Funding Kiwirail and Trucks

Yesterday Kiwirail released their annual results and once again they lost a significant amount of money – $167 million for the year. The shortfall obviously has to come from the Government. They were also keen to point out that the main reason for the loss was the cost of maintaining the rail network which includes 4,000 kilometres of track, 1500 bridges and 150 tunnels.

As sure as night follows day the truck lobby were quick to complain about Kiwirail getting government support.

The argument put forward by KiwiRail won little sympathy from the main trucking lobby group.

Ken Shirley of the Road Transport Forum accused KiwiRail of seeking special treatment, and he said the company should stand on its own feet.

“No business can say that they can only conduct themselves if they have an input from the taxpayer,” Mr Shirley said.

“They have to look at their whole pricing methods, they have to look at their management of their assets and they have to organise their business.”

That’s quite a bit rich coming from the trucking industry which is heavily subsidised by tax and ratepayers. But just how much support do they get. Below is some information from the NZTA and Ministry of Transport on his.

The three year National Land Transport Programme identifies where funding comes from and where it is spent. It predicts that over the 2015-18 period of the current NLTF over $2.7 billion in funding for transport will come from local council rates which goes towards paying their share of non-state highway projects. These are of course the roads that most trucks need to use on their journeys to get to the doors of their customers

Then we have the National Land Transport Fund – the place where fuel excise duty (FED), road user charges (RUC) and vehicle registration fees go. As the graphic shows road user charges – of which the largest contributor will likely be trucks – are expected to contribute about $4.3 billion in funding while other road users contribute $5.5 billion. Lastly there are other sources of funding which go towards projects such as the government’s regional State Highway programme which is funding a number of projects directly from general taxes.

NLTP 2015-18 revenue and investment flows

The Ministry of Transport also have information on who pays for what and where it goes. Helpfully it also breaks RUC by heavy and light vehicles (less than 3.5 tonnes). It shows that heavy vehicles make up about 4% of the NZ vehicle fleet but pay about 26% of the taxes raised. The reason for this disparity is that heavy vehicles cause significantly more road wear.

As the charts below show taxes from Heavy RUC pay for about 23% of State Highways and 25% of local roads.

Fuel Taxes

With those numbers in mind let’s turn attention to one of the biggest projects coming down the pipe – The East-West Link. As we know a near motorway quality road is proposed along the northern side of the Mangere Inlet. Auckland Transport and the NZTA say the early indicative costs are $1 billion however I believe they’re now pushing up around $1.5 billion. The reason this project is getting so much attention is primarily due to the strong lobbying from the Truck and Business lobbies. They argue that the new almost-motorway is needed to free up truck movements making it quick and easier for them to operate.

Given the truck lobby are so adamant Kiwirail shouldn’t get any help from the government and the East-West Link is primarily being built to improve freight movements I look forward to the announcement that the trucking companies are paying the full cost of this new mega road.

Of course we know not all trucking companies share the view that Kiwirail shouldn’t get any help. Mainfreight has long been a supporter of having a stronger of rail network. Richard Prebble – the former leader of the ACT party and a person with an infamous history in the history of rail in NZ – has called for it to have more investment. That is in part from him seeing the value in it as a director of Mainfreight.

Just to be clear I’m not saying we should go and start charging truckies for all projects but surely it’s about time they dropped the “we’re not subsidised” act.

One positive to come out of all of this news about Kiwirail is it appears the government are coming around to the idea of having the NZTA manage the freight network

State-owned KiwiRail is pressing the NZ Transport Authority to take over funding the national railway network and believes it has Transport Minister Simon Bridges onside in a way not true of his predecessors, Gerry Brownlee and Steven Joyce.

In comments at KiwiRail’s annual public meeting, chairman John Spencer and chief executive Peter Reidy highlighted the inclusion of a new top priority in the NZTA 2015-2019 statement of corporate intent to “integrate road and rail to improve freight network productivity” as a sign the government is coming round to the need for an integrated approach to road and rail network investment.

This is positive to hear as it’s a position that seems to be almost unanimous across a broad spectrum.

More motorways and blaming cyclists, transport BAU

Responses from two of the country’s biggest transport lobby groups yesterday highlight what could probably be described as the business as usual approach to transport in NZ.

First we have the NZ Council for Infrastructure Development, the lobby group for those that build and finance infrastructure and who have never seen a project they didn’t like or one they didn’t think should be bigger and more expensive. Not content with having managed to get the East-West link moved to near the top of the queue are already calling for a second East-West link in the form of the destructive motorway from the Airport to East Tamaki.

“Transport agency proposals to address East-West traffic flows released for public consultation yesterday will help address urgent freight needs in the Penrose-Onehunga area in Auckland. But the long term solution must be one which connects Auckland’s commercial and industrial heartland in Penrose, Mt Wellington and East Tamaki and also caters for planned residential intensification and growth from the eastern suburbs to the airport,” says Stephen Selwood CEO of the New Zealand Council for Infrastructure Development.
“In order for Aucklanders to provide worthwhile feedback on the proposals it is essential that they understand the full benefits and costs of each option and the long term strategic implications.

“The options proposed are concentrated on the Onehunga-Penrose catchment zone which, while still the largest in terms of employment, represents just one fifth of the $11 billion per annum generated across the industrial zones bordering the Manukau Harbour and Tamaki Estuary. Little information has been provided, to date, on the benefits, costs and strategic implications of the alternatives proposed.

“Connectivity to East Tamaki as well as further south to Mangere and on to the airport is not planned for improvement in these proposals, except through improved bus movement.

“How these areas will be connected into the future has great bearing on what the appropriate solution is for this first phase of investment.

“One option considered in earlier analysis included a motorway south of the Manukau Harbour. It provided long term connectivity not only between the industrial areas, but for all communities in the east of Auckland accessing employment and the airport.

“It was almost immediately terminated following public reaction, leaving a northern Manukau Harbour solution as the most politically acceptable. However, given that the proposals released yesterday provide no new east west connectivity for Glen Innes, Panmure, Howick, Pakuranga, Botany and the industrial areas of East Tamaki and Mt Wellington it is not clear how existing and projected growth demand in these areas will be addressed.

“Too often major projects in New Zealand are developed in a piecemeal fashion and modified and reduced to satisfy environmental and local interests without adequate consideration of strategic implications or the relative cost of lost accessibility and reduced economic efficiency.

“The East-West connection is a critical corridor linking not just the two busiest stretches of motorway in the country and three of the largest employment zones, it is a strategic link on the national highway network providing long term resilience and capacity for all road users crossing the city from east to west.

“It is critical that this project is seen as a strategic east west link for Auckland. That means providing adequate capacity to and through Auckland’s industrial heartland and supporting network connectivity region-wide,” Selwood says.

There are some really pull your hair out type comments in this statement.

Firstly it’s clear the NZCID are now trying to paint the East-West link as some kind of temporary fix up despite some of the options (like Option E) basically amounting a $1 billion+ motorway along the foreshore of the Mangere Inlet. There’s nothing temporary or short term about it.

EW Option - Option E

It also ignores that the East-West Link has long been seen about improving access on the northern side of the harbour because as the NZCID point out, that’s where the largest portion of businesses and therefore freight movements are. Also let’s not forget the project has long been sold as being needed to improve freight movements.

Perhaps because the current proposals better deal with freight movements they are also trying to shift the argument back to having the motorway option by talking about the residents of the eastern suburbs. In doing so they basically suggest that the ability of Eastern suburbs residents to drive to the airport should come ahead of the liveability and communities of residents who live in Mangere.

East-West Option 4

The horrific Option 4 the NZCID want back on the options table

If they were really concerned about how Eastern suburbs residents and about providing them better connectivity then a quicker, cheaper an much less destructive option would be something like we’ve outlined in the Congestion Free Network. Two busways running at high all day frequencies connecting East Auckland with the rest of the region enhances connectivity not just for trips to the airport but for a wide range of other activities too. Some may say that Eastern suburbs residents won’t catch a bus but it’s worth remembering that people have said the same thing about North Shore residents yet the busway has been spectacularly successful.

CFN East

Of course the NZCID won’t like the idea because it only costs a fraction of what a motorway does.

The other lobby group making news is the Road Transport Forum (RTF) in response to the suggestions from the NZTA’s Cycling Safety Panel that it be mandated for vehicles to give cyclists at least 1.5m of space when passing. Ken Shirley the CEO of the RTF has been rubbishing the suggestion and in doing so said:

There’s a dual responsibility, the cyclist also has to be more aware of the impact of the impact they might have on vehicles, whether it’s a car or a truck because that can be very severe”

Yep because cyclists can really do some damage to a 40 tonne truck or having to slow down for 10 seconds is just such a horrific concept.

“One of the problems is blind spots on trucks and cyclists unaware of those blind spots and there’s a lot of technology that’s new to the market with infra-red and radar up the side of the truck giving an audio and visual warning to the the driver that in fact there might be a cyclist sitting in the blind spot”

Of course as soon as anyone suggests making technology like this a requirement Shirley is the first to jump up and down complaining about it.

Too many cyclists don’t appreciate how vulnerable they really are,”

Cyclists are vulnerable primarily because of how other road users act and even the most safety conscious cyclist has sometimes been involved in tragic crashes.

I think they’re a bit light on actual cycle education – we see some outrageous behaviour from cyclists – and a lack of appreciation of the blind spot, particularly with heavy vehicles.”

Nothing like the good old tar all people on bikes with the same brush.