Auckland transport network at 'crunch point,' KiwiRail's Reidy says

"Too much has been done in silos in the past."

KiwiRail chief executive Peter Reidy says Auckland's transport network is at "crunch point" as the city's population grows, with demand from freight and passengers increasingly at odds.

Speaking at a Trans-Tasman Business Circle lunch in Auckland, Mr Reidy said KiwiRail was working with council-owned Auckland Transport, which contracts train operators to run Auckland's commuter train services, and the New Zealand Transport Agency, responsible for an integrated transport system nationwide, to build more network resilience.

"Too much has been done in silos in the past. Auckland is at crunch point and if we don't get it right, it's really going to cause problems," he said. "We can't build our way out of this."

On Auckland's rail network, passenger services every 10 minutes are clashing with an increase in freight services to and from the port and inter-modal transport hubs, he said. Nationally, KiwiRail handles 25% of the country's exports and over 2.7 million passenger trips, including one million tourists annually.

Mr Reidy said the Auckland Transport Alignment Project, which released an interim report in June on developing Auckland's transport system over the next 30 years, hadn't really considered the rail freight challenge.

"The fact we were not at the table may account for that," he said.

Some groundwork on joint planning for rail over the next 15 to 20 years has now been done and the boards of Auckland Transport and KiwiRail have met a few times on how to deal directly with this issue, Mr Reidy said.

The government confirmed this year it will continue to pour money into KiwiRail despite the likelihood it will never be able to generate profits because its cashflow-positive freight business is overshadowed by the high cost of maintaining the national rail network. The state-owned rail operator has been told to reduce its reliance on the level of government investment, currently running at around $200 million a year.

KiwiRail's full-year results are due out later this month and it reported a $16.2 million net loss in the six months to December 31, 2015, following falling revenue from the rail network due to a drop in coal and milk freight and one-off restructuring costs. Mr Reidy said $39 million in costs were cut out of the business last year and staff levels have dropped 15% in the past two years.

He'll put figures before government within a few months on what funding levels it will need for the next few years, including optional investment such as new tunnels and further electrification and expects decisions on those early next year.

Last year KiwiRail followed Air New Zealand in introducing a high-performance, high-engagement agreement with unions in a bid to boost productivity.

Mr Reidy said it has been a "slow burn" to build trust and confidence in the idea, which was hardly surprising after KiwiRail had had six CEOs in 15 years and five different owners. "It was kicked around like a football and the union has been the only constant."

The unions and company are about to sign a joint charter for working under the new agreement to allow frontline staff to have more involvement in problem-solving and for company management to ask questions rather than just supply the answers.

"In the past, we've been too quick to say what we're going to do and try to shove it through," Mr Reidy said. He hopes it will lead to higher productivity and wages and reduced costs.

"We're starting to get some early wins," he said.


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