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The first freight train to travel the Main North Line last year, after the Kaikoura earthquake

Rail’s future will be
– By Dave MacIntyre

“A renaissance” … “no more begging bowls” … and “an open door to the government” … the optimism for the future of rail is overwhelming, judging by comments at the recent New Zealand Rail 2018 Conference in Auckland.

Endorsement for rail came from Auckland Mayor Phil Goff and in a major economic study by consultants EY, but the most critical support can be found in the new understanding between KiwiRail and the NZ government.

Outgoing KiwiRail chief executive Peter Reidy tellingly began his presentation by saying “it’s been an unbelievable 18 months”. When he took over as CEO four years ago, there was talk of rail being shut down, and he showed a slide of Oliver Twist daring to ask for more food as being akin to KiwiRail holding out the begging bowl.

That legacy in its dealings with the government has ended. When he went to new Finance Minister Grant Robertson to outline rail’s case for funding, he was met with the response: “We get this … we know this.”

The ‘new now’

The next slide in Mr Reidy’s presentation underlined the ‘new now’ – Minister for Regional Economic Development Shane Jones being quoted as saying: “To the board member [of KiwiRail], to the CEO, pony up your proposals because you will be pushing on an open door.”

From the first speaker, the new acceptance of rail’s role in New Zealand’s freight and commuter landscape was obvious. Auckland Mayor Phil Goff talked about the “renaissance of rail” and said it was “blindingly obvious” that having more cars and more motorways was not the way of the future. 

He said the Auckland Transport Alignment Programme would put $28 billion into the city’s transport system over the next decade, and higher-density housing would grow around transport hubs in Auckland. “The change will be transformational,” he said, pointing to initiatives such as the City Rail Link and the third main freight rail line.

What if rail was gone?

Chris Money, partner of professional services firm EY, referred to its study carried out as part of a joint KiwiRail/NZ Transport Agency team looking at integrated transport planning. It was produced in 2016, but was only released last Christmas after the coalition government assumed power.

It showed that rail is delivering about $1.5 billion each year to New Zealand in hidden economic benefits, far outweighing the amount of government funding which has been put into the mode since it was renationalised in 2008.

By putting an economic value on the various benefits of rail, the report was able to reveal in financial terms an ongoing value that does not show up on a normal balance sheet. It quantifies the $1.5 billion annual savings as coming primarily from the cars and trucks it takes off our roads. That value is put at $1.3 billion a year because it cuts congestion for all road users, including freight movers. 

On top of that $1.3 billion figure come wider economic benefits, such as reducing greenhouse gas emissions, lowering the number of road accidents and reduced spending on road maintenance and upgrades.

Asking the question, ‘what would happen if rail wasn’t there?’ Mr Money cited a personal story to underline the importance of commuter rail. He said that in 2013 when part of the rail network was put out of action by a storm, a 38 km traffic jam was created by commuters trying to get into Wellington from Upper Hutt.

“Currently, if we put every container from Ports of Auckland on a truck, and every [commuter rail] passenger on a bus, the Auckland transport network would also gridlock,” he said.

Sustainable and inclusive

Behind all this wave of optimism, the core message given by Mr Reidy is that rail’s future will be customer-led. “Here’s KiwiRail today and what we do, from the environmental benefits of 32 million low-carbon journeys, to the 25% of exports we carry, to the 3400 jobs we provide in 50 towns and cities around New Zealand,” he says, adding that a culture change has happened among KiwiRail staff.

Outgoing KiwiRail chief executive Peter Reidy – he will join Fletcher Construction as their chief executive in early November

“When I started, people wouldn’t look you in the eye. Now we have had a massive change in employee engagement … our employees have led the step change in our operational performance, and two examples are in our overhaul facilities in Woburn in Wellington and Palmerston North. This step change allows us to have more assets out on the line creating more revenue, which is good for the business and the workers.”

Other telling facts are that freight trains replace 1.2 million trucks on the roads, over 200,000 tourists go on train trips, and the Interislander ferries transport 750,000 people across Cook Strait each year.

However, it has not been an easy path for KiwiRail, says Mr Reidy. “We have been through that many ownership changes, restructurings, privatised and then renationalised. In the early 1980s, when we operated in a regulated market, the railways employed 21,000 employees, and by the time the business was sold in the early 1990s there were less than 5000 employed.

“During privatisation there was the real problem of keeping the business solvent as the share price crashed. This affected every part of the business and meant that over this period there was limited to no investment,” he notes.

“Our asset base is poor – we are still operating locomotives that are 60 years old and our main trunk line still has wooden bridges. While our resilience was low and our ability to react to market challenges limited, now, however, change is occurring and one of KiwiRail’s focus areas is driving sustainable growth in regional New Zealand. The work we’re doing aligns with the government’s targets around environmental, economic and social growth.”

It is also customer and sector-led growth, says Mr Reidy. The organisation pursued a programme called Wa Heke, involving 32 in-depth interviews with KiwiRail customers, industry and non-industry players, to get insights into the rail business and the freight and tourism sectors in general. Dominant themes emerged, such as technological innovation, the need for seamless digital transactions, increased visibility of freight movements, and integrated tourist journeys that enhance customer experience and make travel easy.

Future purpose

Mr Reidy says KiwiRail is now in the midst of setting its purpose for the next 150 years. “We have a government which is hugely supportive of rail, and we are investing to deliver economic benefits to regional New Zealand – and we cannot lose our customer focus. We’ve invested in a 12-month strategy programme which uses deep customer insights to seize the opportunities ahead of us,” he adds.

“We are driving new growth strategies in the regions: with our port partners, in forestry and dairy, and enabling the enormous growth in commuters in our biggest cities. You’ve also heard about our bottom-up focus, and how we are empowering our people to make a difference within our company. All of this adds up to stronger connections and a better New Zealand.”

Dave MacIntyre is an award-winning journalist who specialises in transport issues within New Zealand; he can be contacted at d.macintyre@xtra.co.nz

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