Toll feels Government bill gives rail a raw deal

Rail operator Toll Holdings may go back to the negotiation table with the Government in a bid to level the playing field between road and rail.

The company is concerned a bill to secure the long-term structure of the New Zealand Railways Corp (NZRC) does not support key principles of its partnership with the Government and could hamper efforts to switch more freight from the roads to rail.

"The lack of focus on the creation of a sustainable transport network in the legislation could create an environment in which rail would struggle to compete with existing road infrastructure," Toll spokesman Greg Steele said yesterday.

"Investment in road infrastructure would create an uneven playing field for rail, particularly in the further flung regions from the main network."

The Railway Network Bill will provide the framework for the state-owned NZRC's operation of the national rail network following the Government's purchase of the tracks from Tranz Rail for $1.

Toll has taken issue with aspects of the bill, including an NZRC objective to "aim to recover its direct and indirect costs of operating the rail network", which the company says is inconsistent with its deal with the Government, in which a key principle is to build a sustainable transport network that puts the public good above profits.

Toll is troubled by the bill and says it is "not above reviewing" aspects of its Government deal.

"It is a commercial agreement and any commercial agreement will have its bumps in the road and may need to be revisited," Steele said.

Bumps in the road, or rather kinks in the track, include the decrepit state of the network and the gap between road and rail user costs.

Last year, the Government and Toll agreed to plough $200 million into upgrading the track, but have since admitted the amount is inadequate.

A recent Transport Ministry study showed rail freight users paid 82 per cent of costs, compared with 56 per cent for trucking operators.

Toll says it is committed to developing the rail network in New Zealand and is looking for a similar stance from the Government.

"Rail has cost and efficiency advantages over road that make it an important alternative from a public good perspective," Toll said in its submission on the bill.

"Reduction in congestion, diesel usage efficiencies, and rail's significant safety and environmental pollution advantages are examples of this.

"These advantages are not appropriately valued or supported within the bill."

The Government yesterday announced a one-off $500 million cash injection for improving road transport. A spokeswoman for Finance Minister Michael Cullen said it was not a question of putting road before rail, but of meeting an acknowledged need.

"The Government [also] acknowledges that $200 million will not be enough [to repair the rail network] and is considering applications for funding on a case-by-case basis."

- NZPA