Joyce: Unconvinced By NZ-Made Call

in Trains by Jon C — May 5, 2010 at 3:26 pm | 11 comments

KiwiRail won’t be having Auckland’s new electric trains built in NZ because  ”because it does not want to take the commercial risk.”

That’s the clear word from transport minister Steven Joyce, who remains unconvinced by the Berl business case report to the rail unions, urging at least some of the work be done either in Wellington or Dunedin rail workshops.

The minister says the case “made no allowance for any commercial risk for the trains to be built in this country despite the fact that it has never been done before, which, frankly, is inexplicable.”

He was questioned in parliament about the report, which is a key part of a union-led ‘Make the trains in NZ’ campaign.

Here was the interchange in parliament:

DARREN HUGHES (Labour) to the Minister of Transport: What strengths does he see in the Berl Economics report “Business Case for Building Rolling Stock in New Zealand”, and what response, if any, does the Government intend to make to the report?

STEVEN JOYCE (Minister of Transport): It is difficult to see strengths when the report is based on highly debatable assumptions. For example, the cost per electric unit has been compared as if the examples in the report are all the same, when quite obviously they are not. The report suggests that the newer Asian manufacturers are having trouble selling trains overseas, and then suggests that New Zealand, though, could somehow be a successful exporter. The economic benefits are calculated by suggesting that the trains will be built mostly by skilled train manufacturers who are currently unemployed, which is doubtful. It has also made no allowance for any commercial risk for the trains to be built in this country despite the fact that it has never been done before, which, frankly, is inexplicable.

Darren Hughes: Why did he suggest yesterday that the new electric multiple units are high-tech and much more challenging to manufacture than conventional carriages when the Business and Economic Research Ltd model already has the engines, bogies, and electronics being sourced from overseas, which would leave 70 percent of the work to be done by our skilled Kiwi work force?

STEVEN JOYCE: Because these are highly specialised pieces of equipment. They are very high-end units, which have never been built in this country before. I note that a previous Government, which the member represented, also took that view, because it bought the trains for Wellington from Korea, rather than having them built—

Darren Hughes: I raise a point of order, Mr Speaker.

Mr SPEAKER: I say specifically to the Government front-benchers that a point of order was clearly called. Members should cease interjecting.

Darren Hughes: My question was free of any political comment or commentary. I asked the Minister specifically about the difficult or high-tech parts that he referred to. Those parts are being sourced from overseas, leaving the more elementary aspects of the manufacturing to be done here in New Zealand. I am not sure whether he heard the question or did not respond to that part of it. I particularly separated that part of the manufacturing so that I could get an answer on the point of the more basic aspect of the proposal that has been put forward.

STEVEN JOYCE: In response I was noting that together these are very high-spec pieces of equipment, and I was noting, by comparison, that it has not been done in this country before. That was the reason for noting another example, which, I think, is an entirely fair answer to the question.

Mr SPEAKER: On this occasion I cannot expect the Minister to give a particular answer. The Minister has basically disputed the member’s assertion when he asked the question—that some of the manufacture is fairly simple. The Minister argued that the manufacture is complex, and in disagreeing with the fundamental aspect of the member’s question, I believe he has answered it. He has not dodged it altogether at all.

Clare Curran: When the Minister told Close Up last night that building the new electric trains in New Zealand would be a step too far in terms of capability, was he aware that Hillside railway workshops in Dunedin are already building 17 AK class carriages for the Tranz Scenic service, and that the quality of those carriages is equal to anything from overseas; if not, why not?

STEVEN JOYCE: I absolutely am aware of what is being built in the workshops in Dunedin. They are doing a fantastic job of building carriages and refurbishing and rebuilding rolling stock. I point out to the member that it is quite a different exercise to build electric multiple units, which are engines and carriages in the same train, the last time I looked.

Trevor Mallard: Has he ever visited either Woburn or Hillside workshops?

STEVEN JOYCE: No, I have not.

Darren Hughes: Does the Minister agree with the comments of the Prime Minister to the working party on this project that “We are spending all this money. It would be good if as much of it as possible could come back to New Zealand.”; and if he does agree with the Prime Minister, can he not see that this plan increases the country’s GDP, increases revenue to the Crown through taxation, creates hundreds and hundreds of manufacturing jobs, all within the allocated budget for rail, and is exactly the kind of step change in economic activity that the Government should be supporting?

STEVEN JOYCE: I indicated in my answer to the primary question that I do not agree with the assumptions and, therefore, the result of the report, but I do agree with the Prime Minister that we absolutely should do as much as we possibly can in this country. It is very important to note that the decision is to be made by KiwiRail, which says that it is unlikely to do the work because it does not want to take the commercial risk. I do not think politicians should be placing themselves over the top of KiwiRail. Let us face it: the last time politicians in this country decided that they could make a decision on rail, they spent $1 billion for a $388-million asset.

Tags: Berl Berl economic KiwiRail Rail union Transport minister Steven Joyce