Loop Caught In Funding Spat


Auckland Transport officers have made some progress in the last week in trying to resolve parts of the rail funding spat with the transport minister Steven Joyce - a row that will delay a decision on the CBD rail loop and affects the new rolling stock for Auckland’s electric trains.

But if everything is not solved soon, we won’t get the government to even look at the CBD business case.

It’s extraordinary that we always make one step forward in progressing Auckland only to get the government putting up a stop signal often appearing from left field.

The minister says Auckland has to find a $30m shortfall to run the present trains before we can think about any rail projects. And he says the government is still forming a view on the funding and arrangements for the new Auckland trains, which, may mean Auckland would be faced with paying some interest charges on a loan to KiwiRail for the trains.

In fact, Auckland’s rail operating costs are not fully funded for the next five years. Agreement needs to be reached about Auckland’s share of track access charges which are used to contribute to the maintenance and renewal of the rail network in Auckland and also agreement needs to be reached regarding the appropriate funding and ownership arrangements for the new electric multiple train units (EMUs) coming to Auckland.

The minister told Auckland’s new Mayor, Len Brown, in a letter dated October 28 that he was aware the business case for the loop was pending at the time but “it is imperative that we resolve the current metro rail funding shortfalls before we consider broader capital programmes to expand the network. I have made this a priority.”

Auckland Council and Auckland Transport officers met with the ministry of transport officials a few days ago to resume negotiations and identify points of agreement and outstanding issues. It was agreed that Auckland Transport would develop a proposal in relation to Auckland’s contribution to rail operating costs.

Auckland Transport says there has been progress in relation to:

  • Identifying ongoing costs and track access charges
  • Identifying a possible funding split between Auckland and NZTA of 40:60 along the lines of funding other public transport operating costs
  • Identifying options for different funding and ownership arrangements for new EMUs in Auckland.

The matter was to have come up in the confidential part of today’s Auckland Council transport committee meeting but chair Mike Lee moved into the public business saying that as it affected progress on the CBD loop and as Auckland ratepayers were “being lined up to pay significantly extra” for public transport, it needed to get an airing.

The council committee agreed to request the Auckland Council CEO to work collaboratively with Auckland Transport in negotiating with the MOT regarding these Metro rail funding responsibilities and to report back.

Who is going to pay for Auckland's ongoing rail maintenance?

Mr Joyce’s letter to the new Mayor, which was released publicly for the first time in full to the meeting, reads:

“You will now be aware that the operating costs for Auckland’s current metro rail programme are not fully funded. Modelling undertaken jointly by my officials and officers from ARTA and the ARC has identified an annual operating shortfall of around $30m per year from as early as the next financial year. the funding shortfall is a result of the significant increase in metro rail services, the opening of new lines and stations, meeting track access charges that recover the cost of renewal and maintainence of the network, and the cost of introducing new rolling stock without a corresponding increase in revenue to recover these costs. the funding shortfalls occur both before and afetr electriifcation in 2013.

In May 2010, I agreed with the respective Chairs of ARTA and ARC to work towards an enduring and sustainable metro rail funding framework. This is needed to overcome persistent periods of under-funding that have resulted in the degradation of infrastructure and the need for large scale remedial investments. the funding framework will require a partnership between the region and the government and a commitment to address difficult issues.

Firstly, I think it is important to address the under funding of track access charges (TAC). This is the amount paid to cover the costs of accessing and receiving services from KiwiRail for the metro rail network infrastructure and which is applied to the maintenance and renewal of the rail network.

Funding of Auckland’s TAC is currently unresolved. For 2010/11 KiwiRail sought a $21m payment to meet increased TAC costs in both Auckland and Wellington. The government agreed to fund $7m for the 2010/11 shortfall and mauy consider more if substaintial progress is made to resolving TAC funding shortfalls with the regions on an ongoing basis.

A working group comprising officials from the ministry of transport and NZTA together with officers from the ARC,ARTA, Greater Wellington Regional Council and KiwiRail has reviewed the TAC process. Whilst further work is required to fully develop an appropriate performance contract between the regions and KiwiRail, I believe we have made substantial progress in identifying a reasonable basis for allocating TAC costs. it is now appropriate for the regions to address the TAC funding shortfall.

To assist the regions, I intend to seek additional funding from Cabinet for the remaining 2010/11 TAC, on the basis that the Auckland and Wellington regions meet TAC from 2011/12 onwards. Auckland’s annual TAC funding will need to increase from $5m to around $15m. As an operating cost, TAC will be eligible for the relevant NZTA subsidy. Failure to resolve the TAC funding shortfall will over time lead to a reduction in the metro rail network’s resilience and will impact on the quality of rail services. Therefore it is in our joint interest to address the issue now.

Secondly, the increase in metro rail services introduced this year by ARTA will lead to a funding shortfall from 2011/12. This is mainly driven by additional costs for fuel, driver, hire, maintenance and the Veolia operator contract. The combination of providing diesel services concurrent with the commissioning of the new EMU fleet produces a particularly large cost spike in 2013/14 with no obvious funding course. The NZTA has done its best to provide additional funding where possible, but ultimately it is up to the Auckland region to assess opportunities to cover the funding shortfalls. These costs are driven by Auckland’s metro rail programmes, and so the region is best placed to address these funding pressures.

Thirdly, the government is still forming a view on the funding and arrangements for the Auckland EMUs. However, you should expect that some servicing of the EMU acquisition costs will beed to be met from a combination of farebox revenue, regional revenue and NZTA subsidies. the degree of scope for additional funding from these sources will need to be thoroughly explored by your council.

Finally , it is my understanding that Auckland Transport and KiwiRail will formally present the initial Auckland CBD rail tunnel business cased to us before the end of the year. However, it is imperative that we resolve the current metro rail funding shortfalls before we consider broader capital programmes to expand the network. I have made this a priority and I am happy to provide access to my officials to assist you in addressing these issues.”




  1. John Dalley says:

    Any letters/information emanating from Joyce needs to be made public any time the Auckland Council receives them. It time most of Auckland’s rate payers will come to discover that Joyce is a complete incompetent and needs to go before he costs Auckland a fortune in unnecessary highways.

  2. jarbury says:

    It’s interesting what he says about electrification. Trying to lump the costs on Auckland - even though the whole basis of removing the regional fuel tax was on the grounds that central government would pay.

  3. Kurt says:

    How about a regional fuel tax?

  4. max says:

    Not legal anymore, Kurt. Government decided that it knew better [i.e. it disliked the idea that Auckland would have significant amounts of funds that THEY would control]. So it removed the funding, and now Joyce is pulling that very same chain, and trying to make us “sit” and “be quiet”.

    I hope he’ll learn that we can still do “bite” if he treats us like a disobedient dog.

  5. Anon says:

    The Waikato Expressway got Joyce’s funding while we were all focused on the exiting news of the still (for 100 years!?) proposed Britomart Subway.

    What are the chances of Joyce pusing for Len Brown’s rail projects if they had a BCR of 100? lol

  6. james baldwin says:

    have checked with howick and eastern busses and they figure it would cost about 100 million a year to pay for free busses in Auckland. As they currently build by-passes and such every year for more than this amount. I took this idea to a “big” transport meeting in the council chambers. Only 2 of us showed up the guy who runs the rail and me.It took only about 10 seconds to hear what the rr guy had to say they then heard me and were horrified -it would swamp the busses I would have thought this was a good thing. So many positive side effects fewer road accidents, no new by-passes, no extra harbour crossing(costing about 300 million plus a year). I took this idea to a meeting for roads held in Panmure later and got a standing ovation, so its popular. No big collection of vehicles outside schools at the start and finish of the day. There are just too many advantages to list .


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