Key Wants Only “Realistic” Rail Plans


KEY: Rail plans have to be "realistic and necessary"

John Key made it clear this afternoon that Auckland’s rail and other public transport plans would have to be “realistic and necessary” for the Government to buy into them.

And that also means both the Auckland and Wellington councils have to run “affordable” public transport networks with both councils paying “their fare share” towards them.

In his annual statement to parliament this afternoon, the Prime Minister John Key clearly spelt out the government’s future thinking on public transport.

“The Government want public transport networks that are “efficient, affordable and future-proofed,” he said.

“To achieve this we will work particularly closely with the Auckland and Greater Wellington Regional Councils on plans to build improved metro rail and bus services. It is important that these cities pay their fair share for the infrastructure their ratepayers need.”

He said the Government sees itself as an important partner in their plans - but added the important condition  - namely in the Government’s view  ” provided they are realistic and necessary.”

That appears to be a not so veiled reference to Auckland Mayor Len Brown’s rail vision - in which at least two of his schemes - airport rail and North Shore rail - have been ruled out already by Key’s transport minister as not being either realistic or necessary.

So where does that leave the remaining one, the proposed CBD rail link, which is currently being reviewed by a team appointed by the minister’s office? We’ll know in the Budget or later in the year after talks with the Auckland Council about funding solutions for the project, which may involve a public-private partnership.

Mr Key said the formation of the Auckland ‘Super City’ Council provides a significant economic opportunity for New Zealand, and the Government will be working to maximise this opportunity in 2011. It will work closely with the Auckland Council as it develops a strategic vision for the City through the Auckland Spatial Plan.

With reference to KiwiRail, Mr Key said the government this year was supporting efforts to build financial durability for KiwiRail, by shoring up its capacity to operate commercially-viable freight operations.

“We want KiwiRail to be able survive on its own two feet, and that means ensuring it can provide a competitive service that Kiwi businesses want to use and pay for.”

On roading, the mood was buoyant: “We will continue building New Zealand’s transport infrastructure. It is vital that New Zealand exporters and producers can move their goods efficiently throughout the country, and that New Zealanders can get efficiently from A to B. That requires a solid transport network that anticipates future needs.

“In 2011, work will progress on developing New Zealand’s State Highway Network with priority accorded to progressing the seven Government-designated Roads of National Significance.  Construction on four of these is already underway, and this year construction is scheduled to begin on projects such as the Waterview Tunnel, the Ngaruawahia Bypass and the Rangiriri Bypass.”

KEY: Rail plans have to be "realistic and necessary"

With reference to the forthcoming Budget, Mr Key warned again there would be little money in the kitty.

“We have signalled that in this year’s Budget our new spending allowance will be reduced to around $800-$900 million. This compares to the average $2.8 billion per annum increase under the previous Labour Government.

“In addition, until we get back into surplus, we have committed to allocating any upward revenue surprises to further reducing the deficit.”




  1. Nick R says:

    Can we have realistic and affordable motorway plans too then please?!

  2. chris R says:

    Now how can we make sure that he “gone by 27 November”?

  3. Matt L says:

    “Mr Key said the formation of the Auckland ‘Super City’ Council provides a significant economic opportunity for New Zealand, and the Government will be working to maximise this opportunity in 2011.”

    I read this as that they will be working to get get out of funding as much as possible by loading the council with as much debt as they can. That way it leaves more money can be spent on the regions that support them politically.

    “We will continue building New Zealand’s transport infrastructure. It is vital that New Zealand exporters and producers can move their goods efficiently throughout the country, and that New Zealanders can get efficiently from A to B. That requires a solid transport network that anticipates future needs.”

    I think he meant, we will continue to build NZ’s transport infrastructure, as long as its a road.

  4. Nick R says:

    ‘Transport’ and ‘road’ are synonymous down at National HQ.

  5. Rene says:

    Spending money we dont have, and cant afford, is synonymous with the Labour Party (and left wing in general) policy. Lets vote in Labour instead who’ll proceed throw more lollies at the electorate so that in another 10-15 years there’s even more debt commitments blocking investment in the rail tunnel.

    Not to mention the need to prop up bad Labour investments and the bill keeps rising. (

  6. Nick R says:

    Rene, the right wing do that too. National has committed to $11 billion over ten years for their ‘National Significance’ roadsfest.. this is above and beyond any regular transport spending.

    Do you think that’ll somehow magically pay itself off?

  7. Vote National - Kill Rail says:

    John Key is completely in the trucking lobby’s pocket. He’s so sold out to them that you cannot ever expect him to have sensible transport plans for New Zealand.

    To get NZ back on track we really have to ensure the Right Wing are voted out this year.

    Vote National - Kill Rail, Kill Public Transport

  8. malcolm says:

    Anyone who thinks National is going to help fund the CBD Tunnel is dreaming. They are never going to buy into it. Joyce will find some excuse not to.

    Unfortunately we will have to wait until Labour gets back into power before central government is going to do anything with this project. So be prepared to wait for probably at least 4 years (cant see National losing this year sadly).

  9. DanC says:

    I get what he’s saying with the cuts happening and money savings. BUT as long as the roading vs rail investment is sorted out. Auckland needs not wants the CBD rail loop.

  10. Cam says:

    “Anyone who thinks National is going to help fund the CBD Tunnel is dreaming. They are never going to buy into it. Joyce will find some excuse not to.” - Yep dead right and he’s working on that right now getting his team at the ministry of trucking to go through the business case with a fine tooth comb and see what excuses can be found.

  11. Cam says:

    “Spending money we dont have, and cant afford, is synonymous with the Labour Party (and left wing in general) policy” - Yeah right on, like that huge unaffordable tax cut they recently enacted.. oh wait actually that wasn’t them was it?

  12. Jeremy says:

    To me these comments are just political talk for no to the City Rail Link.

  13. Carl H says:

    So Auckland and Wellington have to pay their own way for rail, but support roads for the whole country. Thanks.

  14. DanC says:

    Can Auckland & Wellington keep the revenue gained from roads & spend this on rail?

  15. Kris says:

    You will probaly see a government/private partnership with the chinese in regards to rail.

    I suspect that 49% of Kwirail will be sold to Hong Kong based chinese equity companies.

    With regards to the the rail infra-structure, the Chinese will invest in the upgrading of the rail network possibility including the Auckland CBD rail loop and the airport line as a 50/50 partnership with the Government owning the land and track (to keep the cousie bros happy) and the chinese stumping up with the cash for the work.

    Ontrack would be re-established as a SOE (50% owned by the chinese & 50% by the government) to look after the land and track/signal infrastructure.

    By doing this, would open up the rail network to other users who want access to the network.

    It make sense, that government is not spending any money and the chinese would get a return on their investment.

    The whole network would end up with chinese technology and rolling stock.

  16. Rene says:

    last three years of the Labour government increased government spending at light speed and when you total the whole 9 years they were in office. When Labour came into office public spending was $41b. By the time Clark and Cullen left it was $76b. Dont talk about above and beyond spending. What did we see for that money? A closing of the wealth gap. Nope. More increase in transport spend. Sure. But no rail tunnel and plenty of roading projects. Labour spent plenty on motorways as well.

    Carl H
    Where else is the money going to come from to develop the rest of NZ’s infrastructure? We are dreaming if we want a population the size of NZ to be able to support a world class infrastrcuture for the land size we have. In a perfect world everyone would live in the NI and the SI would be the worlds largest national park. Supporting the infrastructure requirements of the myriad of small rural towns is a false economy.

    Tax cuts were revenue netural as they were balanced by GST increases. Read the news pal. Hardly unaffordable.

    With $11b of roading spend over 10 years is just over $1b per year in roading infrastructure spend that will keep some jobs going and finish the job that should have been done years ago. The cost of financing just one of Labours 2005 election bribe policies, interest free student loans, is just under under half a billion a year. Well there’s a quarter of the tunnel right there.

    Dont get me wrong. I think we do need a rail tunnel. But lets not start blaming this government for not having a spare $2b in the bank to pay for it outright. In the final wash up the government will foot some of the bill but that probably wont be enough for posters here of course.

  17. Rene says:


    your comments are spot on. Although I’d be suprised if there wasnt some sort of local capital stake in the PPP operater to cover political arses.

    Also exepct to see a seperate PPP for the rail tunnel but with a longer term 40-50 year contract as opposed to the standard 30 year term.

  18. Doloras says:

    I don’t care who pays for it as long as I gets mah City Rail Tunnel. Happy to pay $100 a year for 10 years for my personal share.

  19. Nick R says:

    @Rene, thats exactly what I said: both sides spend up large, Labour did it and National is doing it.

    Spending money we dont have, and cant afford, is synonymous with both the Labour Party and the National Party policy.

  20. Luke says:

    @Rene doesnt take away from the fact that it is a matter of priorites. This govt could fund the the CBD loop tunnel just by canning the full motorway option of Puhoi -Wellsford, and maybe delaying a couple of other projects for a couple of years.
    Would benefit far more people and would make a real difference to mobility in Auckland, as oppossed to mobility for a few people for a week a year.

  21. Matt says:

    Tax cuts were revenue netural as they were balanced by GST increases. Read the news pal. Hardly unaffordable.

    “Revenue neutral” to the tune of a full billion dollars less tax income than projected, you mean?
    They were claimed to be revenue neutral, but very clearly weren’t even close.

  22. Rene says:


    this “projected $1b shortfall” you cite is mostly a result in corporate tax revenue decline with a marginal GST component.

    Please also remember the GST component of this figure you have fellaciously pulled from Red Alert represents only 2 months of a total of 5 months of reported revenue. In other words only 2 months worth of changes to the GST take are represented in the November tax out-turn report.

    The fact that GST revenue for a 5 month period is slightly below a forecasted amount is more of a statement with respect to private consumption patterns in NZ right now rather than the effects of any change in tax policy. Take this to read NZers have too much debt, are therefore spending less to pay this debt off.

  23. KLK says:

    Thanks Rene for commenting correctly on the GST increase/tax cuts - the position overall should be revenue neutral for the government (spending habits permitting)

    I’ve read time and time again here (and other places) from people who can’t understand a pretty simple concept. Raise consumption tax and lower personal income tax correspondingly.

    A bit of a left-wing conspiracy comment in that last sentence though Matt……

  24. Patrick R says:

    Kris you make it sound all very easy but remember that PT systems are extremely difficult to work as PPPs for the simple reason that most of the benefits are not monetised: they are economic not financial. Unless of course they get a contract that guarantees profits through public subsidy. Don’t laugh. Or is it that you expect them to get a return on investment through the freight arm? Are the new Chinese owners going to sue their business partners, NZ government, for subsidising the truck freight competition to their new rail business? Or again will there be fish-hooks in the contracts…. The Chinese, or anyone else, are not going to invest in our infrastructure for fun.

  25. BD says:

    So let me get this straight guys, wasting billions of dollars of our money in Motorway construction is considered affordable and nessary whereas public transport projects are unnessary, the world must be going mad. All of Len Browns 3 projects are important.

    As for having electric trains by 2014 this is not on! We live in the 21st century guys! Labour promised us electric trains by 2011, it’s now 2011 and we have to wait another 3-4 years to have electric trains, disgusting, all because National scrapped the fuel tax. The electric trains were only approved as kiwi rail had to get a $500million loan, which they will have to pay back. If this was a motorway project this would have got full government funding without any problems.

    National enough is enough, your out come election!

  26. Paul Q says:

    Why are there always attempts by some (note I say some!) on here to do a direct comparison between road and rail.

    As far as I am aware, rail is a resource where all users have to make direct payments related to usage and all government contributions/subsidies are funded completely from general taxation.

    Road however is funded by direct taxation of users (much of it not usage related) and general taxation, but there is little or no direct payment by users.

    Therefore, you cannot make direct comparisons between the two regarding unless you make allowances for this.

    Too many on here are making subjective statements not totally based on fact.

    Note - I am ready to be corrected on any factual inaccuracy above (I’m not perfect).

  27. Luke says:

    one thing to note Paul is that specific road projects are funded because of the wider benefits to society and economy, as well as traffic and road users.
    In our major cites Public Transport such as rail can generally provide these benefits far better than roads can. So therefore they do need to be compared.

    Also note that a fair bit of public transport funding comes from the National Land Transport Fund - petrol tax, rucs. Major capital projects such as electrification, new trains are sometimes different though.
    Also the roads budget is often propped up form general taxation.

  28. Luke says:

    @Rene if no one was worse off, and those on higher incomes were substantially better off, there is no way the tax switch was fiscally neutral.
    there are definitely some lies somewhere, either low income are worse off, or the govt books are worse off

  29. Rene says:


    claiming a tax initiative is something fiscally neutral for the government is a seperate argument from the effects that it has on wealth distribution the population. Agree (to a point) the tax distribution of the new policy could have been slightly more equitable but the fact remains that over the long run the tax changes are fundamentally neutral with respect to government revenue.

    As someone in the top tax range I can tell you every cent of my tax break has gone back into the economy.

    I highly reccomed that you (and others on this blog) read the excellent report complied by the Victoria University working group on tax. It is a stark warning that there a very few peple in this country that are actually paying tax, and the proportion they pay with respect to the population is absurd and is a big reason why many of our skills are going offshore.


    Back on the point off PPPs and the rail tunnel. I think Kris’ observation of the PPP route for the rail tunnel are the most likely although I do agree with some comments made here about the viability / profitablity of such a procurement method. However I think uncle Len has very few tools left in the shed and PPP will certainly be looked at hard.


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