Despite the $750 million announcement for KiwiRail, the Auckland-Northland rail link appears to be under threat. I can’t understand the logic.
Steven Joyce is intent on building the ‘Holiday Highway’ from Puhoi to Wellsford – a road with a negative cost-benefit ratio – at a cost of up to $2.1 billion as part of his Roads of National (Party) Significance. That’s three times the amount he is spending on the KiwiRail nationally.
Here’s the incomprehensible part –
- the reason for the Holiday Highway is to optimise movement and freight to the north. Cutting the rail link simply shifts freight on to our roads. (It occurs to me that maybe that’s part of the Joyce masterplan to lift the Holiday Highway’s negative BCR.)
- increasing heavy trucks on these roads and congesting it further for other motorists raises safety issues, another reason he has cited for the Holiday Highway. Obviously much of that pressure could be relieved with more freight going by rail.
- our deepest – and alternative main port – is at Marsden Point. The rail link there is strategically very important.
Yes the rail line needs some long overdue upgrades, but the potential is enormous.
Btw, what KiwiRail appears to be doing is making small, non-headline grabbing improvements to rail that should greatly lift its efficiency. That same strategy for SH1 in the north would result in much more cost-effective improvements: a diversion around Warkworth for example, or straightening and widening other parts of SH1 would remove the need for a brand new motorway and at a fraction of the cost.
Non-headline grabbing I said. I guess that’s not so attractive National’s new Mr Think-Big.
Very true, Kiwirail is making all the small improvements that are by far the best for increasing rail’s economic productivity, track easements, passing loops, tunnel lowering and daylighting etc. the ironic part is this is happening because Joyce doesn’t want to spend a dollar more on rail than he has to so is spending it reasonably well, but the same principals apply for road developement and improvement, small improvements of existing roads alignments and safety…
What do we find there..? Massive approvals of multi billion dollar roads with negative benefit to cost ratios…
The guy is an economic vandal if you take into account upcoming declining energy availability…
The irony of the holiday highway is that is doesn’t go anywhere- or least anywhere near where the freight will need to go. For one thing it takes the route of the existing SH1 which is one of the more hilly options straight up and over the Dome Valley to Warkworth. A much more direct route to Wellsford you would think should be further to the West.
When you get to Wellsford- what then?Trucks will still need to traverse the Brynderwyns’ – anyone who drives that part of SH1 knows how narrow the road gets there. Without outlaying another couple of $bill on a tunnel – you’d have to think that this road would not be particularly useful getting freight to the North and back.
If they were properly serious about this you’d think they would 1. Take the most direct route 2. build it all the way to Marsden or 3. simply invest some more money in SH16.
Jeremy said:
THIS is a quotable quote.
Is “strategically important” another name for “we might want it some day even if we don’t use it now, and have no idea when we might actually need it, but that’s not the point because we might”?
So we might need it. Why not build it when we do avoiding the costs of the “big if”
Chuckie R La
It’s not quite the Great American Streetcar scandal, but it’s not far off it either.
[...] the full post and comments on Red Alert. AKPC_IDS += "433,"; Featured, [...]
@insider, because of construction lead times, oil prices can rise a lot faster than the; decade of analysis, consultation, consents, construction, operational introduction, etc…
The most recent IEA report stated the peak is in 2030 (while basically screaming in the background not to believe that it is that far away as this date was based on Government reserve figures) and that we need at least a 20 year lead in time to ween ourselves off oil…
Sadly we cannot rely solely on the market to transistion to a post peak economy…
They are mainly talking about north of Whangarei. Where there are very few people and consequently very little freight. A large part of this network was not finished until the 1940s without regard for the economic case and the fact that roads had taken over by then. A lot of the lines north of Whangarei have closed in the last 20 years or so already.
There is far far more traffic on roads yet in the minds of some they have not yet got used to the idea that road transport has superseded rail in lightly populated areas. Similarly there are those wearing tinted spectacles who rabbit on about peak oil and how we should be ready to move all that freight to rail. That will never happen as they say because the freight still needs to be moved by road to the railhead. The higher costs of doing that will simply result in depopulation of remote areas as business becomes uneconomic.
another 750 mill for something worth about 400-600$ absolutely amazing!
utterly brilliant thanks alot class of 1999!! 
It seems a little unfair to comment on his expenditure when you’ve forced the government to keep a dead fish…it wasn’t even bought at profit…
stephensmikm: what are you talking about. The Govt needs to be spending way more on rail relative to roads. The rail network is an infrastructure backbone to the economy. Your pointless point scoring about “dead fish” or whatever only serves to underline the fact that the private sector demonstrated itself unable/unwilling to develop critical infrastructure for NZ.
If anything this is a warning against privatising key national infrastructure assets.
With declining oil stocks, rising fuel prices and so on it’s not a matter of “if it happens”. Physically peak oil has to happen. There’s only a certain amount of oil in existence, it’s not being replenished at anywhere near the rate it’s being used, so therefore we are reducing the amount of oil there is each and every day.
There will come a point (if it hasn’t already come) when half the oil has been used up, and history tells us that once that point is reached supply tends to start declining (because of the way each oil well works aggregated up). So we will be nailed by higher fuel prices, the only question is “when?”
David, a good question to put to Joyce is “does he anticipate freight volumes between Auckland and Whangarei increasing over the next 10-20 years?” If he answers yes, then one has to question why the NAL is on the list of lines for closure. If the answer is no, then why the heck is he proposing to spend billion on the holiday highway? He can’t have it both ways.
Unless he is starting to realise that the only way the holiday highway can be justified is if it’s the ONLY freight option north of Auckland, and he’s going to great extents to ensure he doesn’t lose face over Puhoi-Wellsford.
@stephensmikm: “utterly brilliant thanks alot class of 1999!! ”
Don’t thank the class of ‘99… thank the asset stripping corporate raiders who fled to Switzerland.
And the neocon right wing freemarket liberals in Govt who enabled those raiders.
@Swampy, so little faith in the market..? Trucking companies will simply seek to lower costs by using precious fossil fuels by including rail in more of the potential freight movements, ditto shipping…
Is the IEA rabbiting on..? Are the oil company CEOs rabbiting on when they say peak oil will happen within two decades..? Time to realise the fundamentals are shifting…
Putting aside some Hypocrisy awarenessing
…
I do wonder why neither Labour or National have considered creating a strong rail link between Tauranga and Auckland to allow for easier transport of goods between the two big ports
Actually that would be an expansion project worth studying, stephensmikm. I wonder if the two ports would be in favour of such a land link.
jarbury
DeepRed
Loota
Wider views are encouraging to read.
The growth pattern called for by economists cannot be sustained ad infinitum. The classical economy as we see it promulgated is a dead fish in the long run.
Peak oil has happened but so has the peak of many other resources. To plan for tomorrow without considering how we can be less reliant on transport does not make sense.
Rail is far more efficient in moving large volumes of goods than road in track, rolling stock and fuel.
When fuel costs rise we are trapped with the most expensive options if rail is not well established and used.
The free market approach will leave us stranded and hungry as food is produced mainly out of town.
How the price of fuel behaves in the years ahead is unknown yet we are relying on a high cost inefficient mode of delivery with road transport.
Diversification is the least we can do to prepare.
City design and a range of other measures to make for less need of fuel use are paramount considerations, and unless food is grown in the city then transport will be needed. Rail is the best bet on the books as few of NZ cities can use water transport.
Fuel doubling or quadrupling or worse in the intermediate term is not far fetched.
Three intertwined issues here:
The first is that the current rail link is a goat track that simply doesn’t bring in enough business to pay the bills. What traffic there is is low value goods transported at what I suspect are low rates. This comment is also made on the basis that while Marsden Point loads out timber products, it certainly does not feature in the exporting of higher value dairy porducts, or as a principal importing port (yet).
The second issue revolves very much around logistics and the expected freight task to and from Northland in future. Jarbury is right on the money when he has commented that Steven Joyce cannot have it both ways…… if the increased freight task to/from Northland is being used to justify the Holiday Highway, then that same argument must be applied to at least have a second look at the Northland rail network. As things currently stand, if Marsden Point becomes a major importing port, those goods will be distributed around the North Island by fleets of trucks roaring through Auckland on the newly built motorway extensions. The future of Marsden Point, Northland rail (and Holiday Highway justifying trucking)revolves around big questions over New Zealand’s international shipping links. It may that state intervention will be essential to ensure New Zealand maintains good quality shipping links to our overseas markets. That intervention might very well require the development of Marsden Point and Northland rail as a reliable, low cost freight corridor to the south.
The third issue revolves around Auckland’s future growth direction into Northland along the Holiday Highway. It would appear that according to the National Party vision, growth will be encouraged northward in a very similar pattern to the direction also set by the then National government in the 1950s. There are some subtle differences though. The 1950s growth of the suburbs was a universal “new way” for all; white collar and blue collar. However, in the 21st century, if petrol prices increase at the rate some predict, then low income families will not be able to afford to live in these new northern suburbs based solely around use of private cars. As many commuters in Wellington could verify, a good public transport network is a great social leveller delivering universal access throughout the region. Could the current Northland rail link to a new rail line built under the Waitemata some day?
This would encourage exactly the close knit communities that we will need in a fuel scarce future. For good reasons, Albany, Orewa, Whangaparoa Peninsula, Warkworth and other communities will continue to grow. They are extremely desirable places to live. However their growth should be tailored to ensure they are universal, not exclusive. Vibrant town centres that form growth nodes along good quality public transport corridors helps to encourage community equality, health and diversity.
Labour has a big role to play in offering a vision of sustainable growth and prosperity for Auckland’s growth and Northland’s growth. The rail link could yet become a critical plank in that strategy.
All NZ cities apart from Palmy and the Tron are on water bodies…
NZ is pretty good food wise post peak (not so lucky in the rest of the world), 4% of our oil use is food production and we can produce for oueselves many times over…
Back to Northland and expanding on Loota’s point, why not an Tauranga –> Auckland –> Northland upgrade with inland ports for road –> rail transfers at strategic locations (already got a Wiri one)… Makes the argument stronger for retention…
Very interesting angle there tuktuk…
@jarbury agreed.
@Stephen 10.58 – sounds good
@T uktuk – Good comment
To Swampy – there may be fewer people actually living in the far north than in Whangarei for instance, or Auckland, but
there are heaps more tourists travelling the Holiday Highway, and currently a huge increase in the number of double-trailered logging trucks : these are often on narrow roads – including the narrow winding road through the Waipoua Forest which is a major tourist attraction. Already these past 12 months has seen logging trucks in major collisions (and deaths) with tourist vehicles. Not a pretty scene. And as more of the logging trucks get going, more of these nasty accidents will occur. A rail line to take these logs to Marsden Point would be a much better option.
I reckon that Whangarei/Northland need the infrastructure and push for advanced economic development just as much as anywhere else in NZ.
I agree that Tauranga and Auckland should be linked by a strong railway service. All the money is being poured into roads in Tauranga though- there are big projects underway building new motorways that link the port to the cities of the north, west and south. This road building seems madness to me given that the data suggests we hit peak oil a couple of years ago.
I’m on both sides of this argument…
Spending money on the freight part of Kiwirail is money the government doesn’t have & can’t afford to spend.
My money is on the fact that this will be sold off as how else can it be sustainable? Where is this money going to come from seeing as like Stephen has said – Labour bought a dead fish & worse still, paid $320mil or so extra for pure nostalgia!
I think the lack of investment in the Auckland-Northland link may be indicative of this…
However, like Jenny has said there is loads of tourists that go there & it is an area well used by the logging trucks – aside from the safety issues this presents long term a strong rail network has to be part of the equation.
Rebecca – but I understand that the Govt can afford to spend several billion on roading in the next 10 years?
Question – which private enterprise is going to buy rail off the Govt if rail – the freight part of it – is not sustainable? It seems to me that the private sector only wants to buy things which are sustainably profitable. And if thats the case, the Govt should keep the asset.
Countries all over the world from China, to Japan to US continue to invest heavily in new rail plans for economic and social reasons (e.g. new bullet train plans to link China with all of western Europe).
Loota – we have to spend money on roads. We are a small population that while may be condensed in the major urban areas, is very spread out elsewhere.
Secondly road transport will always have its place in the freight world as rail can never secure overnight deliveries – something which so many of our businesses need & currently use.
In terms of prospective buyers – I would imagine the freight sector would be quite keen to buy the rail network – it’s too costly for the government to keeping writing an infinite number of operating cheques but it would have huge personal benefit to the freight sector to keep it all in house & invest the money required to get the network up to scratch.
In terms of government investment in rail – I agree we are sadly far behind. Shameful really how respective governments over the last few decades had no foresight to keep investing in it.
I don’t think the Govt has the option of selling rail to the private sector; in it’s current state who would buy it. And I’m not sure of the case to sell it fullstop. It was the private sector that effectively sucked out the profits and reinvested the minimum into its upkeep, hence the need for $750m catch up now. Rail is a hugely important asset – for the all the reasons mentioned above.
Jarbury, you’re right – perhaps closing the North Auckland Line will make the BCR better for the Holiday Highway. My understanding is that 13% of Northland’s freight is carried by rail – all the heavy stuff. Imagine the extra clogging if that made its way on to SH1.
The alternative view is to ask, how much would it cost to upgrade the NA Line to increase freight competitiveness and up the % carried by rail? A fraction of the Holiday Highway pricetag I know. The benefit? Eased congestion on SH1 and further lowering of the economic case. I wonder if Joyce has thought of that much cheaper option?
@Rebecca: “In terms of prospective buyers – I would imagine the freight sector would be quite keen to buy the rail network – it’s too costly for the government to keeping writing an infinite number of operating cheques but it would have huge personal benefit to the freight sector to keep it all in house & invest the money required to get the network up to scratch.
In terms of government investment in rail – I agree we are sadly far behind. Shameful really how respective governments over the last few decades had no foresight to keep investing in it.”
Wisconsin Rail, anybody? And our telco sector wasn’t much different.
“when you’ve forced the government to keep a dead fish” – hang on a minute, Labour didn’t buy the trains for National, they bought them for themselves! They just didn’t get to follow through with intentions because they country voted the wrong way.
Aaah Deepred – you need to have your ear to the ground more
Sorry buddy, the country has voted the right way, the way is going to be realistic about the dead duck rail is and has been for years. These lines have not been viable in decades regardless of ownership. There is very little freight on any of them hence the discussion and talk of closure.
If oil prices rise significantly all economic activity in far flung areas will simply be curtailed due to the financial shock which will make our recent scenario look like a picnic. Most of the areas concerned having been hit over the past 20-30 years by things like stopping the farming subsidies and the uneconomic Govt forest developments, logging extraction relies heavily on fossil fuel to haul the logs out to the road, or to a railhead. Just think a little about what happened when the oil crisis hit in the 1970s, if you were alive then.
What’s very important to realise. Rail has had untold billions poured into it by governments over the years. For political causes. Labour buys it as a favour to their biggest and wealthiest union affiliate. This generates in turn a clear situation we have where people expect rail to be run the way it has been in the past i.e. a political football, instead of according to market conditions.
If you looked at how the union has championed that totally ridiculous Berl report which claims New Zealand could compete on the world market from nothing, then this is clearly the expectation that the government is going to recreate the gravy train of decades past. When people talk about us building superyachts, this is not a government industry. It is private sector, and there has not been any private sector operation in NZ ever that could have built these trains. All of the private sector operators set up in Australia to manufacture for both markets. It makes sense for them to be set up where most of their market is.
Swampy said:
From nothing? Are you kidding? NZ is the country which engineers and builds luxury yachts, military patrol vessels and trans-scenic trains.
NZ workers and industry have the capability, right here right now, and anything they can’t do – didn’t you know, kiwis are fast learners.
Some anyway.
Swampy is quite obviously from a road lobby, the tender wasn’t for creation from nothing, the Hillside Workshops already produce wagons for our use (very cheaply, of high quality and should be exported overseas) and maintain our locos (quite often with full rebuilds)…
They should just give the bleepin work to Hillside
They deserve the jobs! 
Swampy – That’s just not true about the government pouring billions into rail over the years. Since we sold it to Toll in 1993 we have invested about 2.8 billion (including the 500 million for EMUs last year and about $300 million for new trains in Wellington)in Kiwirail. The bulk of that is going on the upgrades in Auckland and buying the rail network back.
Over the same period we invested about 14 billion in the state highway network. If you included our investment in regional arterials and local roads the difference in investment would be even bigger.
I think what is often missed are the wider benefits of the rail system, in particular in the way that it can limit the number of trucks on our inter-city roads. There are likely to be wider benefits to road users (in the form of reduced congestion, increased safety, less wear and tear on the roads) from getting freight onto rail, rather than having it on a million individual trucks. Of course that won’t work everywhere, but where it does make sense it will be important.
The ultimate point is that the rail system might not be making money, but through its wider benefits it might still be a sound economic investment for the country.
If you take the example of the urban passenger rail system, one could argue “heck it eats subsidies like crazy, let’s shut it down”. However, if you did that then you’d put a huge number of additional cars on the city’s streets, clogging them up, leading to further environmental degradation of our urban areas and so forth. So therefore, while commuter rail runs at a loss, in a wider sense it’s still a sound thing to do because of the wider benefits. The same applies to freight.