rail network

The Herald on Sunday had a good editorial on Rail yesterday.

Under Labour, the whole operation was valued at $10.6 billion, which might reflect its replacement cost but not its ability to earn a return. Under National its value has been written down to no more than $1.3 billion, on which it will be expected to show a normal commercial return. Both figures are important to answering the basic economic question: is it still worth our while to maintain a railway?

Or to put it another way, if we did not have this railway, would we build it? Its performance in the post-war era would say no. Its passenger services, and even its freight, have declined in competition with sealed roads, cars and trucks, especially since restrictions on long-haul road freight were lifted 30 years ago. Don’t even mention how cheap air travel has become. Frequent capital injections from the taxpayer over the years have not made much difference and it seems the $750 million over the past three years will not bring the turnaround.

Precisely…if you had to contemplate building the rail network you simply wouldn’t do it, the numbers don’t stack up. They should dig it up and use the land for a dedicated truck and busway to get them off SH1.

Yet no government can contemplate closing it down, for two reasons: once lost it would never be replaced, and the Greens might be right. Oil prices, climate change, who knows what else, could make future generations glad to have it.

But for now, it has to be made more economic. It has a role to play in bulk freight haulage to ports from mills and mines and inland container bases. The main trunk between Auckland and Christchurch, including inter-island ferries, might pay its way. Commuter services in Auckland and Wellington should be run at a reasonable ratepayer subsidy. Other than that, pipedreams like an Auckland-Hamilton commuter service are just that.

I object strenuously to tax and ratepayer subsidies. If something needs subsidies it is uneconomic and should be left to die and the land and access put to better use.

The report that Labour brought to Parliament this week is another sign that something is happening. Its bleak forecasts on maintenance may be the worst imagined rather than the most likely. But it is important that rail continues to be assessed in economic terms and not romantic ones.

It cannot run on nostalgia. Losses must never be excused as “social investment”. It is a costly method of transport and it needs to be driven hard.

ᔥ Liberty Scott

The Labour party and other train spotters would have you believe a whole load of nonsense about rail in New Zealand that is frankly all motherhood and apple pie fantasies.

Liberty Scott bursts those bubbles:

Here’s a good summary I wrote before...

1. Rail network shrinked due to privatisation. Wrong. Almost all line closures were under state ownership when rail had a statutory monopoly on long haul freight!  The track network length has barely changed in 20 years.

2. Rail stopped being viable after free market reforms. Wrong, it stopped being consistently financially viable by 1945. It had short pockets of profitability since then. The early 1970s saw it drift from profitability to losses, which weren’t recovered until 1983 after debts had been written off and it started being paid by government to run commuter rail services in Auckland and Wellington under contract (and a host of unprofitable freight lines, such as the Otago Central Railway).

3. Track Maintenance was run down after privatisation. Wrong, it was already being run down in public ownership, track was run down more, but sleeper replacement under private ownership increased.

4. Rail is worth a lot as an asset. Wrong. The NZ$12 billion book value of rail that was on the Treasury accounts was a nonsense, equating it to all other SOEs combined (e.g. 3 power companies, Transpower, NZ Post) which all make profits. Most of the value is based on a replacement cost if it was built today, which of course would never be done. I’d argue it is probably worth 4% of that at best.   It’s worth noting that this has only been partly fixed as of late.

5. Rail only needed rescuing after privatisation. Wrong. It has been rescued several times before. It has long had serious economic viability issues.   In recent history it was bailed out in 1982 (all debts cancelled, and the operation commercialised), 1990 (had the debt of the North Island Main Trunk line electrification written off as a “Think Big” debt, then NZ$350 million, and another $1 billion wiped off to pay for the restructuring to make it viable).

6. Rail is good to reduce accidents, congestion and environmental problems Wrong. “the optimal level of externalities is not zero – at some point it becomes more expensive to lower them than the welfare created by their further abatement” Rail related deaths are only slightly lower than truck related. No evidence that rail reduces congestion. Sea freight is twice as fuel efficient than rail, but little interest in that mode.  Indeed Greens actively oppose international ships carrying domestic freight along the coast to placate their unionist mates.

Like I said before, the presentation basically says that rail is not as fuel efficient as is quoted, and that only 30% of the current network handles 70% of the freight. It suggests concentrating on the main trunk, and lines to the Bay of Plenty and the West Coast

ᔥ NZ Herald

The vast number of commuters yesterday were unaffected by the outage of the train system in Auckland. Quite simply we, those of us who drive, didn’t even know and couldn’t care less that “other people” go held up by a cock up with the public transport system.

We don’t even care that the system was shut down because of a power outage in Wellington…the roads worked just fine for us. Len Brown can stamp his foot all he likes, the fact remains is the rail network is a dog, bugger all use it and in the event of a massive earthquake in Wellington Auckland’s trains will stop working…yet another reason to build more roads and ditch his stupid rail loop.

The mayor of Auckland is demanding answers, after the city’s trains were shut down in the middle of rush hour due to a major power outage in Wellington.

The outage at National Train Control hit around 4pm yesterday afternoon after backup systems failed.

It lasted for about an hour but caused disruption for much longer as commuters attempted to catch trains home.

Once signals were restored, commuters faced lengthy delays as trains got moving again.

Mayor Len Brown said the problem had been disappointing at a time when hundreds of millions of dollars were being spent on upgrading Auckland’s rail network.

“We’ve a got fully integrated electric rail system coming into position mid next year, and we do not want any of these types of control issues impacting on the delivery of super modern service.”

Len Brown said he expected a report into what happened on his desk this morning.