Kiwirail on rail

Peter Reidy, CE of Kiwrail writes at Stuff:

The cost of rail to New Zealanders and the value of rail to New Zealanders are two different debates. They are related, but they are not the same.

This financial year, for example, taxpayers will contribute $210 million to KiwiRail. That is one very basic measure of the cost of rail. Also this year, freight trains will replace an estimated 1.4 million trips that would otherwise have been required by trucks on our roads. That is a measure of the value of rail.

One could divide the value by the cost and get the taxpayer subsidy for each truck trip not required is around $150.

But actually it is more complicated. Most freight trains operate profitably. The $210 million subsidy will only be for a small portion that are on unprofitable routes.

The benefits can also be measured in lower carbon emissions because of greater fuel efficiency than road transport, and reduced congestion on the roads.

Yes, but that is why we have a price on carbon. That price should cover the carbon emissions of road transport which makes rail more economic. However even with that, rail is needing $200 million a year.

It is estimated that in June alone, Wellington commuters avoided more than 650,000 car trips by taking a train. Fewer vehicles on the road also means a likely reduction in accidents, and the need for fewer new roads.   

Yes, but that is not the part of the network needing the $200 million subsidy. Wellington rail is funded by user fees and direct transport funding by local authorities.

I agree with Transport Minister Simon Bridges that it is worth investigating whether a stronger land transport system can come from a more integrated approach. That means that the various attributes of road and rail would be weighed and considered when making planning and investment decisions about transport. At KiwiRail, we think a more integrated land transport strategy would make more efficient and effective use of the significant investment that New Zealanders make in road and rail.

The reality is that we currently operate lines that are uneconomic. To us, it makes sense that where there is minimal bulk freight to be carried, then trucks should do the work and where the bulk freight load is highest, trains should be preferred. It is about the need for road and rail to work together and “code-share” to determine the most efficient arrangement in the best interest of the Government’s business growth agenda, and in the best interests of New Zealanders themselves.

I agree. Where there is lots of freight, use rail. But where there is minimal bulk freight, then trucks are the sensible choice.