Joyce faces ‘difficult’ decisions on size of rail
September 10th, 2009
Transport Minister Steven Joyce faces “difficult but important” policy decisions on the size of the railway he wants taxpayers to subsidise and probably won’t complete his assessment in time for the National Infrastructure Plan, slated for early 2010. The National Infrastructure Unit released its first stab at the plan this week, calling for submissions. It says much of the rail network is uneconomic, even taking into account the environmental value of its greater fuel efficiency. And there’s “little current evidence” the railway contributes much to reduced congestion, emissions or accidents, or road transport doesn’t pay its full social costs.
The Infrastructure: Facts and Issues report suggests road freight pricing may be “close to the economically correct level,” reducing the justification for subsiding rail freight. The rail network naturally breaks down into four components – the Metro lines in Auckland and Wellington; long-distance passenger services targeting tourists, such as the TranzAlpine; the interisland ferries (of which 79% of revenue comes from road transport and passengers and the national freight network. The last of the four may cause the most pause for thought. Last year’s National Freight Demands Study concluded demand for bulk commodity transport, rail’s strong suit, may climb 70% by 2031. Rail cap-ex may amount to $3bn over the next 10 years, including $2bn of “critical spending” subject to the Govt’s decision on the size of the network. KiwiRail’s revenue will not be sufficient to fund the work.
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