Rail plan robs Peter to pay Paul

The Government’s new plan to fund rail from the money we pay for roads is robbing Peter to pay Paul.

Yesterday, with much fanfare, the Government released The New Zealand Rail Plan. The original plan was to release the document in August 2020, according to the Cabinet paper released with it, and:

“The Rail Plan does not provide a definitive list of investments for rail over the next decade, nor does it provide a funding commitment for all of the projects outlined. However, it does send a strong signal of the Government’s commitment to rail over the next decade, and the investments needed to achieve a resilient and reliable rail network,” the Cabinet paper said.

Essentially, it’s a plan to have a plan, to make rail a contender for a greater share of the freight task and bump trucks off the road. It totally misses the mark of what is happening in freight movement globally.

Freight is customer driven. The customer gets to choose the best way to have their goods delivered. The Government cannot direct the movement of freight just because it wants to.

There is a new population cohort – let’s say under 40 years of age – that has their life delivered to their door. They shop almost exclusively online. They want door-to-door delivery, as fast as possible. Rail cannot deliver that; trucks can.

Currently, 93 percent of the total tonnes of freight moved in New Zealand is moved by road. That is projected to grow, given increased customer demands.

The Ministry of Transport’s National Freight Demand Study 2017/18 shows demand for road freight increased by 16%, while demand for rail freight declined by 17%. This is because the advantages of road over rail are many.

But the Government will now take the money road users pay into the National Land Transport Fund (NLTF) – in road user charges and petrol excise duty – to further subsidise its own KiwiRail, with some fantastical notion that rail can take a considerable amount of freight off roads.

We think the user-pays model means the money collected for roads should go to fixing dangerous roads and building some new ones – this will benefit the economy. Vast sums of that money shouldn’t be thrown into rail with no real plan, no real cost benefit analysis, and just an ideological fixation that rail must be best.

In its announcement yesterday, the Government said it would implement track user charges (like road user charges) to add a contribution from rail to the NLTF. There were no details on how much track user charges would generate, or how they would work.

We think if there are any track user charges, they will be a drop in the bucket to meet the rail programme spend.

We fully support spending money on passenger rail in Auckland and Wellington. If public transport is affordable and reliable, it allows commuters to move about without using their cars, which we hope reduces congestion on roads.

We don’t support pouring billions more dollars into rail freight when it may only shift about one percent of the freight task from road.

The Government likes to reference rail’s environmental benefits over road, but these are simply illusionary, as any level of success for rail transport is entirely dependent on truck transport. A truck has to deliver to and/or from the train to the end destination. Measuring environmental performance solely on the basis of the relative performance of the truck versus train, instead of the reality of point-to-point sender to receiver, is a very narrow perspective.

There are some 93,000 kms of road in New Zealand, about 10 percent of which are state highways, and only about 4,000 kms of rail track. The split isn’t going to change significantly and freight customers will continue to make business-based choices.

We do not support heavy-handed State intervention to counter market choices and potentially put hard working New Zealander trucking operators out of business.

– Nick Leggett, CEO, Road Transport Forum


Back to Nick's Blog