Dialogue: Design standards vital to enhance Auckland city

By MIKE LEE*

The deal struck between Tranz Rail and Auckland local body leaders is being hailed as a triumph which will at last give us a decent public transport system and free up our congested motorways.

The agreement in principle is for access to Auckland's rail corridors, which will enable the Auckland Regional Council, the body charged with subsidising public transport services along with Tranzfund, to call for competitive tenders from different transport operators.

The deal will cost Auckland $65 million, payable by September 30, and $2 million a year for the balance of Tranz Rail's track lease.

The mode of transport to be invited to compete on the corridor (bus, light rail or conventional rail) remains undecided, as does the selection process (though it is worth noting that the process is, at this stage, not envisaged to be competitive, according to the regional council's annual and strategic plans).

The introduction of market competition to line utilities such as railways is a revolutionary concept for most Western countries. There are practical problems to surmount, not the least being safety.

Still if the radical notion of competition on our train lines ends up providing us with a better public transport service, why not give it a try?

Well, there are serious problems with this deal and the process which the public, who will be footing the bill, should be aware of.

Auckland's recent history provides us with several reasons to be cautious about the judgment of our local government leaders. In fairness to the mayors and politicians, however, the idea of opening up Auckland's rail network to competition originated with the transport bureaucracy of the regional council. The council's dispute with Tranz Rail over access has been protracted and, at times, acrimonious.

Initiatives for improved services from Tranz Rail have been dismissed out of hand and improvements to infrastructure such as the much-needed double tracking of the western corridor (from Newmarket to Henderson) effectively blocked, a hostage to the negotiation process.

The council argues that competition will bring about a cheaper and better service than the conventional approach offered by Tranz Rail. While the idea of service improvements through competition is not unreasonable, it depends how much one first pays for the right for competition.

No cost-benefit analysis has been done by the council to determine whether paying to open the lines to competition would provide a cheaper service than the international benchmark model used by the Wellington Regional Council.

Of course, now that we know the price to be paid to Tranz Rail, any future service would have to be competitive enough to offset the outlay of the $65 million and the ongoing rent. It's difficult to see how economies can be wrung from competition to recover those sorts of costs.

The council, with no hard data to back up its assertions, has claimed that it had no choice but to demand competition because of the dictates of the Commerce Act and the Transit New Zealand Act.

Last September, former Prime Minister Jenny Shipley was told that "the Auckland Regional Council can't legally do a deal with Tranz Rail to provide rail services" because of those acts.

Yet a few weeks earlier, the council wrote to the Ministry of Commerce submitting that the Commerce Act needed to be rewritten to enable it to compel Tranz Rail to open up for competition.

The other piece of legislation, the Transit New Zealand Act, came into force four years before the privatisation of NZ Rail, so it is hard to see how its competitive process clause was intended to force a free market in train services. This is recognised by the Wellington Regional Council, which continues to deal with Tranz Rail on a competitive-price basis.

Another concern in the Tranz Rail deal is the role of Infrastructure Auckland. Its chief executive, Richard Maher, negotiated on behalf of the regional council at the request of the Auckland Mayoral Forum, itself an informal body.

Infrastructure Auckland was set up to inherit ownership of Auckland's remaining public assets. It is also charged with scrutinising and evaluating transport and stormwater infrastructure projects before investing in them.

While its chief executive was negotiating with Tranz Rail, Infrastructure Auckland was meant to be impartially assessing the financial merits of a rival proposal from Tranz Rail for improved Auckland rail services along the Wellington model. There appears to have been a clear conflict of interest.

Mr Maher says, however, that he was involved in the Tranz Rail negotiations as a private citizen and a facilitator, not as the chief executive of Infrastructure Auckland. This is unacceptable, particularly now that we find that a significant portion of Tranz Rail's $65 million will come from Infrastructure Auckland's capital investment funds.

Meanwhile, those members of the public looking for action to end motorway congestion will still have some years to wait because the brave new world of competition does not start until 2003-04 when Tranz Rail's contract ends.

Instead of providing a golden handshake, the $65 million could have been spent on tangible improvements in transport, such as the double tracking of the Western corridor and buying new rolling stock. Tranz Rail is being paid handsomely to do nothing.

There remains the $65 million question. Is the deal a breakthrough for competitive public transport or an ill-judged squandering of Auckland's infrastructure capital?

* Mike Lee is an Auckland regional councillor.