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

Border rethink required to meet skilled worker demand

Armed with the knowledge that managing Covid-19 in New Zealand is now a long-haul project, it is time for the Government to re-think its approach to the border.

As possibly the last place on earth to get any kind of mass population vaccination coverage – we don’t even have a plan for that yet – we cannot have the level of border closure we’ve got indefinitely.

Flexibility and clever thinking need to replace rigidity and rules that don’t always make sense. Appropriate levels of risk profiling need to be applied.

I do not want to start a barrage from concerned citizens saying we must keep our country closed off from the rest of the world for as long as it takes. We hear quite enough from them every day in the media.

I do want to start a conversation about the very real economic pain that is coming in 2021 as a result of a border closed for one, two, three years, or more.

We can both protect the New Zealand population and allow more people into the country, if we consider we are protecting the population from death and from overwhelming the public health system, not from the odd case of Covid-19 in the community. New Zealand is very good at contact tracing and shutting down any small outbreaks that might occur.

If you believed everything you read, you’d think we were being over-run by the sick from overseas. In fact, between March 2020 and December 2020 the number of people leaving New Zealand was 122,902 greater than the number of people coming into New Zealand (New Zealand Customs Services passenger statistics). We are losing population, not gaining.

We should also note the people coming into New Zealand are mostly New Zealanders, who by law, have every right to do so.

I know there are many people who will love that statistic because they think we can subsistence live in New Zealand. However, we are a trading nation and we need a regular flow of people and goods to maintain our standard of living. We also need people with different skill levels to power the productive elements of our economy. The truth is that the people departing from our shores are probably the very ones who will pick and box the fruit, oversee the COF of a truck, or be a retail worker. 

The flows of goods and people are being seriously impacted by the New Zealand Government’s stance. We have compounding supply chain issues that New Zealanders will be starting to see as they notice shortages, or no supply at all, of goods across the board.

We need to be focused on improving our ability to export and import, not slowing it down further and naively believing we can be self-sufficient. We need more people with skills than are currently available in New Zealand. Those people need to come from overseas.

Plenty of shade has been thrown at Ports of Auckland, as one of the main ports for goods coming into and out of New Zealand, regarding delays to the flow of freight. But to reach maximum capacity, Ports of Auckland need more skilled workers, particularly crane operators. Those skilled workers need to come from overseas.

This is not a situation that can be fixed by redeploying currently unemployed New Zealanders.

This is work that can take up to 18 months to acquire the training and skills to be competent in.

Importing a small number of experienced crane operators to work at Ports of Auckland would have an immediate impact on the supply chain by relieving the current extreme shortage of workers and the resulting congestion.

New Zealand needs to adopt a pragmatic approach to immigration if we are to trade our way out of the economic pain caused by Covid-19 around the world. We need our best “number 8 wire” innovative thinkers on the job to address our supply chain issues given our low population, distant location, and relatively small contribution to global markets.

– Nick Leggett, CEO, Road Transport Forum