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The Interislander ferries are an extension of SH1, moving 800,000 passengers and up to $14 billion worth of road and rail freight between the North and South Islands each year

$1.2 billion investment another major step in rebuilding rail for New Zealand

The Government’s $1.2 billion rail investment in Budget 2020 will help KiwiRail attract more customers and get more freight on rail, according to KiwiRail group chief executive Greg Miller.


Building on the Government’s $1 billion investment in Budget 2019, this second round of funding includes $400 million towards replacing the ageing Interislander ferries and $421 million to continue the replacement programme for some of KiwiRail’s oldest locomotives. 

The funding also includes $246 million, plus a $148 million top-up of the National Land Transport Fund, towards ensuring New Zealand’s rail network – which includes more than 3000 km of track, more than 1000 bridges and nearly 100 tunnels – is reliable and resilient.

“I welcome this substantial funding, which is another major boost for rail in New Zealand. For our customers, this investment sends a clear signal that rail has a big future and gives them the confidence to get onboard,” Mr Miller says. 

“Our customers want to make greater use of rail and we’re seeing more road operators reach out for our support as their networks contract. We’re here to help them.”

A greater role to play

Mr Miller says the Government’s investment will allow KiwiRail to continue with its locomotive replacement programme and raise the standard of rail lines, bridges and tunnels across the country. “This will enable KiwiRail to offer better and more reliable train services for our customers, and move more of New Zealand’s growing freight task onto rail.

“This funding recognises that rail has a greater role to play in New Zealand’s transport sector, and that it can make a valuable contribution towards lowering our transport emissions, reducing road congestion and saving in road maintenance costs – which benefits our nation as a whole,” he adds.

“The range of track renewal and facility upgrades we are planning will also support our workforce of almost 4000, as well as numerous civil contractors and material supply businesses across the country. I’m very grateful to the Government for this level of support and I know that KiwiRail’s customers will be pleased by this demonstration of our shareholder’s commitment to rail.”

The increased investment in tracks, bridges, tunnels and signals includes replacing rail, sleepers and ballast, drainage works, civil works to strengthen slopes and prevent coastal erosion, and upgrades to the train control system. The work will be prioritised according to levels of risk and growth opportunities. 

The investment will include the most critical parts of the national rail network with the highest expected freight demand, such as the Golden Triangle (Auckland-Hamilton-Tauranga), the North Island Main Trunk Line, the Midland Line from Rolleston to Stillwater, and Main South Line from Lyttelton to Rolleston, as well as raising the standard of other regional rail lines that have seen significant underinvestment.

Ferry connection

Mr Miller says the $400 million contribution to replacing Interislander’s three ageing ferries and necessary landside infrastructure highlights how important the ferry connection is to New Zealand.

“Our Cook Strait ferries are an extension of State Highway 1, moving 800,000 passengers and up to $14 billion worth of road and rail freight between the North and South Islands each year. They are a ‘must have’ for NZ Inc. The two new rail-enabled ferries will be more advanced, have significantly lower emissions and last for the next 30 years,” Mr Miller says.

The new ferries will be nearly 40 m longer and at least 5 m wider than the current vessels. They will also be high-tech, including the latest propulsion systems, and able to run on battery power at times. KiwiRail is also future-proofing the design so new fuel sources can be adopted as they become available. 

“This is a once-in-a-generation investment and I am thankful for the Government’s support,” Mr Miller says. “It gives us the security to go out to international tender to build the ships, which we hope to see arriving on our shores in 2024 and 2025.”

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