Transport Minister Steven Joyce says customers and councils are not paying the cost of rail infrastructure and they will have to get behind rail."Frankly everyone is going to have to hold hands and jump together if this is to work," he told the
Transport Minister Steven Joyce says customers and councils are not paying the cost of rail infrastructure and they will have to get behind rail.
"Frankly everyone is going to have to hold hands and jump together if this is to work," he told the 2010 New Zealand Rail Conference today.
The Crown's role would be to front up with some capital but it was taking a hard-nosed approach after the Labour-led government spent a billion dollars of taxpayers' money to buy back rail assets now worth $388 million.
Mr Joyce detailed huge investments by the Crown in rail infrastructure in Wellington and Auckland and said regional councils in Auckland and Wellington, along with the New Zealand Transport Agency needed to buy into rail's future.
"So the infrastructure is improving at a great rate, but the reality is this: neither Auckland or Wellington are paying the actual amounts required to maintain and renew their share of the network."
In Wellington, KiwRail was constantly bagged because of its rundown and sometimes unreliable services but no one had yet been prepared to fund the full amount to have the network adequately maintained.
"Well - for a KiwiRail turnaround plan to work, all customers, including those regions that provide metro passenger services, and their co-funder New Zealand Transport Authority, will need to stand up," he said.
Metro operations would have to meet the actual fair costs for the renewal and maintenance of the networks going forward. Discussions would start shortly.
The message for big freight companies was the same.
"The current reality is that because of historical arrangements some freight is currently being carried on KiwiRail at prices approaching a marginal cost basis."
Those arrangements would have to be altered to ensure that KiwiRail could meet the reasonable costs of track maintenance and renewals. As well as carrying freight at a fair price, Kiwirail would need to carry a lot more of it.
KiwiRail was already having talks with customers.
KiwiRail has been working on a turnaround plan to make it a sustainable freight-based business able to fund its ongoing operating and capital expenditure from customer-generated revenue within 10 years.
"The reality is we need to have all three transport modes working to complement each other, and have their level of usage determined by their relative costs and convenience, and therefore suitability for the myriad of different types of freight carried on them.
"The best way to achieve this and ensure all three modes are used appropriately is to ensure that each is priced at a level that reflects their costs so that freight-forwarders, exporters and importers all have clear choices," he said.
Unions and staff also had a major role to play in making the turnaround plan a success.
The government would soon be in a position to announce the approach that would be taken, and how those challenges will be addressed from the government's perspective.
