The board met yesterday to determine the future of the service.
Agency (NZTA) chief executive Nicole Rosie said the decision was made in line with the Government Policy Statement (GPS) on land transport which outlined “new priorities” for the agency.
“There is a need to link ongoing investment to service and commercial performance to make sure taxpayers’ money is being used in the best way,” Rosie said.
“Our decision to progressively reduce the level of our co-investment aligns with the draft-GPS, takes into account current funding pressures and recognises the performance of the trial to date.
“Performance for Te Huia as a start-up public transport service has been generally encouraging. While the service has gradually built patronage, Te Huia has not achieved all of the targets set out in the original business case.”
NZTA would continue to co-invest in the Te Huia service with around $12.2 million committed from the 2024/27 National Land Transport Fund (NLTF) for the remaining two years of the five-year trial.
NZTA’s co-investment in public transport is expressed as a so-called Funding Assistance Rate (Far). This is a percentage of the cost of operating the service fare and other revenue received.
For most public transport services across the country, the standard Far is 51 per cent.
Since the beginning of the trial, Te Huia had an enhanced Far of 75.5 per cent.
Yesterday’s decision would see the Far progressively reduced to 60 per cent: In the 2024/25 financial year it would be a 70 per cent Far and from July 2025 until the end of the trial period - but no later than June 30, 2026 -a 60 per cent Far.
Nicole Rosie, chief executive of Waka Kotahi, the NZ Transport Agency.
The progressive change in Far equates to a reduction of about $1.98m over two years based on the estimated cost to run the service over that period.
This meant the local share of the co-investment would need to increase to maintain the same level of service.
It was expected that the Far for any further operation of the Te Huia service beyond the five-year trial would be at the standard 51 per cent Far.
“Waikato Regional Council runs Te Huia and they will need to determine what the operational impacts could be. They will need to take some time to work through the impact of the board’s decision on the service and their local co-investment share,” Rosie said.
“NZTA will work closely with them and continue to support Te Huia for the remainder of the trial.”
The new co-investment arrangements come into effect on July 1 this year.
NZTA chief executive Nicole Rosie said the decision was made in line with the Government Policy Statement (GPS) on land transport. Photo / Danielle Zollickhofer
The Waikato Regional Council said it welcomed the continuation of the funding.
Angela Strange, a Waikato regional councillor and the future-proof public transport subcommittee deputy chairwoman, said the council appreciated the board’s decision.
“This decision supports the vision those before us had for a service connecting Waikato and Auckland, and the work of the amazing KiwiRail crew.
“We have received overwhelming support from the regional community, including through submissions to our Long Term Plan and the regional land transport plan, and I know our loyal passengers will join us in rejoicing over this news.”
Te Huia is funded by both passenger fares and public funding (taxpayer and ratepayer funding).
Waikato Regional councillor Angela Strange.
The public funding portion is currently split between NZTA (75.5 per cent), the Waikato Regional Council (21.2 per cent) and the Waikato District Council (3.3 per cent).
Following the NZTA board’s decision, the Waikato Regional Council will need to consider options for providing the regional share, which would be discussed through the Long Term Plan deliberations due to begin on Monday, May 24.
In August 2019, the NZTA board endorsed a five-year trial for Te Huia.
This included co-investment which was approved until the end of June 2024. The start of the Te Huia trial was delayed due to the Auckland rail network rebuild and various Covid-19 lockdowns.
The trial is now timed to run until April 2026. As a result of those delays, further funding approvals were required.
