Transport: Rail

302. Subject to government policy decisions about the size of the network it wishes to support, it is likely that KiwiRail Group will need to undertake capital expenditure of several billion dollars over the next 10 years, including critical expenditure of $2 billion over the next five years, to realise its aspirations for the business.[82] Commercial revenue will not be enough to cover this level of expenditure, which will also require significant funding from central government if it is to go ahead.

• The current locomotive and wagon fleet allows little or no room for revenue growth. The fleet is old (average age is 30 years for locomotives and 25 years for wagons) and prone to structural failure. KiwiRail has recently announced the purchase of 20 new locomotives from China, using a $75 million debt facility provided by the government. Further locomotive and wagon investments worth several hundred million dollars will be needed to replace the ageing fleet.
• More than a decade of under-investment in the track network has resulted in a backlog of deferred maintenance, affecting reliability and transit times, and undermining competitiveness with road transport. Track renewals and upgrades are KiwiRail's largest items of capital expenditure. Some of this may be spent building new lines to take advantage of new freight opportunities (such as the proposed line to Marsden Point).
• KiwiRail is spending approximately $40 million to upgrade carriages on the TranzAlpine and TranzCoastal tourist services over the next two years, funded by a government grant.
• A new interisland rail ferry is likely to be needed by 2016 to replace the ageing vessel Arahura, and may cost up to $250 million.

303. Demand for further investment in the Wellington and Auckland metro rail systems will also continue, although this is driven by passenger demand and the investment plans of local government, rather than the national rail operator.

• Current metro projects in Auckland include the double-tracking of the Western line, under-grounding at New Lynn, the re-opening of the Onehunga branch line, a new spur line to Manukau, and a number of station upgrades, including a major upgrade at Newmarket, as well as electrification of the entire Auckland network and the purchase of a fleet of new electric passenger trains. Elements of this are already complete, although the entire project won't be finished until 2013, by which time approximately $1.6 billion of central government investment, and $220 million of local government investment (subsidised through the New Zealand Transport Agency) will have been made. Improvements to date on Auckland's metro rail system have already contributed to record patronage growth[83].
• Current metro projects in Wellington include the double-tracking and electrification of the line to Waikanae, upgrade of the Johnsonville line, and the purchase of a new fleet of electric passenger trains. This will be completed by 2011 and will have a total cost of approximately $550 million (including about $40 million of local government investment).

304. Beyond the projects already approved and under way, both regions have significant aspirations for the ongoing development of their metro passenger rail systems, which will require expenditure of billions of dollars over the next 20 years.

• Auckland is planning for an inner-city underground passenger rail loop connecting the Britomart Transport centre and the North Auckland Line near Mt Eden station, a rail link to the airport, and a rail tunnel under the Waitemata Harbour to the North Shore.[84]
• Wellington is planning for the purchase of further electric trains, and ongoing improvements to rail corridors, stations and park and ride facilities, including the provision of ‘feeder' shuttle services.[85]