The New Zealand Transport Agency Waka Kotahi (NZTA) now intends to pay a smaller share to keep the Capital Connection running butcouncils are reluctant to pick up the shortfall for a train they do not run or own.
KiwiRail and its predecessors commercially operated the Capital Connection prior to July 2015. However, the route was suffering from declining financial performance and increased maintenance costs.
It was saved from closure when Horizons and Greater Wellington regional councils agreed to chip in with some funding. KiwiRail continued to own the train and operate the service.
The newly-elected Labour Government was briefed in 2017 that this arrangement was going to expire the following year and that the service “will not continue if public support ceases at that point”.
The Government Policy Statement on Land Transport in 2018 was amended to allow projects like Capital Connection to access the National Land Transport Fund (NLTF) administered by NZTA.
The Capital Connection at Levin railway station.
The service was then primarily funded through the NLTF with the regional councils each paying $110,000 annually.
A NZTA briefing to Transport Minister Simeon Brown said this funding arrangement expired at the end of June.
The briefing from May was released to the Herald under the Official Information Act.
It dealt with the question of how the Capital Connection would be funded between now and 2029, when it will be replaced by 18 new four-car trains being introduced onto the Wairarapa and Manawatū rail lines.
The new trains will improve the connection between Wellington and Palmerston North by doubling peak-hour services as well as adding new off-peak and weekend services.
Meanwhile, the Government Policy Statement on Land Transport has also changed under the Coalition Government. The 2024 version says value for money is a priority and “increased public transport fare box recovery and third-party revenue will be expected from local government”.
NZTA proposed in its briefing a “transition roadmap” that would bring the service into Greater Wellington Regional Council’s transport network and increase the share local councils pay.
The agency’s board has since decided to decrease its funding contribution for Capital Connection to 51% over four financial years meaning the local share will increase to 49%. This is a move to what’s known as the Funding Assistance Rate model.
Currently, NZTA funds about 90% of the service’s total operating expenses – about $3-3.6 million annually.
NZTA multimodal and integration acting national manager David Shepherd said the funding arrangement for Capital Connection has been a subject of discussion between the agency and its local government partners for some time.
“It brings it in line with the rate at which other public transport services are funded, and importantly, is fully consistent with the direction set in the Government Policy Statement on Land Transport which encourages a more commercial focus for public transport.”
Horizons Regional Council chairwoman Rachel Keedwell said she was not comfortable with the transitional funding arrangement in terms of providing value for money for ratepayers. Photo / Bevan Conley
Horizons and Greater Wellington regional councils estimate NZTA’s move will gradually increase their share to $700,000 each annually.
The councils have settled to increase their payments for this financial year to $220,000 each but their leaders say there is no formal agreement between them and NZTA about what to do after that.
Horizons Regional Council chairwoman Rachel Keedwell said she was not comfortable with the transitional arrangement in terms of providing value for money for ratepayers.
“I don’t believe it is justified to expect ratepayers to increase our current contribution of $200k annually to up to $700k for a service we don’t own or run.”
Keedwell supported ratepayers paying more money when the new trains were in place and the number of services had increased because that would “revolutionise how people travel”.
“However, until that point, I don’t support the Government proposal to shift the costs from their books to a small ratepayer base.”
Horizons was committed to ensuring Capital Connection continued to run in the meantime and looked forward to a conversation with central government about a fair and equitable funding system, Keedwell said.
Greater Wellington Regional Council chairman Daran Ponter said keeping Capital Connection on track over the next few years required co-operation between parties rather than NZTA “trying to issue edicts”.
He wanted full visibility from KiwiRail of the cost of running the service, Ponter said.
“The costs of providing the Capital Connection services are currently a black box only known to KiwiRail and this would need to change if ratepayers were expected to increase their subsidy for the service.”
KiwiRail commuter general manager Tracey Goodall said KiwiRail did provide information about operating costs to councils under its contract with them.
“We have provided everything requested of us to date to support funding discussions between the councils and NZTA.
“KiwiRail is and will continue to engage with the councils to ensure a successful transition to new arrangements when the new fleet arrives in 2029.”
Georgina Campbell is a Wellington-based reporter who has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working as a broadcast journalist.
