Report says most freight can't be delivered by rail but roads at risk from "flawed" Govt strategy. Photo / File
Report says most freight can't be delivered by rail but roads at risk from "flawed" Govt strategy. Photo / File
A new report highlighting deteriorating roads questions the quality of work of Government advisors pushing for more heavy rail investment and what taxpayers will get out of it.
The report from Ia Ara Aotearoa Transporting New Zealand claims to challenge with evidence "the ideology and rhetoric" that rail can bea serious competitor to road freight, noting that while the Government is spending billions on rail at the expense of the much more valuable roading network, only 12 per cent of freight is estimated to be contestable by rail.
"We don't believe the Government should try to manipulate the market for no apparent reason other than some ideological view that trains are 'better' than trucks," said chief executive of the national trucking representative organisation, Nick Leggett.
"Evidence and independent research point to the bulk of future freight growth being accommodated by trucks, both in New Zealand and internationally, even where there are excellent rail networks.
"How many trains do you see backing up to a farmgate or a supermarket?"
The Government has committed more than $8 billion to SOE KiwiRail since 2017 and intends to spend another $5b in the next three years, according to its 2021 rail plan. KiwiRail recorded a group net after tax surplus of $42.5m on revenues of $709m in the 2021 financial year. In 2020 it recorded a group deficit of $228.1m on revenues of $639.2.
The road freight transport industry employs 32,868 people - 2 per cent of the New Zealand workforce - has gross annual revenue of $6b and transports 93 per cent of the total tonnes of freight moved in the country, said Leggett.
The report, which compiles government data, national and international road freight information and analysis, with contributions by independent New Zealand economists Dave Heatley and David Greig, aims to "bring greater balance and enable more informed discussion on freight movement".
It lands as New Zealand grapples with a freight supply chain crisis and takes aim at a lack of balance in the Government's emissions reduction requirements for trucks and rail.
"Progress won't be driven by ideologically-captivated politicians or government officials; it will be driven by tried and tested technology. Rail has never been able to run as a profitable business in New Zealand. Even with all the Government control and subsidies, customers still prefer to send their goods by road," it says.
While the report supports Government investment in rail "where it makes good sense" and notes the trucking sector is probably rail's biggest customer, it says the Government's basic strategy is "fundamentally flawed".
"The movement of freight is a key contributor to the economic success of the nation. Government's focus should be on supporting and improving the movement of freight."
Apart from a small number of cases, road freight was undeniably the most efficient and effective means of moving freight. The Government had "mistakenly confused" its priorities in putting "second order" transport externalities such as safety, congestion and environmental outcomes ahead of the primary purpose of keeping the economy going by moving freight.
"We have serious concerns with the way Government and its advisors are providing information to justify its approach.
"The information it has provided underpinning the claimed environmental benefits is emotive and unbalanced. It lacks scrutiny and integrity.
"There is a lack of quality information and evidence being shared to underpin and justify Government policies. The policies do not appear to include comprehensive analyses of options, trade-offs, opportunity costs and risks."
The Ministry of Transport said it "was not in a position to comment" on the report, having not seen it before publication.
Nick Leggett, CEO of Transporting NZ, formerly the NZ Road Transport Forum. Photo / File
The report says subsidising rail to keep it viable does not make economic sense.
"The rail infrastructure has not produced an economic level of return, or during some periods, any return, for decades... the long term trend has been a deterioration in rail's financial performance and we do not see the latest investment changing that trend.
"Government's failure to learn from history is deeply concerning."
The report says according to the ministry's freight model, around 30 per cent growth in rail freight net tonne kilometres (NTK) was expected in the next 30 years, or 1 per cent a year. Road NTKs were expected to increase by around 60 per cent.
"We are already seeing a deterioration in the quality and condition of road surfaces and further Government subsidies to keep rail going expose the freight activity to risk of a lose-lose scenario."
Leggett said in some areas, such as the so-called economic "golden triangle" of Waikato, Auckland and Bay of Plenty, there was a case for enhancing rail capacity.
"But we simply don't know what they are proposing to do (with the money). There's just huge rhetoric.
"What proportion of shift from road to rail are they going to get from $5 billion, and where specifically is it going to be spent to achieve it? We have none of these answers."
Leggett hopes the report challenges opinions, raises questions and fires a debate.
