is called Kiwi Rail.
We think that having KiwiRail as an SOE that has a for-profit motive and is run under the Companies Act is something that’s a good thing because it promotes commercial discipline. It means that we don’t get uneconomic, wealth-destructive investments. The worry with this bill is that, essentially, road users will end up cross-subsidising rail users on uneconomic routes that rail users don’t wish to use. And so the concern is that this is going to be a giant waste of money, and that is why we oppose the bill.
I’m expecting the bill to pass into law and it doesn’t seem like something a future government would necessarily prioritise reversing. Nevertheless, it is worth putting in a submission that supports this step towards a more integrated transport planning and funding system – while also suggesting that they reconsider the ‘full integration’ option so that investment prioritisation is truly undertaken in a multi-modal way through Regional Land Transport Plans like everything else.
You can make a submission here.