Rudman's city: Mischief masks rail plan's value

By BRIAN RUDMAN

What a public relations disaster the latest chapter in Auckland's bid to gain access to the region's rail corridors has been.

For months the regional council has been trying to soft-soap wary ratepayers and a highly suspicious Government of the worth of a proposed $65 million plus deal with Tranz Rail.

Now we're suddenly told the council's done an even better deal, which will just happen to cost us an initial payment of $112 million. For the majority unaware of the small print in both deals, this option seems set to cost us twice as much as the first deal.

This confusing news is hardly out before the two parties involved add to the weirdness by taking public potshots at each other.

Of course, Transport Minister Mark Gosche, arch-sceptic of the original deal, can't resist joining in with a whack at both the rail company and the region.

With all the millions being forked out by the region and local councils to pay for transport and financial consultants during these negotiations, what a pity a few bob wasn't put aside for a PR adviser to avert this fiasco.

It would have been money well-spent because in reality the two deals are not that far apart financially. And far from being forced upon a reluctant region, the proposed new deal - yet to be endorsed by the various local councils - is the one they always preferred.

The key change between the deal agreed to in principle on June 2 and the new one, centres on the section of the main trunk line running from Papakura to Auckland Central via Middlemore and Glen Innes.

In the June agreement, the region agreed to pay $65 million to buy out Tranz Rail's lease on the West Auckland line to Swanson, the Newmarket branch line to Queen St, the Onehunga branch line and the right to the proposed rail corridor between Avondale and Southdown.

For an additional $2.25 million a year (CPI adjusted), the region gained partial access to the main trunk line.

Further negotiations introduced a stepped approach to main trunk access, with the $2.25 million payment limited to 80 daily return passenger train journeys. The bill went up to $3.25 million for 81-100 trains a day and $4.25 million for 101-126 services.

Tranz Rail refused to give up control of the main trunk line because it saw it as a vital part of its freight network. This attitude changed in August and Tranz Rail signalled its willingness to hand over the lease to this part of the main trunk line.

The regional council leapt at the suggestion. To run an integrated rapid-transit system would be much easier with the ownership (including line maintenance and train control) of all the lines and corridors in one set of hands. This was particularly true of the main trunk line, where planners predicted that passenger trains could eventually outnumber freight movements by four to one.

The proposed new deal, soon to be voted on by local authorities, calculates the value of Tranz Rail's lease over the region's rail corridors, the main trunk included, as $112 million.

But instead of the region having to pay an extra $2.25 million to $4.25 million a year, this time Tranz Rail will have to front up with an annual payment, starting at $2 million. For that they are entitled to 100 freight movements a day on the main trunk line.

Viewed over time, the two deals start to look rather different from the initial suggestion that the cost to the region had doubled. It has not.

The June deal was for $65 million upfront plus annual instalments for the 60-odd years the lease had to run.

The new deal has the region paying $112 million, then receiving $2 million a year from Tranz Rail for the next 60 years.

And the region gets the benefits of ownership already outlined.

It hardly seems the calamity Mr Gosche and others are making out.

Herald Online feature: Getting Auckland moving

Herald Online traffic reports