Government divvies up $200m for rail network

By PAM GRAHAM

The Government's $200 million gift to the rail network has been split into $100 million on improvements and $100 million for past under investment.

Major customers are already complaining their lines are not getting enough funding as the first details of spending proposals emerged yesterday to cries from Opposition politicians of pork-barrel politics.

There was plenty to digest when documents of the Government buyback of the track were posted on Treasury's website because they measure nearly 12cm thick when bound. The usual drop around Parliament's press gallery was not practical.

The documents show that there can be no new rail passenger operators for three years and, after that, Toll just has to run three return services a week to keep other operators out. This will affect heritage operators looking to run scheduled services.

They confirm the $200 million of Government funding for the rail network, bought back for $1, will not be recovered in access fees.

It is a "contribution recognising recent low levels of investment in the network".

The new track owning company decides where the money gets spent but $100 million is to go on making up for past under investment and $100 million on upgrades over the next four years.

The South Island coal route gets $25 million of the past under investment money and the fan in the Otira tunnel is on a list of suggested upgrades.

This was not a cap on total spending on the coal route.

Solid Energy chief executive Don Elder said this was not good enough and he would be seeking more discussions on funding of the coal route.

Solid Energy estimates there is $70 million of deferred maintenance on the route between the west coast of the South Island and the Port of Lyttelton.

Other suggestions being made to Track Co for upgrades are improving rail connections to some of the biggest dairy sites in the country, improving clearances of trains in the Manawatu Gorge and other lines, improving sidings at Wiri, in South Auckland, and improving the loads on the main trunk line and line to Tauranga.

"We still think it is possible for the Government to direct investment and that it can engage in pork-barrel politics," said John Key, the National Party's finance spokesman.

Investment in the track beyond the $200 million is supposed to be recovered from rail operators. Toll NZ pays access charges of $38 million in the first year.

Toll also gets $15 million from the Government for capital expenditure on the track since last October when Toll Holdings took control of Tranz Rail.

This comes out of the $100 million of replacement capital spending. The company did not get compensated for the cost of floods in the lower North Island. Toll, which has renamed Tranz Rail Toll NZ, is to invest $100 million in rolling stock.

The Government can invest more than the $200 million if it sees a track project of no benefit to the rail operator which is justified on public policy grounds.

Such projects will be directly funded by the Crown.

"In practice, many such proposals are likely to have a commercial and public policy element and so the funding split would be subject to negotiation between Track Co and users," the document says.