The New Zealand Rail Industry - National Rail Strategy

Last updated on 25/06/2009 2:04 p.m.

Commercial Framework

Purchase of the national rail network

New Zealand's national rail network totals approximately 4000 km. There are also a number of privately owned lines and sidings. There are 2187 railway bridges and viaducts: the longest, at 1.7 km, is over the Rakaia River. There are 149 railway tunnels, the longest being the Kaimai (8.9 km).

The Government has purchased the national rail network and related assets, including rail tracks, structures such as tunnels and bridges, and signalling, train control, and track maintenance operations. ONTRACK has held these assets since 1 September 2004, and is responsible for managing and operating the national rail network.

Access to the network

Toll NZ has exclusive access rights until 2070 for freight, existing long-distance passenger operations, and the Wellington metro passenger service. Auckland urban rail passenger services are provided by Connex New Zealand under contract to the Auckland Regional Transport Authority. Toll NZ freight and passenger rights are subject to 'use it or lose it' provisions. New operators will be able to operate long-distance passenger services on routes not serviced by Toll NZ from July 2007.

Other operators can exercise their existing access rights on the network, and can be granted access rights to line segments where Toll NZ is unable to meet its 'use it or lose it' obligations, or does not take up its right to operate over new sections of the network. In such circumstances ONTRACK will grant access rights to new operators on a non-exclusive basis. Heritage operators will negotiate with ONTRACK for the use of the network.

Track Access Charges

ONTRACK will be responsible for setting Track Access Charges (TAC) for all operators. In setting access charges, ONTRACK will be required to recover the costs of operating the network, beyond the initial funding of $200 million. The agreements with Toll NZ and Connex New Zealand (the Auckland passenger operator) provide a process for agreeing the TACrelated portion of ONTRACK's budget, and the agreement with Toll NZ also provides for agreeing increases to ONTRACK's capital base, both of which will be key determinants of the level of the TAC.

Rail Participants

Rail operators

There are approximately 80 organisations operating railways and tramways in New Zealand.
They can be classified into three broad groups:

Network operators - larger operators with extensive route kilometres:
- Toll NZ - rail freight operator; long-distance and Wellington urban rail passenger operator.
- Connex New Zealand - Auckland urban rail passenger operator.
Industrial operators - railways serving the needs of factories, stores, or other industrial facilities, usually on a localised site with connection to the rail network. There are currently 34 industrial railway operators.
Heritage and tourist/leisure operators - usually operating on a short dedicated railway line or tramline, or making excursion trips on the main network. There are currently around 40 of these operators.

Government agencies

Ministry of Transport

The Ministry of Transport:

advises government on transport policy across all modes, including rail policy and purchase advice
administers relevant rail-related transport legislation
monitors transport Crown entities.

The Treasury

The Treasury is responsible for providing financial oversight.

ONTRACK

owns, manages, and operates the national rail network
controls operations on the network (eg signalling and train control)
controls access to the network, including the setting of TAC
implements, co-ordinates, and maintains an approved safety system for the network
manages rail land, property, and leases
provides advice to Ministers.

Land Transport New Zealand

Under the LTMA, Land Transport New Zealand:

allocates National Land Transport Fund (NLTF) funding to regional councils for passenger transport and the purchase and co-funding of new infrastructure or operations relating to the use of rail for the movement of freight.

The Director of Land Transport:

approves, as the safety regulator, rail licence holders' safety systems (under the Railways Act 2005, Land Transport New Zealand will license a wider range of railway industry participants)
monitors rail safety across the national rail network
provides assurance to the Government that rail organisations are operating safely.

Transport Accident Investigation Commission (TAIC)

The TAIC investigates significant air, maritime, and rail accidents and incidents for the purpose of determining circumstances and causes, and makes safety recommendations with a view to avoiding similar occurrences in the future.

Other government agencies

A number of other government agencies have responsibilities in respect of rail: for example, the Ministry of Health, the Ministry of Civil Defence and Emergency Management, the New Zealand Police, and the Department of Labour (Occupational Health and Safety).

Local government

Regional councils

The regional councils:

prepare regional land transport strategies
chair regional land transport committees
issue air and water discharge consents under the Resource Management Act 1991
(in Wellington) contract passenger rail services and infrastructure improvements, own new urban passenger rolling stock and stations, and contribute ratepayer funding for these services.

Territorial authorities

These authorities:

fund and contract improvements to railway stations and associated facilities
issue land use consents under the Resource Management Act 1991
inspect their district regularly for nuisances, offensive conditions or conditions likely to injure health, and take action to abate them (eg where litter around railway stations may attract vermin).

Auckland Regional Transport Network Limited (ARTNL)

ARTNL is responsible for:

contracting upgrades and maintenance for Auckland passenger railway stations
managing the Britomart terminal and holding the lease for the other Auckland suburban railway stations.

Auckland Regional Transport Authority (ARTA)

ARTA:

contracts passenger rail services and some infrastructure improvements on behalf of the Auckland Regional Council
specifies required performance outcomes (eg required passenger capacity for the Auckland rail system), including requirements for significant infrastructure upgrades.

Unions

Rail and Maritime Transport Union

The union represents members within ONTRACK, Toll NZ, and Connex.

New Zealand Council of Trade Unions

The CTU represents the interests of transport sector workers.

Rail Funding

A comprehensive rail funding policy will be developed following the release of this Strategy. Current funding arrangements are:

Crown funding

The Crown funds national rail infrastructure through:

appropriations to ONTRACK for rail projects justified on public policy grounds (Ministers determine the level and direction of funding, with advice from the Ministry of Transport)
loans for commercial projects and property development to promote use of rail.

Funding for passenger services

Long-distance passenger rail services presently receive no central or local government subsidy. Urban passenger rail (Auckland and Wellington at present) is funded by regional councils1 from rates etc; Land Transport New Zealand funds from the NLTF; and additional Crown contributions for capital improvements (rolling stock and infrastructure).

Land Transport New Zealand funding

Land Transport New Zealand funds:

subsidies to operators for urban rail passenger services
rolling stock for urban rail passenger transport
fixed urban rail passenger infrastructure (tracks)
purchase and co-funding of new infrastructure or operations relating to the use of rail for the movement of freight.

Local government funding

Regional councils contribute towards the subsidy cost for contracted urban passenger rail services through rates and other council revenue.