Murray Douglas: Councils should lead on rail solution

By Murray Douglas

4 comments


It is about time that the east coast wider community thinks about "buying" the East Coast rail line and running it as a company, in the same way the community owns and locally operates ports and airports and effectively operates the major share of the roading network in the region.

I have always found the KiwiRail l argument that the line has been "unprofitable for some time" as dubious.

I accept that Kiwirail, with its focus elsewhere, has not found the line easy to operate commercially and certainly accept that it took over a very run-down asset when rail was repurchased.

However, this does not mean that a locally-focussed company - as the Port of Napier has demonstrated - could not wholesale services and attract sufficient revenue to prepare and maintain a profitable line.

The January report by Business and Economic Research Limited (Berl) analysed the decision. It questioned the figures on which it was based and considered the KiwiRail assumptions as flawed, given the high operating cost estimated by Kiwirail.

I agree with Berl, largely because it is fingering the problem KiwiRail has with the line - it needs heavy maintenance in advance as the line has been run down over time to minimise on-going operating costs. And KiwiRail simply does not have the money, given its other commitments.

However, just like Auckland and Wellington are paying "subsidies" for commuter traffic to minimise road travel and destination parking congestion, the East Coast needs to think about the economic reality of freight, which is the lifeblood of our economy.

And for Hawke's Bay we have an interest in Gisborne for access to the Port of Napier, as well as the tourism operations, which are the icing on the rail cake. We have to be also conscious that the business most against a good rail freight service is actually Port of Gisborne - and representatives made that clear to me at the time.

A great deal of work was undertaken by logistic operators in the Gisborne area which I was privy to and indicated sufficient freight volume for the line.

The key ingredient from the potential users of rail was ensuring long-term certainty of rail being an option. KiwiRail was always hard to hold to a commitment of certainty. The core operating cost was just over $2 million pa when the conversation started. However, by the end when KiwiRail was justifying not fixing the washout areas - they had escalated this sum to $8 million pa - no wonder Berl (and others including myself) found this claim dubious and self-serving.

However, the reality we have is that the national rail carrier is not prepared to operate the line.

In my view, it is time the East Coast and particularly the Hawke's Bay Regional Council and the Gisborne Unitary Council partnered and worked with the business community on the local solution. And fast. The mayors of the east coast had a meeting with the Minister of Transport and the outcome was to call for yet another report.

This is not the answer. The solution is for the powers-that-be to take the leadership directly and I know many business people in Gisborne would also be keen to facilitate this.

Murray Douglas is a fig grower and former CEO of HB Chamber of Commerce.

- Hawkes Bay Today

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