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Auckland's rail electrification project - and the petrol tax to pay for it - are a week or two away from Government approval, after Finance Minister Michael Cullen described them as "a lock-down certainty".
Dr Cullen told the Herald yesterday, after announcing an extra $121 million of Government
spending on the re-nationalised rail network, that he expected an order-in-council to be issued within a fortnight to allow Auckland Regional Council to raise a special fuel tax for electrification and other public transport. It is understood an announcement may be made as early as next week.
The council has proposed a tax starting at 1c a litre on June 30 - before rising to 3c the following winter and to 5c in 2011 - to raise collateral for a loan for its half-share of an electrification bill of around $1 billion.
A separate scale of tax instalments ultimately amounting to up to another 5c a litre will cover the Government's share, with money left over for roading projects.
Despite some nervousness at the regional council about the fate of the tax if National wins the election, Dr Cullen said the Government was committed to electrifying Auckland's existing rail network, while looking ahead to future needs such a possible inner-city tunnel loop out of Britomart and an underwater harbour crossing.
"There is no way we're not going to be proceeding with the electrification of the Auckland rail system - the real issue is the next stage, beyond what's planned," he said.
"The Government sees in effect the current electrification as a lock-down certainty. We are starting to think about the next stage now."
National's transport spokesman, Maurice Williamson, was unavailable for comment on whether his party might reverse the new tax.
Although he has said National would honour commitments already made to electrify the Auckland network between Papakura and Swanson, he favours alternative funding devices such as infrastructure bonds.
But regional council transport chairwoman Christine Rose said it was essential electrification be secured through a fuel tax, given the risk of a credit squeeze from the global financial crisis.
Council chairman Mike Lee said he would call an extraordinary council meeting as soon as the tax gained Government approval, to allow the Auckland Regional Transport Authority to call for international tenders for electrification to be rolled out from 2011 to 2013.
"National has sent mixed signals, so we don't want a repeat of 1975 when Robbie's [Sir Dove-Myer-Robinson's] rapid rail was torpedoed at the last moment by the Muldoon National Government."
"That's why we will be moving with alacrity ... because this is a once in 50 years opportunity."
Mr Lee acknowledged that Sir Dove-Myer's scheme was hampered by "a certain amount of political disunity in Auckland. But he said: "This time, Auckland is very strongly united."
Dr Cullen's announcement of a further $121 million for the national rail network coincided with the official launch yesterday of KiwiRail as an operating division of the New Zealand Railways Corporation, of which former National Prime Minister Jim Bolger has been appointed board chairman.
KiwiRail, which the Government bought back from Toll Holdings in July for $690 million, will operate alongside Ontrack, which has been confirmed as a separate division of the corporation in charge of railway lines and signals.
The new money follows a start-up grant of $80.2 million to KiwiRail for a basic upgrade of freight wagons, passenger carriages and locomotives, and will be a down-payment on a five-year investment plan of about $1 billion which the Railways Corporation board must finalise for Government approval by February.
National finance spokesman Bill English said Dr Cullen paid "way too much" to buy back rail and yesterday's announcement confirmed a "blank cheque approach" to the business.
He said National was committed to making the rail investment work for New Zealanders but, if elected, would review KiwiRail decisions "with a strong focus on value for money and economic competitiveness".
