I despair that this railway nonsense still persists.
In 1971-72 I was Deputy project Manager of the NZ Transport Policy Study which burst the bubble of railway protectionism (which, incidentally, had withered coastal shipping).
In 1978-80 I was transport adviser to the prime minister. NZ Railways was a political football. To help mop up unemployment prior to the 1978 election the railway was told to employ 2000 more staff.
To Treasury and PM's Dept it was obvious that NZ's railway was both capital intensive AND labour intensive. Trucks took goods door-to-door and were becoming bigger, sleeker and more productive. Rail was suited to long-haul bulk (eg coal and ores) but NZ was not Australia.
Folklore about railway's feats of nation-building, coupled with the romance of steam age, made it politically impossible for the government to retire the rail system. What to do? First corporatise then privatise the railways. Private sector imperatives would prevail if rail could not compete.
In 1982 the railway was corporatised. Staff numbers halved. In 1993 it was bought by Wisconsin Central (a US rail company) et al. In 1996 the NZ subsidiary, known as Tranz Rail, was listed on the stock exchange. It initially did well but its share price had collapsed by 2000, when it was sold to Toll Holdings.
So far so good. Then foolishness intervened. In 2008 the railway was re-nationalised and called KiwiRail. In 2012 assets were drastically written down. The saga contunues.
It's great to have this level of factual evidence and logical argument on key issues of the moment. The media are so full of comment and opinion it is hard to know what to believe any more.
But I still disagree with the thrust of this piece. New Zealand has a problem with infrastructure. We seem not to be able to plan or fund it appropriately. New Zealand also has a problem with capital investment, particularly for essential infrastructure (we cannot raise the money). And we have a problem with short-termism; we make decisions that seem logical in the short-term, but that over the long haul fail to build for the future. And I think this critique of the rail ferry failure is a case study of the confluence of those three failings in our public policy decision making. And we have had several recently. The cancellation of the Onslow battery project analysis, even before completion. The repeal of Three Waters without adequate replacement. These are arguably other candidates alongside ferry cancellation for preferring the short-term in expenditure reduction (with tax cuts waiting in the wings) over long-term planning and infrastructure enhancement.
The Economists recently ran an editorial on the matter, but with the UK in its sights. It was under the headline "The Treasury Trap", the prime problem being that the UK Treasury focuses narrowly on keeping control of near-term spending, even if that means squashing projects that make sense in the long term. And it went on to identify a whole series of transport projects from the UK context where such an attitude has sorely hurt the country's future prospects (including productivity and growth incidentally), as well as the NHS.
Speaking of which I witnessed this in my role as an elected board member on the Auckland DHB. This was not necessarily a Treasury matter but more a political and cultural one whereby the Key government was gently and not so gently squeezing the health system, ostensibly because of the GFC, but also with the endgame of offering the voters a hefty tax cut in the 2017 election (and we are talking tax cuts against long-term investment decisions yet again, BTW). At one of my first meetings of the board we were informed that the national immunisation register was "on its last legs" with no immediate prospect of revival (and this in the lead-up to a once-in-century near-existential pandemic, of which we were of course unaware at the time). I then got to appreciate that all IT systems were in bad shape, with clinicians relying on "work arounds" and the near-impossibility of working across a near-dozen different and non-interoperable IT systems in, outside and across health and hospital sectors. And why? Because in order to fund essential clinical services when the squeeze is on you raid the depreciation and other funds set aside for capital investment. Almost all the IT systems were beyond their use-by date and were no longer serviced by the initial providers. And this in an otherwise world-class hospital system undertaking the most complex and intricate interventions.
Three Waters is another example. For 30 years governments of all persuasion have been pleading with local authorities to set aside the necessary depreciation for water infrastructure. With few exceptions, they have failed to do so. So, this short-termism and privileging of keeping taxes and rates low to please the voters at the expense of long-term capital investment is not just an affliction at the level of central government and The Treasury; it is rife at the local level too.
The reforms of the 1980s did many good things, but among the negative outcomes - apart from hobbling the commerce commission and failing to implement a capital gains tax - was selling off key transport infrastructure entities, namely the railways and the airline, both of which had to be bought back from the brink of collapse. Let's not make the same mistake again with ferries!
I cannot find any data from Kiwirail outling the need to build 2 new rail fitted ferries.
Within their top 9 freight commodities 8 of them do not move inter island ie, forest products , dairy etc.
The main domestic freight is from northern region of North Island to the central and southern region of the South Island. This freight movement is covered by existing container vessel services operating north > south as part of their international services.
There is no requirement for a inter island rail link so it then follows that Kiwirail should not be involved in this business and should concentrate on improving the operational and financial performance of the actual rail network.
Bluebridge operate a commercial business and they and possibly another operator can cover the withdrawal of Kiwirail from this business sector
If we can get away with a couple of solid second hand (or even brand new ones) for cheap money, which seems reasonable, why doesnt govt commit Kiwirail to buying a few smallish container ships too? It would fit in this budget, and solve the missing third leg problem of NZ transport - the lack of coastal shipping. We already accept rail running at a loss, we paid Maersk to do it during covid, and Kiwirail are already a ship operator. This would remove the need for rail ferries because coastal shipping would be semi reliable.
unfortunately there is no evidence that atmospheric CO2 causes the temperature to rise whereas there is evidence that demonstrates CO2 is not a factor in our earth's temperature - commercial greenhouses use CO2 generators to enrich the greenhouse atmosphere to 1200-1500 ppm CO2 - requiring no 'heat abatement' - workers inside the greenhouse do not wear special clothing or breathing support - science anyone can understand - what you and many people believe is a fraud perpetrated upon non science - you have no idea about the earth's greenhouse gases - the leading greenhouse gas is water vapour at 95% meaning the unproven greenhouse gas theory puts water vapour front and centre - you have been mislead by scientists who pay lip service to the fraud to maintain funding for their programs at universities - the original culprit is the UNFCCC's definition of 'climate change' which begins "climate change is man made..." - this definition was adopted by the IPCC - hence the 2 major factors of weather being the sun and watervapour
Excellent assessment. Dave Heatley should be the foremost go-to person in NZ for expert comment about Rail. It is quite correct that the Rail Ferries are inextricably connected to "Rail" as a nationwide system, which has had far too much optimistic "investment" of public money in it as all systemic logistical trends have run against it. Its blind-faith proponents love to focus on the efficiency of the rolling, fully loaded "vehicle" versus competitors like trucks on roads. But that is only a fraction of the whole story. Ships, whether on sea, lake, river or canal, are superior to rail for energy efficiency at moving a payload but that does not mean, even in a heavily-coastal nation, that ships have predominated forever as a transport mode. Honest "whole system" analysis would reveal just why roads, trucks, automobiles and buses have had a Kondratieff Wave that rose as that for rail was falling. It is not a question of "subsidies" making the "playing field not level" in some way; rail has received the most disproportionate subsidies, not to mention the disgraceful era during which competition from road freight was near-banned at the expense of NZ macro productivity. The only parts of the world where rail freight is approximately viable, is where there is a large economy with bulk commodities able to be transported across long distances of non-challenging terrain. Gradients and tight curves are death to rail efficiency. NZ is simply one of the worst places in the world to try to perpetuate this transport system that we were cursed with as our coming of age as a nation came too early for the later, better-fit system of road transport. Heatley's "History and Future of Rail in NZ" (June 2009) should be like our standard text book. There is a global fad of political and ideologically driven wishful thinking about rail, and few nations can be in a more absurd position by running with this, than NZ.
If there had never been heavily subsidized rail ferries, maybe some form of coastal shipping would have evolved all along for niche bulk-commodity freight. There is far too little belief in leaving it to investors to intelligently fill gaps in markets, maybe with tax breaks if something is perceived as in the public interest (as opposed to subsidies going into a black hole of public-monopoly systems). Don't get me going on urban public transport.
They can't actually afford it, the estimates have doubled to 3billion from the last business case ( gone up more than 6 fold from the original) and they knowingly bought ferries so much larger the size of the existing fleet that can't use the landside facilities. Plenty of reason to reach the last conclusion and sack the board.
I despair that this railway nonsense still persists.
In 1971-72 I was Deputy project Manager of the NZ Transport Policy Study which burst the bubble of railway protectionism (which, incidentally, had withered coastal shipping).
In 1978-80 I was transport adviser to the prime minister. NZ Railways was a political football. To help mop up unemployment prior to the 1978 election the railway was told to employ 2000 more staff.
To Treasury and PM's Dept it was obvious that NZ's railway was both capital intensive AND labour intensive. Trucks took goods door-to-door and were becoming bigger, sleeker and more productive. Rail was suited to long-haul bulk (eg coal and ores) but NZ was not Australia.
Folklore about railway's feats of nation-building, coupled with the romance of steam age, made it politically impossible for the government to retire the rail system. What to do? First corporatise then privatise the railways. Private sector imperatives would prevail if rail could not compete.
In 1982 the railway was corporatised. Staff numbers halved. In 1993 it was bought by Wisconsin Central (a US rail company) et al. In 1996 the NZ subsidiary, known as Tranz Rail, was listed on the stock exchange. It initially did well but its share price had collapsed by 2000, when it was sold to Toll Holdings.
So far so good. Then foolishness intervened. In 2008 the railway was re-nationalised and called KiwiRail. In 2012 assets were drastically written down. The saga contunues.
It's great to have this level of factual evidence and logical argument on key issues of the moment. The media are so full of comment and opinion it is hard to know what to believe any more.
But I still disagree with the thrust of this piece. New Zealand has a problem with infrastructure. We seem not to be able to plan or fund it appropriately. New Zealand also has a problem with capital investment, particularly for essential infrastructure (we cannot raise the money). And we have a problem with short-termism; we make decisions that seem logical in the short-term, but that over the long haul fail to build for the future. And I think this critique of the rail ferry failure is a case study of the confluence of those three failings in our public policy decision making. And we have had several recently. The cancellation of the Onslow battery project analysis, even before completion. The repeal of Three Waters without adequate replacement. These are arguably other candidates alongside ferry cancellation for preferring the short-term in expenditure reduction (with tax cuts waiting in the wings) over long-term planning and infrastructure enhancement.
The Economists recently ran an editorial on the matter, but with the UK in its sights. It was under the headline "The Treasury Trap", the prime problem being that the UK Treasury focuses narrowly on keeping control of near-term spending, even if that means squashing projects that make sense in the long term. And it went on to identify a whole series of transport projects from the UK context where such an attitude has sorely hurt the country's future prospects (including productivity and growth incidentally), as well as the NHS.
Speaking of which I witnessed this in my role as an elected board member on the Auckland DHB. This was not necessarily a Treasury matter but more a political and cultural one whereby the Key government was gently and not so gently squeezing the health system, ostensibly because of the GFC, but also with the endgame of offering the voters a hefty tax cut in the 2017 election (and we are talking tax cuts against long-term investment decisions yet again, BTW). At one of my first meetings of the board we were informed that the national immunisation register was "on its last legs" with no immediate prospect of revival (and this in the lead-up to a once-in-century near-existential pandemic, of which we were of course unaware at the time). I then got to appreciate that all IT systems were in bad shape, with clinicians relying on "work arounds" and the near-impossibility of working across a near-dozen different and non-interoperable IT systems in, outside and across health and hospital sectors. And why? Because in order to fund essential clinical services when the squeeze is on you raid the depreciation and other funds set aside for capital investment. Almost all the IT systems were beyond their use-by date and were no longer serviced by the initial providers. And this in an otherwise world-class hospital system undertaking the most complex and intricate interventions.
Three Waters is another example. For 30 years governments of all persuasion have been pleading with local authorities to set aside the necessary depreciation for water infrastructure. With few exceptions, they have failed to do so. So, this short-termism and privileging of keeping taxes and rates low to please the voters at the expense of long-term capital investment is not just an affliction at the level of central government and The Treasury; it is rife at the local level too.
The reforms of the 1980s did many good things, but among the negative outcomes - apart from hobbling the commerce commission and failing to implement a capital gains tax - was selling off key transport infrastructure entities, namely the railways and the airline, both of which had to be bought back from the brink of collapse. Let's not make the same mistake again with ferries!
I cannot find any data from Kiwirail outling the need to build 2 new rail fitted ferries.
Within their top 9 freight commodities 8 of them do not move inter island ie, forest products , dairy etc.
The main domestic freight is from northern region of North Island to the central and southern region of the South Island. This freight movement is covered by existing container vessel services operating north > south as part of their international services.
There is no requirement for a inter island rail link so it then follows that Kiwirail should not be involved in this business and should concentrate on improving the operational and financial performance of the actual rail network.
Bluebridge operate a commercial business and they and possibly another operator can cover the withdrawal of Kiwirail from this business sector
If we can get away with a couple of solid second hand (or even brand new ones) for cheap money, which seems reasonable, why doesnt govt commit Kiwirail to buying a few smallish container ships too? It would fit in this budget, and solve the missing third leg problem of NZ transport - the lack of coastal shipping. We already accept rail running at a loss, we paid Maersk to do it during covid, and Kiwirail are already a ship operator. This would remove the need for rail ferries because coastal shipping would be semi reliable.
unfortunately there is no evidence that atmospheric CO2 causes the temperature to rise whereas there is evidence that demonstrates CO2 is not a factor in our earth's temperature - commercial greenhouses use CO2 generators to enrich the greenhouse atmosphere to 1200-1500 ppm CO2 - requiring no 'heat abatement' - workers inside the greenhouse do not wear special clothing or breathing support - science anyone can understand - what you and many people believe is a fraud perpetrated upon non science - you have no idea about the earth's greenhouse gases - the leading greenhouse gas is water vapour at 95% meaning the unproven greenhouse gas theory puts water vapour front and centre - you have been mislead by scientists who pay lip service to the fraud to maintain funding for their programs at universities - the original culprit is the UNFCCC's definition of 'climate change' which begins "climate change is man made..." - this definition was adopted by the IPCC - hence the 2 major factors of weather being the sun and watervapour
are removed from any and all calculations
Excellent assessment. Dave Heatley should be the foremost go-to person in NZ for expert comment about Rail. It is quite correct that the Rail Ferries are inextricably connected to "Rail" as a nationwide system, which has had far too much optimistic "investment" of public money in it as all systemic logistical trends have run against it. Its blind-faith proponents love to focus on the efficiency of the rolling, fully loaded "vehicle" versus competitors like trucks on roads. But that is only a fraction of the whole story. Ships, whether on sea, lake, river or canal, are superior to rail for energy efficiency at moving a payload but that does not mean, even in a heavily-coastal nation, that ships have predominated forever as a transport mode. Honest "whole system" analysis would reveal just why roads, trucks, automobiles and buses have had a Kondratieff Wave that rose as that for rail was falling. It is not a question of "subsidies" making the "playing field not level" in some way; rail has received the most disproportionate subsidies, not to mention the disgraceful era during which competition from road freight was near-banned at the expense of NZ macro productivity. The only parts of the world where rail freight is approximately viable, is where there is a large economy with bulk commodities able to be transported across long distances of non-challenging terrain. Gradients and tight curves are death to rail efficiency. NZ is simply one of the worst places in the world to try to perpetuate this transport system that we were cursed with as our coming of age as a nation came too early for the later, better-fit system of road transport. Heatley's "History and Future of Rail in NZ" (June 2009) should be like our standard text book. There is a global fad of political and ideologically driven wishful thinking about rail, and few nations can be in a more absurd position by running with this, than NZ.
If there had never been heavily subsidized rail ferries, maybe some form of coastal shipping would have evolved all along for niche bulk-commodity freight. There is far too little belief in leaving it to investors to intelligently fill gaps in markets, maybe with tax breaks if something is perceived as in the public interest (as opposed to subsidies going into a black hole of public-monopoly systems). Don't get me going on urban public transport.
They can't actually afford it, the estimates have doubled to 3billion from the last business case ( gone up more than 6 fold from the original) and they knowingly bought ferries so much larger the size of the existing fleet that can't use the landside facilities. Plenty of reason to reach the last conclusion and sack the board.
There is nothing in this article that leads to the assertions in the final paragraph.