Hamilton-Auckland passenger rail service Te Huia continues to use an "extravagant" amount of taxpayer funding to do the job and is not achieving any of the financial environmental goals it was intended to, says a new analysis.
A report commissioned by the Waikato Chamber of Commerce on the viability of the service, introduced last year with $85.8 million funding from NZ Transport Agency and $12.2m from Waikato local government, concludes if this year continues the trend of modest patronage, the project's future viability "should come up for extensive debate".
The study, by final year Waikato University school of management student and chamber intern Nicholas Farrell, found that per trip from Hamilton to Auckland, the cost of travelling by diesel vehicle was $48 compared to $294 on Te Huia - made up of a $12 fare and a $282 subsidy. (The $48 was before last month's fuel price hikes. The study used IRD figures for diesel cost given KiwiRail also uses diesel on the service.)
The report, which acknowledges that with Covid and stop-start operations, the service can argue it is still to get a fair opportunity to show its viability, said using current trends alone to analyse its financial and environmental performance "displays the clear fact that the service in its current form is not achieving any of the goals that it was intended to".
"Even when ignoring the $68.7m of capital expenditure to date, the project continues to use an excessive amount of government funding in order to carry out its operations, an extravagant amount when compared with the costs of alternative modes of transport."
The service, which is being run by the Waikato Regional Council on a five-year trial, had a total subsidy budget for the next three years of $23.3m.
The report found commuter (during the week) trips averaged 30 passengers per journey for a 20 per cent load factor. Weekend trips averaged 146 passengers per journey for a 74 per cent load factor.
The overall load factor was 26 per cent.
In a car, carbon emissions per person, Hamilton to Papakura, assuming one person per vehicle, were 19.9kg per person. On Te Huia, using current patronage, it was 31.6kg per person.
A one-way car journey took 91 minutes. Using Te Huia, to its latest extension stop in Parnell, it was 145 minutes. Congestion reduction from the service was 0.13 per cent less northbound traffic on SH1.
Regional councillor Hugh Vercoe, chairman of the Te Huia rail governance group, said the chamber had approached the council last year signalling an intention to produce the report.
The council had provided information to the author but had only received a copy on Friday and would need time to consider it, he said.
However chamber chief executive Don Good met council chairman Russ Rimmington early last week to discuss the report.
Vercoe said the council will be doing its own comprehensive review of the service at the two-year mark "when we will have adequate data to provide a fair assessment of how it has performed against projections".
"It's clear the service hadn't operated for long enough last year to build up demand before Covid-19 stopped the service. This demand impact is on par with passenger demand decreasing across all other public transport networks in New Zealand.
"I remain confident that this service will only get better and more popular. We've got some really fantastic changes that we've already made and more planned for this year. As it improves, Te Huia will manage to achieve its decongestion, emission reduction, reliability, financial and patronage targets."
The council noted changes had been made to improve the service after market research.
All services now went to The Strand in Auckland, and stopped at Puhinui "a short bus ride to (Auckland) airport". Te Huia would also offer a better timetable and higher service frequency.
"We intend to fully deliver on this with an increase in weekday services from four to six by mid-2022. We strongly believe these improvements will enable us to grow passenger numbers in line with business case projections, but a lot turns on how long the disruptions to normal life from COVID-19 last."
Passenger demand had been around 35 per cent lower in the past three weeks - in line with a national trend after the move to the Covid Red setting, the council said.
Supposed to launch in March 2020, Te Huia's start was delayed until April last year due to Covid, a delayed supply of equipment and the need for track redevelopment. It was in full service for 19 weeks until a nationwide lockdown in August.
Over this time the service ran from Hamilton's Frankton railway station to Papakura, operating two return services on weekdays and one return service on selected Saturdays.
In January the service was extended to a termination at the Strand in Parnell, a journey estimated to take 145 minutes.
The report noted both the Frankton and Strand railways stations are 2km from their cities' CBDs, meaning potential additional travel time for commuters.
The report says the regional council's business case targeted an average total weekday patronage of 240 in its first year, increasing to 320 in the second year.
As at November last year financial forecasts for the current 2021-2022 year, 2022-2023 and 2023-2024 show NZTA (Waka Kotahi) funding Te Huia $4.7m, $6.7m and $6.4m respectively.
The same respective period funding figures for the regional council are $1.5m, $1.5m and $1.6m. The Waikato District Council is down for $220,000, $227,000 and $234,000.
NZTA will provide nearly 77 per cent of the total funding, with the regional council putting in 20 per cent and the district council providing the balance.
The report closely examines projected passenger numbers, load factors and subsidy per passenger breakdowns for 2021-2022 and the following two years.
Its environmental impact analysis finds each journey Te Huia made in 2021 from Hamilton to Papakura used 1221kg CO2e (carbon dioxide equivalent).
"This means when the service operated it would use 4884kg CO2e on weekdays and 2442kg CO2e on Saturdays," said the report, noting one of the main goals of the Te Huia project was to decrease carbon dioxide emissions and road congestion across the region.
"This is also a key priority for the majority of modern-day public transportation projects, with the sustainability of every new endeavour being placed under the microscope.
"The total average CO2e emissions per passenger carried by Te Huia for 2021 was 31.55kg. This is a large quantity when compared with the emissions of New Zealand's three most popular diesel utility vehicles which use an average of 19.87kg CO2e on a comparative journey by road from the Hamilton railway station in Frankton through to the Papakura railway station.
"Assuming that every patron in 2021 were to take their own vehicle on this route instead of using Te Huia, driving this route would have resulted in a 37 per cent decrease in CO2e emissions."
The Waikato chamber's Good said the analysis should give central and local government decision-makers a better understanding of Te Huia's future viability "and whether the sizeable funding was realistic long-term".
He called for "real accountability" from those who advocated introduction of the service.
"And I imagine ratepayers and businesses will have some serious questions in the lead-up to local body elections.
"We're going to start seeing more and more electric and hydrogen vehicles on our roads in the next few years, so would it more sensible to invest in improving roading and EV charging sites?"