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Getting New Zealand Back on Track

Getting New Zealand Back on Track

A Green Party strategy to save the rail network

To reverse the disintegration of the rail network, the Green Party proposes that central and local Government join together to regain ownership of the rail track.

A new SOE, lets call it New Zealand Track, would be set up to own the physical components of the rail network: track, land lease, signalling, communications and some buildings.

New Zealand Track would have the three crucial features:

1. Owned as partnership between central and local government; 2. No debt on creation; 3. Only required to break-even and maintain the network - not to make large profits

The right to run trains on the Government-owned track would be the subject of access agreements. Where demand exceeds space these would be bid for competitively. Service providers bidding for access could include freight companies (eg Tranz Rail), private passenger companies, regional councils or joint ventures.

New Zealand Track would be debt-free because it would not pay cash for the rail network. Instead it would be given the track at no or low cost in exchange for taking on the backlog of track maintenance, and in exchange for a guaranteed access agreement over some part of the services (eg freight) for Tranz Rail for a set period of time.

As well as receiving rail access levies from lease-holders, NZ Track would also receive annual funding from Transfund.

Transfund payments would include:

1. Maintenance payment - to cover cost of maintaining the network to a safe standard and fix the backlog of deferred maintenance; 2. Equalisation payment - to 'level the playing field' in the face of ongoing undercharging for road users; 3. New projects fund - new investment funding, contestable between road and rail

New Zealand Track could access investment funds from:

1. Central or local Government as owners; 2. Borrowing; 3. Transfund new project funding; 4. Outside investment for specific projects - eg double-tracking for passenger services or a spur line to a new port. Any new track would be owned by New Zealand Track, the outside investor would have monopoly access rights and/or reduced access fees for a period of time.

New Zealand Track

* Operates according to statement of intent setting out policies and priorities;

* No debt or requirement to earn commercial rate of return;

* Joint venture between central and local government;

* Owns tracks, lease on land, signalling, communications and some buildings;

* Responsible for system operation and safety;

* Negotiates access agreements with service providers;

* Operating revenue from Transfund and rail service providers (as levies);

* Capital investment from borrowings, retained earnings, third parties & Transfund

Rail Service providers

* Could include freight companies (eg Tranz Rail), private passenger companies or private-public joint ventures;

* Run trains according to access agreements with NZ Track;

* Service providers bid for access where there is competition for limited space;

* Can buy or sell access agreements provided comply with NZ Track standards;

* Pay access levies to NZ Track in exchange for use of track;

* Responsible for complying with NZ Track safety and operating procedures

Safety Management

* End to confusing overlaps;

* NZ Track and rail service providers covered by OSH for employee safety;

* LTSA sets standards, oversees NZ Track safety systems, audits service operators compliance systems, and monitors trends

Transfund

* Refocused on "safe and sustainable land transport at reasonable cost", and pays to maintain rail and road networks to safe standard (presently just roads);

* Pays rail "equalisation payment" to compensate for undercharging on roads;

* Operates contestable new projects fund open to both road and rail projects;

* Project evaluation takes into account efficiency, safety, climate change, local environmental factors and regional development

Third Party Investors (local authorities, private companies etc)

* Provide capital for specific projects (eg spur line, double tracking etc) that may not proceed without extra cash;

* Receive preferential access rights or lower rail access fees rather than ownership rights to infrastructure;

Transition

* No large cash payment for tracks;

* Tranz Rail given access rights for freight for a defined period of time and allowed to sell access rights for passenger services

Specific solutions

* Auckland can acquire track access. Some or all of Auckland region money goes into services and facilities rather than just buying access;

* Auckland investment in double tracking mean Auckland controls access rights to that track while NZ track does integrated network management;

* Wellington can negotiate long-term access agreement with a reliable provider;

* Napier-Gisborne line repaired and maintained as part of the national network;

* Rotorua line retained for forestry growth even if no traffic in the short term;

* Marsden Point spur line facilitated by NZ Track, possibly with third party involvement from port and forestry companies;

* NZ Track provides a means to invest in new forestry rail by bringing together public and private sector investment.

Questions and Answers:

Why would Tranz Rail agree to give up the tracks?

Tranz Rail faces ongoing maintenance costs and a backlog of deferred maintenance. What TranzRail needs is the ability to run services on the tracks. Once it realises it is unlikely to get $112 million for the Auckland deal, TranzRail may well be interested in swapping its network for an exclusive right to run freight trains. A possible sweetener would involve allowing TranzRail to continue to sell the access rights for long-distance services before the transfer.

What would it mean for Auckland?

Right now Auckland is facing a $112 million bill just to get to get access to the tracks. Under our model, Auckland could be given a set of access rights and go and negotiate with someone to provide the service it wants. Auckland region money then goes into services and facilities rather than just buying access. If Auckland wants to double track the Northern line, then it gets access rights in exchange for putting up the cash. In short Auckland gets the access it needs and can spend its scarce cash on services.

What would be the role of Regional Councils?

Regional Councils would be part-owners of the rail network and potentially partners in service provision. They remain as passenger transport funders and could also make strategic investments in exchange for control of access rights. They retain their roles in developing Regional Land Transport Strategies and Passenger Transport Plans.

Why should rail be subsidised through an equalisation payment?

Road users benefit by having freight on the rail system and people riding in trains. The roads are safer and less congested, and require less maintenance.

Road users don't face anything like full costs. We need to recognise rail as essential infrastructure. While road has such a massive implicit subsidy from the taxpayer and the environment, it's only fair that road ought to pay something to rail to level things up a bit.

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