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Government Says No To Napier – Gisborne Rail

Minister of Transport Gerry Brownlee, along with Economic Development Minister Steven Joyce, issued a press release on Wednesday stating there is little evidence to support the reinstatement of the Gisborne – Napier railway line:

Transport Minister Gerry Brownlee and Economic Development Minister Steven Joyce today released a study of the East Coast region’s economic potential over the next 30 years.

The East Coast Regional Economic Potential Study assesses the region’s economic performance and barriers to development, and models five economic growth scenarios along with their implications for transport infrastructure and the skills needed.

Mr Brownlee says the study shows the economic importance of maintaining and boosting the road network in the East Coast, particularly in Gisborne.

“There will be an increase in logging freight over the next decade and improved roading will be vital to support that and other industries,” Mr Brownlee says.

“The study illustrates the need to develop further capacity for heavy vehicles on State Highway 35 north of Gisborne and to maintain the quality of State Highway 2 between Gisborne and Napier, and northwest of Gisborne to the Bay of Plenty.

“I will be asking the New Zealand Transport Agency to review its plans for these highways in light of this study.”

The report also concludes there is little evidence to support the case for reinstatement of the damaged rail line from Gisborne to Napier.

“When operational, rail only accounted for 2 to 3 per cent of freight from the region and the report finds no clear evidence of a significant economic impact following its closure,” Mr Brownlee says.

To provide context, a map of the area shows the distances involved in the region:

Hawke's Bay and Gisborne

Hawke’s Bay and Gisborne

 

It is a distance of 214 km from Napier to Gisborne, and it takes about 2 hrs 40 minutes to drive according to Google maps.  Tolaga Bay to Gisborne is 55 km.

The study referred to in the press release comes in two parts.  The first is a desk-based review of available research and analysis of economic data, which runs to 197 pages. The second is a relatively lightweight 141 page document called “Economic forecasting and transport and skills implications“.  The Transport and freight section of the second document on page 33 contains an analysis of heavy commercial vehicle (HCV) use, and also talks about proposed plans to use Tolaga Bay as an inland port for Gisborne’s Eastland Port.  Bear in mind that traffic counts on the state highways in the area are low, with around 3,000 veh/day or less away from the main urban areas of Gisborne and Wairoa.

report-hcv2

Storage space at both Napier and Gisborne is an issue for logs, but it isn’t clear from the report why Tolaga Bay has been chosen as the inland port for Eastland Port, who made the decision, or why the Government has effectively chosen to subsidise Eastland port by upgrading the road to HPMV (“big truck”) standards. The last sentence looks like consultant-speak for “upgrading SH2 between Gisborne and Napier to support heavy trucks will be bloody expensive and will have ongoing high maintenance costs”.

The report states that logs currently make up 97% of export traffic through Eastland Port.   There are very few imports.

The Port of Napier exports a slightly less volume of logs and timber than Eastland Port – 1.4m tonnes vs 1.9m tonnes annually. However Port of Napier imports a significant amount of fertiliser, lime and cement.

The report sets out rail freight flows between Gisborne and Napier, before the line was mothballed in 2012:

report-rail-freight

Note that 2011 rail freight volumes were less than half of the 2005.

The report goes on to make assumptions about future economic growth over the next 20 years, including oil and gas production encouraging between $11bn and $85bn worth of investment.  The report does not analyse how likely either of these scenarios are.

Page 75 of the report looks at the role of the railway between Napier and Gisborne:

report-rail-role

The report’s conclusion on rail is:

We also emphasise that, even if rail services are reinstated, the majority of freight traffic and surface passenger transport will continue to travel by road. The possible resumption of rail services does not detract from the need to improve the road network to ensure the resilience and reliability necessary for providing attractive linkages in the region and minimising the effects of distance from the neighbouring cities and the rest of the country.

Not everyone shares KiwiRail’s pessimism about the viability of the line, however.  A  report by BERL in December 2012 called KiwiRail’s analysis “very conservative”, and there are fundamental flaws with the way KiwiRail have determined profitable freight volumes. That report states that the cash flow neutral tonnage is only 226,000 tonnes per year.  The same report also states:

The spending on the Napier to Gisborne road in the last ten years has totalled $102 million. In the last four years it averaged $14.8 million per year. If the number of trucks, and heavy trucks at that, increased by 33% to 38% because the rail line is not available for wood freight, the annual spend on the road can be expected to increase at least proportionately, namely by $4.9 million to $5.6 million per year. This indicates that it would likely be in the national interest to make the capital expenditure required on the rail rather than having to increase spending on the road, and suffer the negative externalities on the road.

In their Draft Annual Plan, the Hawke’s Bay Regional Council is proposing to invest $4.5m in the Napier Gisborne Rail Establishment Group, which estimates that $10.7 million will be needed to finance capital and operating budgets, including $5.3 million to buy rolling stock, $2.4 million for working capital and a $3 million disaster contingency reserve.

A 51 per cent shareholding from the regional council is proposed, with a contribution of about $5.46 million through to the 2018-2019 year, with investors from Hawke’s Bay and the Gisborne region holding the remaining 49 per cent interest in a holding company, which would be formed especially for the purpose.

Submissions on the HBRC Annual Plan close on Monday 12th May.  You can find out more and make your own submission here.

29 comments to Government Says No To Napier – Gisborne Rail

  • Jon Reeves

    In the last 5 months before the line closed it started to have a huge upswing in usage as the local transport operator, Weatherall Transport, took over as local sales agent for Kiwirail. The problem they, and what limited the growth was that Kiwirail did not have sufficient locomotives, crews or rolling stock!

    So, you had businesses all willing to use the line, had the freight ready and Kiwirail said “sorry, no rolling stock” or “no locomotives available”. It was almost if as Kiwirail had an agenda by the National Party led Government to close the line down in any way possible.

    Weatherall Transport is part of the consortium willing to take over the line if the Government repairs it to operational standard.

  • Nico

    What happened in 2008 that caused the massive drop in volume transported?

  • Jon Reeves

    TOLL sold the trains to Kiwirail. Took alot of freight off rail and put it on their trucks.

  • Richard Horner

    And who is going to pay for the upgrade of the highways for the heavy trucks? Not the operators using the roads but the taxpayers and motorists. The railway track should be subsidised to the same level as the trucks are on the road then we would see a totally different set of figures.

    It would be great if a consortium was to take over the line and make a profit. This would be the ultimate mud in the eyes of the government and Kiwirail. This stupid government needs to get a rational national transport plan looking further into the future. Remember Auckland in the 70′s when Robbie pushed for rapid transit and Muldoon (another railway hater) stopped it. As Robbie forecast we are now having to pay a fortune to implement a reduced version of rapid transport at astronomical cost. Don’t let go what you already have….daft

    • obi

      The reference to trucking and a potential need to upgrade the road was, I think, referring to the area north of Gisborne around Tolaga Bay.So subsidising a railway south of the city isn’t going to change that traffic volume at all. Either someone needs to maintain and upgrade the road, which will be paid for by road user charges and by taxing the economic activity involved in forestry. Or we should shut down or limit the forestry industry around East Cape, and pay the dole to all the forestry workers. It isn’t as if they’d be the only unemployed people on the Cape.

      The rail infrastructure in Gisborne is pathethic. It’s a giant carport-like structure, a portacabin, and a vast concrete wasteland. You could spend a lot of money repairing the line and upgrading the infrastructure, but the best case is that all the logs and other export freight gets sent to Napier and the port in Gisborne closes. On the other hand, the rail yard in Gisborne is near the beach and would be good for apartments. While the line itself would make a nice cross-country cycle track.

      • Can’t figure out if you are just trolling, but in your best case scenario did you read the bit about upgrading SH2 between Gisborne and Napier being really expensive?

        • obi

          They’re talking about forestry north of Gisborne where there is no rail. And forestry activity between Napier and Gisborne where it is uneconomic to double or triple handle logs in order to send them a short distance in to either city. So I don’t see why you think rail is a viable alternative to an upgraded road? The only reasonable alternatives are the road upgrade, or not developing the forestry industry. And I note that forestry expansion is a Labour Party policy plank so I can’t imagine they’ll be keen to shut the industry down in NZ’s poorest region.

          Then there is the fertiliser issue, since it would be the main user of rail. So people are arguing to spend large amounts of public money on specialised infrastructure in order to freight fertiliser between two cities. And all because people feel nostalgic about the particular infrastructure. That would be the sort of policy making madness that saw previous governments sending coal from the West Coast to Christchurch to be loaded on to ships in order to justify the rail line, instead of loading that coal on to ships in Westport for a fraction of the cost. You can’t do economic development if your objective is nostalgia. Although if you wanted to try, I’m sure there are some wharf-fans out there who would love to load logs on to ships at the underused Tolaga Bay wharf.

          • Simon C

            Obi the rial infrastructure in Auckland could’ve been said to be pathetic not very long ago. Hasn’t stopped that infrastructure being renewed and upgraded. Just because something isn’t great at this point of time doesn’t mean it has to be like that for future. You’ve obviously been taking lessons from the Steven Joyce school of political ideology ie 87% of trips are by cars now so that must mean that it will be the status quo in the future as well…the kind of thinking which is just plain dumb.

          • obi

            There is a clear need for passenger rail in Auckland and the benefits are obvious. It warrants the current and future investment.

            On the other hand, the Napier-Gisborne rail line served some purpose a long time ago, but it hasn’t been viable for a long time. The only reason it is still mentioned as a possible future option is because it is rail, and fail-fans will support just about any non-viable proposal provided there is a rail solution.

            It’s like commuting from Hamilton to Auckland. No one thinks that is a great idea, although people can do it if they want and there is a perfectly good intercity bus service. But if you propose a rail solution to this non-problem, then TranportBlog commenters will support an absolutely enormous subsidy per journey.

            Or consider rail from Auckland to Rotorua. When the last Labour government scrapped the service it transported, on average, eight people a day. It is not a transport problem, and certainly there is no reason to spend public money “solving” it. But TransportBlog commenters have proposed spending billions of dollars turning this in to a high speed line. You only have to mention “train”, and people will support all sorts of impractical economic decisions. Because some people get very nostalgic thinking about these marginal and uneconomic rail services.

          • tuktuk

            obi – I challenge this statement: ‘That would be the sort of policy making madness that saw previous governments sending coal from the West Coast to Christchurch to be loaded on to ships in order to justify the rail line, instead of loading that coal on to ships in Westport for a fraction of the cost.’

            The Port of Lyttelton, TranzRail, Toll, Solid Energy and other west coast coal miners over the years have thrashed out fully commercial agreements to cart coal from the west coast by rail with export shipment from Lyttelton. No sign of subsidy there. Bathurst from what I understand proposes to barge a portion from Westport to New Plymouth to export ships in addition to railing over the Southern Alps. Again, fully commercial agreements.

            The big issue with export ports on the West Coast is the fundamental nature of the coastline…unless you are proposing to barge coal down to Fiordland to trans-load onto export ships!

            One thing you have achieved in highlighting the West Coast railway line is this – in the early 1980s, under another National Party government there was indeed a strong push to close the line down. Despite a multitude of reports at the time recommending its closure this line was not shut down………

            And that Southern Alps railway line went forward to financially underpin the entire South Island rail freight (and rail tourism) operation through the 1990s and 2000s. It had only weakened in recent years due to the fluctuating fortunes of coal, and rail tourism since the GFC and Canterbury earthquakes. The summer just been has seen loads on the Tranz Alpine recover to pre GFC levels, and in both passenger and freight the line continues to earn a profit.

            Closing down Napier – Gisborne rail in an uncertain world? Very foolish, not financially sound and not safe to car drivers if you are going to instead subsidise roads to support HPMVs. Have you actually driven Napier – Gisborne road?

  • Some years back, the cost of getting the Napier-Gisborne road up to standard state highway conditions was estimated to be around $600 million. Much of the work required is between Tutira and Tongoio (the devils elbow in particular). It would actually be easier to relocate SH2 onto the railway alignment from Tutira to Eskdale than sort out the devils elbow, and this was mooted back in the 80′s. Let’s hope the government doesn’t get another term, as I’m beginning to suspect this might be their motive.

  • courtney edmonds

    This government has failed to show a surplus throughout the last two terms It has been in so I very much doubt new zealanders will vote them in again. Like Mr Key says “Show me the money.” I bet ACC will be overwhelmed with injury claims from tipped over log trucks. What are the “other industries” than logging left on the east coast and how much will Toll and Mainfreight be donating to the National party reelection campaign? ??

  • The biggest problem getting rail freight reinstated is that the regional councils have also been sniffing around for a coastal freight service. (even before this line was officially mothballed after the washout in 2012)

    Gisborne doesn’t have enough volumes to make both rail and a shipping service viable and the council are naturally protective about the economic viability of the port company

    The estimated prices for TEUs from Gisborne to Napier ( and presumably vice-versa) via the three modes in this report makes for interesting reading ( although this report is clearly biased in its desired objective)

    http://www.nzta.govt.nz/resources/gisborne-to-napier-coastal-shipping-study/docs/gisborne-napier-coastal-shipping-link.pdf

    • Bryce P

      I stayed here https://goo.gl/maps/AJWhm for 3 nights last year. The volume of trucks carrying logs is astounding, not to mention loud until late at night and starting again in the wee hours. We did some filming up on the hill above the port and there must easily be 20 truck/trailer logging trucks into that port every hour. (I moved out of that camp as I wasn’t sleeping and into a motel. Bliss.)

      • Gary Young

        I had a similar experience in 2012. Stayed at a campsite on Lake Tutira for Labour weekend and could barely sleep. All night, at intervals of 10 to 15 minutes the logging trucks rolled south. I have no recollection of them ceasing at any time of the night. In the morning I could stand it no more so I packed up and left.

        A few trains would have carried all those logs and more in my opinion.

        • Kevin Welsh

          And they have only just started Gary. We have 30 years of this that has really only just started. By the time the forestry has cranked up into full production, imagine what it will be like.

  • Faith based ‘analysis’:

    Faith that truck is always best, faith that oil will be there and economic to extract, faith that vandalising infrastructure inherited from our forebears won’t be regretted. Faith that they won’t be in government when the true costs of the abandonment of the energy efficient rail line and the costly to maintain road come in, faith that all the additional death and injury caused by the increase in heavy traffic won’t be connected with this decision.

    Economically irresponsible and scandalously shortsighted.

    • HF

      Of course Rail is free – and green – and never has accidents.

      Roads are the best and cheapest way to ensure the freedom of travel NZ citizens and industry wants.

  • Sigmund

    So, none of you know anything about hauling freight. Check.

    The double and often triple handling of product to get it to the station, onto the train, off again and transported to where you actually want it adds a substantial amount to the cost of supplying relatively low-value primary goods. It seriously risks the viability of very thin-margined industries. But no, train geeks gotta moan. Gotta have their toys and colourful lines on a map.

    • Sailor Boy

      If your industry needs hundreds of millions in roading infrastructure subsidies to succeed then your business isn’t viable.

    • Gary Young

      Of course, freight by road doesn’t need double or triple handling does it? I quite often see truck and trailer units driving along Queen Street delivering primary goods to the shops.

    • Kevin Welsh

      Are you seriously saying that forestry is a ‘thinly-margined’ industry?

      It has been estimated that when the forestry production in Hawkes Bay is in full production there will be around 300 truck movements a day into Gisborne port. Whereas with an inland port and rail only 2-3 movements a day are required. Not hard to see the inefficient method of transport here.

    • Luke C

      So you don’t know anything about logs in Gisborne. Check.
      Gisborne Port is already double handling the logs, with one inland port already, and talk of setting up another just south of Gisborne, near the railway line.
      What if these inland ports were set up along the railway line, maybe near Wairoa. No increase in double handling, but huge decrease in traffic volumes and thus expenditure required. Maybe the govt could even subsidize these ports so they were free to industry, bet would be 95% cheaper than upgrading the full length of the highway.

  • YET another log truck crash closed the East Coast highway for more than an hour yesterday when a truck rolled and its load spilled across the road near Rototahi swamp south of Tolaga Bay. The driver of the truck and trailer unit escaped injury in the accident.

    Emergency services were called out at about 11am. Police and the Tolaga Bay volunteer fire brigade were called, along with the township’s first response unit.

    “Another rig was used to drag the overturned truck off the road to re-open the highway,” a witness said.

    It is the third truck accident in that area of the coast road in the past six months.

    http://www.gisborneherald.co.nz/article/?type=article&id=36802

  • Eight men have been injured, two critically, in a collision between a van and a logging truck in Hawkes Bay.

    All eight occupants of the van were injured in the accident, a Hawke’s Bay Helicopter Rescue Trust spokeswoman said.

    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11246433

    • nonsense

      That is exactly why we need to spend more in roads isn’t it?

      • Dave B (Wellington)

        We have been spending on roads for decades, yet road transport remains far and away the most dangerous aspect of our daily lives. An alternative approach is to recognise that over-dependence on roads is undesirable and to take steps where possible to scale it back, shifting as much as possible to safer modes (e.g.rail). There is no fundamental law of nature which says we must depend on roads for everything. Just a group of loud-mouthed lobbyists who try to spread this misleading message. And a government who appear to be in their pockets.

  • BD

    Its evident we have a poorly run government in power that is quite happy about spending tax payers money on unnecessary items like housing, lavish dinners for royal family. And yet not spent on where its needed the most and too make NZ roads safer

  • Yet John Key seems to think it’s an election winner to spend $1.5m on passing lanes (http://www.gisborneherald.co.nz/article/?id=37577), plus $5m to replace a just repaired bridge for 900 vehicles a day (http://www.stuff.co.nz/national/politics/10215096/Govt-fixes-bridge-then-replaces-it), rather than $3.3m (http://berl.co.nz/assets/Economic-Insights/Infrastructure/Transport-and-Energy/BERL-economics-Napier-Gisborne-Rail11Dec.pdf) to reopen the Gisborne railway line. We’ll see what the election results are to find out if he’s right.

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