Editorial: Uncertainties and hazards ahead

Exactly a month ago we suggested that Auckland local bodies should put their plans to buy the region's railways on hold until the national picture is clearer. Tranz Rail had just put all its passenger services up for sale. But the local bodies were not inclined to pause. Since then Infrastructure Auckland has committed $30 million towards the purchase, on condition that taxpayers provide another $35 million, and the local bodies have decided to ask for more.

Rather than pay $65 million for two railway corridors and an annual sum for access to a third, the Auckland councils have agreed to buy the lease of the third line, too, bringing the purchase price to $112 million. In fact, they say, the new price is no more than the original deal would have cost when the annual rental of the third line is taken into account.

So the region is proposing to pay $112 million for the Auckland section of a national railway that fetched $328.3 million in its entirety when privatised in 1993. And the deal does not include rolling stock - just leasehold land, tracks, stations and signals.

It is hard to escape the impression that the local bodies are rushing into an urban rail scheme as though money was no problem. And it is not a problem, for the moment. Infrastructure Auckland was set up with assets close to $1 billion and while the value of its cash cow, Ports of Auckland, has declined by $95.4 million in the past year, there remains sufficient in the Infrastructure kitty to buy the entire national railway if it was allowed.

But the danger is that local government, flush with funds, will build a transport system that will cost ratepayers a fortune to keep running. As our series concluding today has shown, there are no simple solutions to public transport problems locally or nationally. Tranz Rail wants not only to sell its passenger and tourist services but also to close lines to Rotorua and Gisborne. And now the original shareholders - Wisconsin Central and Fay, Richwhite - have put their 38 per cent stake on the market.

Despite some enthusiasm within the Alliance and the Green Party, it is hard to imagine that the Government could be enticed to buy the stake. Rail regularly lost millions in state ownership. But in spite of the declining profitability of Tranz Rail, there seems to be no shortage of international operators interested in it. It is in everyone's interest that the railways remain a private enterprise in order that the right investment decisions are made.

That is to say, the level of investment should be no more and no less than the real value of rail to the economy. That value can be seen when all modes of transport present their true cost to users. Rail enthusiasts argue that if road users, particularly in private cars, had to confront the costs of the wear and pollution they cause, they would find rail more economic. Yet a study of those environmental costs some years ago produced a figure roughly the same as the total amount motorists pay in petrol taxes.

Rail has proved competitive against roads and air travel in the movement of freight but not in the contest for passengers. Auckland local bodies are proposing to invest heavily in a public rail system to make it modern, regular, reliable and convenient. But the scheme depends upon most people being prepared to drive or catch a bus to a train station and the lines serve a limited proportion of Aucklanders' daily destinations. That was reason rapid rail schemes never proceeded very far.

Now that money is no problem, those misgivings seem to have been shunted aside. They remain very good reasons for caution.

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