Wellington metro rail funding and ownership package

The government, the Greater Wellington Regional Council (GWRC), KiwiRail and the NZ Transport Agency (NZTA) have confirmed a package deal that will complete the rebuild of Wellington commuter rail services.

The package includes government funding of $88.4 million to renew the rest of the signalling and traction assets on the network, while GWRC will take over and refurbish the 30 year old Ganz Mavag units at a cost of $80 million, which will be supported with an operating subsidy from NZTA.

The complete funding and ownership package comprises:

• government funding of $88.4 million to renew the rest of the signalling and traction assets on the network
• GWRC retaining ownership of the Matangi train fleet
• GWRC taking over ownership of the Ganz Mavag and English Electric trains from KiwiRail and committing to upgrade the Ganz Mavag units at a cost of $80 million
• GWRC taking over ownership and responsibility for stations (other than Wellington Station), train stabling and the electric train depot
• the Crown (through KiwiRail) retaining ownership of the metro rail track network, the traction and signalling assets, and responsibility for any further investment in the upgrade of these assets
• GWRC will pay a track access charge to KiwiRail, partly subsidised by NZTA that reflects the fair cost of maintaining the tracks and other assets

Read the Minister’s media statement on the Beehive website

Questions and Answers

What is this announcement about?

In 2010 the Crown and Greater Wellington Regional Council (GWRC) began discussions to put Wellington rail on a sustainable funding pathway with clear guidance on ownership and responsibilities.

The aim of the work has been to ensure Wellington commuters can look forward to a safe, reliable and affordable metro rail network.

Negotiations between the Crown, GWRC and KiwiRail on an agreement that covers a significant funding and ownership package for the future of the Wellington region’s metro rail system have now been completed.

As part of this agreement, the government has agreed to an $88.4 million funding package over 8 years.

Why does the Wellington metro rail network need additional funding?

The Wellington commuter rail network has been allowed to decline over a long period of time. This has led to reliance on what are now very old and degraded rolling stock, as well as problems with overhead power supply, signalling and track infrastructure.

Although parts of the network have been upgraded in recent years, it requires further work to make it functional and reliable.

Both the government and the GWRC want to bring Wellington’s metro rail back up to a high standard.

What does the funding and ownership package comprise of?

The package shares the costs and responsibilities for delivering improvements to rail in the Wellington region.

The complete funding and ownership package comprises:

• government funding of $88.4 million to renew the rest of the signalling and traction assets on the network
• GWRC retaining ownership of the Matangi train fleet
• ownership of Ganz Mavag and English Electric trains operating on the network transferred from KiwiRail to GWRC
• GWRC takes over ownership and responsibility for stations (other than Wellington Station), train stabling and the electric train depot
• the Crown (through KiwiRail) retains ownership of the metro rail track network, the traction and signalling assets, and responsibility for any further investment in the upgrade of these assets
• GWRC will pay a track access charge to KiwiRail (with subsidy from the NZ Transport Agency) that reflects the fair cost of maintaining the tracks and other assets

What are the benefits of this package?

For the region

The GWRC now has greater control over the passenger trains and most stations in Wellington, including their maintenance, refurbishment and eventual replacement. It will now also have more influence over the timeliness and reliability of the service, through its contract with the operator.

This gives the region control over the long term future of these assets, regardless of the operator.

The package will also make it easier in the future for the GWRC to tender out the operations of the train services. Introducing contestability will provide a greater incentive to improve services and value for money for tax payers, ratepayers and rail users.

For the government

The package agreement puts responsibility for rolling stock (including maintenance, refurbishment and eventual replacement), stations and renewals with the GWRC with assistance from the NZ Transport Agency.

Fairer track access charges to be paid by the GWRC means KiwiRail will no longer be subsidising the network.

Transferring responsibility for rolling stock, stations and renewals will also allow KiwiRail to focus on putting its core freight business on a more commercial footing.

Who will pay for the rail package?

Everyone will need to pay their fair share to ensure the future of the region’s rail network.

The Crown has stepped up to play its part in committing to funding $88.4 million to renew the rest of the signalling and traction assets on the network. But it will also require investment from the GWRC, ratepayers and users of rail services.

The GWRC will be paying a fairer share of track access charges to cover the costs of operating, maintaining and renewals of the metro rail network. At present the costs of the metro-related infrastructure and services that KiwiRail provides to the Wellington region are not being fully met by passengers, the GWRC, and the NZ Transport Agency.

What funding role will the Crown have?

The Crown will invest over a number of years to complete the upgrade of the rest of the metropolitan networks traction, signalling and platform assets to get the network up to a functional, safe and reliable standard.

The Crown will also have an ongoing role through KiwiRail which will retain ownership of the Wellington metro rail network infrastructure (track, signals, and power supply).

How much will the Crown contribute?

$88.4 million over eight years.

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

Total government investment in the Wellington regional rail project (WRRP) is nearly $400 million.

This funding has contributed to projects including: double tracking to Waikanae, the new Waikanae Station, improvements to the Paraparaumu Station, and train storage; Johnsonville tunnel improvements, renewals, platform and station upgrades; new Matangi train units; and new depots and storage areas.

Other funding has come from the GWRC and the NZ Transport Agency.

Why is more funding needed on top of this?

Funding to date has largely focused on work to enable the operation of the Matangi trains on the network. Additional work is required for a safer and more reliable rail network. This includes work such as replacing old wooden poles, signals and overhead wires.

How will this affect ratepayers?

The package will require greater investment by the GWRC, and this will affect rates over time. The GWRC is responsible for setting the region’s rates and has consulted with the region on rates increases as part of its draft Annual Plan.

Will this affect train fares?

All parties will need to contribute to improving the Wellington rail services – the government and the GWRC will contribute to this and users who benefit from improved services will also have to pay their fair share.

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 infrastructure and new electric trains.

What is the Metropolitan Rail Operating Model?

This model 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 the operation of networks for commuter services in Wellington or Auckland.

Part of the package involves the transfer of overall responsibility for metro rail ownership and funding to the GWRC. This is consistent with the Metropolitan Rail Operating Model.

Why is the NZTA adjusting its funding assistance rate (FAR) for rail services in Wellington?

The adjustment is part of a wider NZTA review of funding assistance rates aimed at introducing more consistency in the level of funding assistance provided for different transport activities, providing greater certainty to councils as they plan future activities, and developing a greater degree of equality between the NZTA and approved organisations (ie councils). For example, local roads are funded at an average of 50 percent, as are bus and ferry services.

What are the consequences for KiwiRail from this package?

This will enable KiwiRail to focus more on its core business of being a freight company, and a network provider.

It will also assist KiwiRail towards achieving the objectives of the KiwiRail Turnaround Plan which the government is supporting through a three-year, $750 million support package.

Who will operate the trains on the Wellington metro rail network on a day to day basis?

The existing contract between the GWRC and Tranz Metro remains. However GWRC has started a review of this to achieve a more performance based contract in the longer term.