Auckland metro rail funding and ownership package

This page contains questions and answers on the Auckland metro rail funding and ownership package that was announced on 1 September 2011.

Questions and Answers

What is this announcement about?

The government has reached a funding and ownership agreement with Auckland Council and Auckland Transport to enable the delivery of a fleet of all electric trains (electric multiple units or EMUs) to run across the Auckland metro network, and to build a new depot for them.

The transfer of a $500 million government loan facility from KiwiRail to Auckland Council group and an additional government grant of up to $90 million will mean 57 three-car electric trains will be purchased – 50 percent more than previously proposed 38 three-car proposal - allowing a fully electric fleet to operate across the network and be owned by the Auckland region.

Read Transport Minister Steven Joyce's media release on the beehive website.

What does full the package include?

The Auckland funding and ownership package comprises the following:

• Auckland Transport will take ownership of the 57 new three-car trains and depot, along with existing non-electrified rolling stock, and will become responsible for all rolling stock maintenance.
• A $500 million government loan to purchase electric trains and build a new depot will be made to Auckland Council group.
• A Crown grant of up to $90 million to assist in funding the additional trains will be made.
• The loan transfers and grant will enable 57 electric trains to be purchased – 50 percent more than the 38 train option previously proposed – allowing a fully electric fleet to operate in Auckland offering the best long-term operational flexibility and value for money.
• Auckland Council group and the NZ Transport Agency (NZTA) will jointly repay the loan.
• Funding assistance from the NZ Transport Agency (NZTA) to help Auckland Council group repay the loan will initially be set at a 60 percent of the costs of the loan repayment (2011/12) and will move to 50 percent on an annual one percent glide path, starting at 59 percent from 2012/13.
• The Crown (through KiwiRail) will retain ownership of below ground assets including track, signals and power supply. The current infrastructure upgrade and electrification programmes will be completed to bring the network to a functional and reliable standard.
• Auckland Transport will pay a track access charge to KiwiRail, partly subsidised by the NZTA, reflecting the fair cost of maintaining the tracks and other assets.
• Auckland Council will meet any additional purchase costs incurred above the $590 million Crown funding.

Is $590 million enough to pay for the whole package?

Final details of costs and funding amounts will be confirmed by the end of September after the procurement tender process has been finalised, however Auckland Council will need to meet any additional costs of the package incurred above the $590 million. 

When will the contract for procuring the EMUs be finalised?

KiwiRail and Auckland Transport expect to sign up the successful tenderer and finalise costs by the end of September 2011. The two agencies have been working together on the procurement process to ensure a smooth transition.

When will new EMUs start to arrive and be operating on the Auckland metro network?

From 2013.

Why is it proposed that Auckland Transport will own the new trains rather than KiwiRail?

When the government approved a loan for the purchase of new trains in 2009 it was decided in principle that KiwiRail should own the new Crown-funded Auckland passenger rolling stock.

Subsequent work on metro rail operations has demonstrated that it makes sense for the Auckland region to own the rolling stock consistent with its responsibilities for planning and funding public transport services.  This also allows KiwiRail to focus on its core business of moving freight and being a network provider to other operators.

Why did the government initially make the $500 million loan to purchase the trains to KiwiRail in 2009?

The loan facility replaced a planned regional fuel tax which was to be used to fund the electrification of the Auckland network (Auckland Electrification Programme or AEP) and the purchase of a fleet of electric trains.

The proposed tax was agreed in 2008, between the Auckland Regional Council and the previous government and would have been funded by motorists in the Auckland region.

This government decided it would not proceed with regional fuel taxes.

Instead the government decided to directly fund the $500 million cost of the Auckland Electrification Project (AEP) and approved a $500 million loan facility for KiwiRail.

Under the new arrangements this loan is now being transferred to Auckland Council group.

Why is the fleet now all Electric Multiple Units (EMUs) rather than the originally proposed EMU and e-loco option?

The original proposal was for the government to provide a loan to KiwiRail to purchase 38 three-car EMU sets which would provide a fleet for Auckland’s eastern and western lines, while the Auckland region was to be responsible for providing trains for the southern line.

The Auckland proposal for the southern line was to lease electric locomotives (e-locos) to haul 68 modified carriages. It has since become clear there are a number of practical problems with this approach.

As part of the EMU procurement, the option of an all-EMU fleet for all lines has been evaluated and it has been found that 57 (50 percent more) EMUs can be purchased to meet the requirements of all three lines at a competitive price.

What are the benefits of an all electric fleet?

An all-EMU electric option will provide a common solution across all three rail lines that is less expensive than the EMU plus e-loco option in the longer term and offers better operational flexibility and integration. This will in turn result in service improvements. Specific benefits of the all electric train option will include:

• improved timetabling from faster more reliable trains
• improved rolling stock management – maintenance skills can be focussed on a one-type EMU fleet
• driver training – only one type of train used on the network will allow drivers to be used across the network
• less track wear and tear
• environmental benefits from less emissions and quieter trains

Passengers on the southern line will benefit from these more modern, consistent and reliable services which will offer positive commuter experiences and provide sufficient capacity to meet future demands.

Over the past decade rail patronage has increased from two million passengers per annum to 10 million. Combined with integrated ticketing and efficient station operation, this investment will allow well in excess of 16 million passengers a year to be carried before further improvements are required.

What are the benefits of this overall package?

The benefits include:

• securing a sustainable funding and ownership partnership agreement for 10-minute frequent, fast and reliable all-electric purpose-designed train services for Auckland from 2013
• costs shared fairly between government and Auckland Council/Auckland Transport
• longer term cost savings from lower maintenance and operating costs for an all-electric fleet
• clearly defined roles and responsibilities for the delivery and operation of the region’s rail services
• more flexibility for the region in deciding how it runs services because of electric fleet operating across the network
• more people using rail because of improved services
• benefits to road users from reduced congestion on the road network
• KiwiRail being able to focus on its core freight business and network system operation
• fully realise the benefits of government and regional investment in signalling, track, station and other system improvements
• environmental benefits from an all electric fleet including less noise and air pollution

Who will be responsible for what under the proposed package?

Auckland Transport

Auckland Transport will:

• take on ownership of the EMUs and new train depot, existing non-electrified rolling stock, and responsibility for all rolling stock maintenance
• provide maintenance  and development of all above ground facilities including stations
• be responsible for operating metro rail services with funding support from the NZTA (metro services currently operated by Veolia under contract to Auckland Transport)
• pay a track access charge to KiwiRail (with subsidy from the NZTA) that reflects the fair cost of maintaining the tracks and other assets

Auckland Council

• Auckland Council group will repay the $500 million loan and any additional loan as required with assistance from NZTA
• meet any additional purchase costs incurred above the $590 million Crown funding 

Crown through KiwiRail

The Crown will:

• retain ownership of below ground assets including track, signals and power supply
• finish the current programme of DART (Developing Auckland's Rail Transport) and electrification investment to bring the network to a functional and reliable standard
• continue to provide, maintain and renew rail network infrastructure and provide network services such as traction, signalling and train control

When will Auckland Transport take contractual responsibility for the new trains?

At the time of signing the purchase contract with the successful tenderer, which is anticipated to be at the end of September 2011.

How will the loan be repaid and over how long?

Auckland Council group will be responsible for repaying the loan.

Significant funding assistance will be provided by the NZTA to help Auckland Council group repay the loan. This will initially be set at a 60 percent of the costs of the loan repayment (2011/12) and will move to 50 percent on an annual one percent glide path, starting at 59 percent from 2012/13.

The loan will be repaid over 35 years for trains and 50 years for the depot.

Where is the new train depot going to be located?

The new train depot will be located at Wiri in South Auckland.

What is the Metropolitan Rail Operating Model?

The Metropolitan Rail Operating Model, approved by Cabinet in 2009, is intended to put metro rail on a sustainable basis, allow operating services to be fully contested, and ensure KiwiRail will not be required to subsidise operations of networks for commuter services in Auckland or Wellington.

Is this agreement consistent with the overriding principles of the Metropolitan Rail Operating Model?

Yes. The Auckland package fairly shares costs between Auckland and the government and places responsibility for future metro rail operating costs with the region. 

Asset ownership is one area where a change to the model has been made.

The model proposed that KiwiRail should own the metro rail rolling stock.  Further work has demonstrated that it makes more sense for both Auckland and Wellington regions to own the rolling stock. 

Auckland and Wellington’s metro rail systems have different transport problems which require different solutions.  However, key aspects of the funding packages agreed in both regions – regional ownership of the rolling stock and related assets and the NZTA funding assistance rate – are the same.

In both regions the aim is to provide a reliable and sustainable metro rail system that will contribute to regional and national economic growth.

How much has the government invested in Auckland rail to date?

The government is investing $1.1 billion in the redevelopment and electrification of Auckland’s metro rail network to bring it up to a functional and reliable standard. This will support both the local and national economy by helping to keep the country’s largest city moving.

The largely finished $600 million Project DART has improved the capacity, reliability and reach of Auckland’s metro rail network and improved pedestrian safety.

The $500 million electrification project is providing the overhead masts and wires that will power the trains, and a new signalling system that will provide for more frequent trains at peak times and additional capacity to help to meet current and future passenger demand.  

The National Land Transport Fund also funds more than 50 percent of the cost of metro rail operations (net of fares).

More information on Project DART and electrification is available on the KiwiRail website.

Will this affect fares?

Fare setting is the responsibility of Auckland Transport but it is reasonable to expect rail passengers to contribute towards the costs of the improved services, alongside ratepayers, road users and taxpayers.

It is the government’s expectation that increased fares will be reflected by the better service, greater reliability and timeliness that will come from this investment in new electric trains.