Stuart Nash: Figures must stack up for rail

Makaroro River valley - site of the proposed Ruataniwha Water Storage project.

People who read this paper should be well aware of my stance on the Ruataniwha water storage scheme. Basically, if it stacks up from an environmental and economic perspective and creates jobs for those in the communities whose rates will subsidise it, then I will support it.

I must be consistent and apply the same tests to all economic development projects funded by ratepayers of the region. While fracking the Bay will never ever pass the test, I thought the reopening of the Napier-Gisborne rail would. Unfortunately, it appears that KiwiRail has turned down the regional council's proposal to lease back the line and run it as a commercial operation.

The beauty of such a scheme from a taxpayer perspective is that it (almost) completely de-risks KiwiRail and the Government from operational costs and responsibility, as the risk is transferred to the Hawke's Bay Regional Council as the holder of the lease. The downside of the scheme is that the ratepayers of Hawke's Bay carry the risk if the line isn't economic.

My understanding is that Kiwirail needed to see evidence of signed-up customers committed to using the line (bankable revenue projections) before they would be prepared to enter into a commercial deal with the HBRC.

This is a difficult proposition because it also requires customers to have faith that the service will deliver on time in spec; something that Kiwirail admitted they weren't doing even before the washout closed the line. For customers, this means advanced logistics and resource planning and may well require the termination (or at least the renegotiation) of road transport contracts that are already in place.

Other options for the line simply don't stack up. There is a group that wants 30km of the line turned into road. Information I received suggests that the average cost of road construction in New Zealand is about $15 million-$20 million/km. So to convert part of the rail line into a road would cost close to $600 million minimum and there is no way any government is going to provide the up-front funding to build a road between Napier and Wairoa.

The cost of converting the line into a cycleway would also be prohibitive to the point where a parliamentary select committee took about five minutes to reject a call to investigate such an option.

So where to from here? Like the dam, paying customers are vital to the Napier-Gisborne rail line even being considered viable. Those who are passionate about it can advocate until they are blue in the face. Hardworking elected officials like the HBRC's Alan Dick, can write feasibility studies and business cases justifying the rail's existence, and I can talk about the need for first world infrastructure if we are to ever get investment in downstream processing happening up and down the coast, however, like most things in the modern world -- and especially when taxpayer and/or ratepayer money is involved -- the numbers have to stack up. This means, as mentioned, enough customers have to perceive value in rail to the point where they will back the project by giving rail their business.

This is not something the HBRC or I or anyone else can force them to do.

The thing for me though, is this whole debate should never be about road or rail, or road versus rail, but rather both modes seen as integral and complementary pieces in a transport infrastructure solution needed to optimise the current and future needs of East Coast industry. Now that would be a novel approach and a new way of thinking for the Government.

Stuart Nash is MP for Napier

Business and civic leaders, organisers, experts in their field and interest groups can contribute opinions. The views expressed here are the writer's opinion and not the newspaper's. Email: editor@hbtoday.co.nz