How KiwiRail will spend its $1.2b rail investment


The Government’s $1.2 billion rail investment in Budget 2020 will help KiwiRail attract more customers and get more freight on rail, says KiwiRail Group Chief Executive Greg Miller

Building on the Government’s $1 billion investment in Budget 2019, this second round of funding includes $400 million towards replacing the aging Interislander ferries and $421 million to continue the replacement programme for some of KiwiRail’s oldest locomotives.

The funding also includes $246 million, plus a $148 million top up of the National Land Transport Fund, towards ensuring New Zealand’s rail network, which includes more than 3000km of track, more than 1000 bridges and nearly 100 tunnels, is reliable and resilient.

“I welcome this substantial funding, which is another major boost for rail in New Zealand. For our customers this investment sends a clear signal that rail has a big future and gives them the confidence to get on board,” Miller says.

“Our customers want to make greater use of rail and we’re seeing more road operators reach out for our support as their networks contract. We’re here to help them.”

“The Government’s investment allows us to continue with our locomotive replacement programme and raise the standard of our rail lines, bridges and tunnels across the country. This will enable KiwiRail to offer better and more reliable train services for our customers, and move more of New Zealand’s growing freight task onto rail.

“This funding recognises that rail has a greater role to play in New Zealand’s transport sector, and that it can make a valuable contribution towards lowering our transport emissions, reducing road congestion and saving in road maintenance costs – which benefits our nation as a whole.

“The range of track renewal and facility upgrades we are planning will also support our workforce of almost 4000, as well as numerous civil contractors and material supply businesses across the country.”

“I’m very grateful to the Government for this level of support and I know that KiwiRail’s customers will be pleased by this demonstration of our shareholder’s commitment to rail.”

Miller says the $400 million contribution to replacing Interislander’s three aging ferries and necessary landside infrastructure highlights how important the ferry connection is to New Zealand.

“Our Cook Strait ferries are an extension of State Highway 1, moving 800,000 passengers and up to $14 billion worth of road and rail freight between the North and South Islands each year.

“They are a must have for NZ Inc. The two new rail-enabled ferries will be more advanced, have significantly lower emissions and last for the next 30 years.

“This is a once-in-a generation investment and I am thankful for the Government’s support. It gives us the security to go out to international tender to build the ships, which we hope to see arriving on our shores in 2024 and 2025.”


Budget 2020 appropriation breakdown

$246 million (+ $148 million Government top up to the National Land Transport Fund): over two years to continue addressing legacy issues on the rail network.

  • This funding underpins the Government’s NZ Rail Plan (and Land Transport (Rail) Legislation Bill), which is designed to ensure that New Zealand’s rail network is resilient and reliable and that rail infrastructure is funded sustainably (through the NLTF) over the long-term.

Increased investment in tracks, bridges, tunnels and signals around the country – including replacing rail, sleepers and ballast; drainage works; civil works to strengthen slopes and prevent coastal erosion; and upgrades to the train control system:

  • This is work to improve resilience and reliability of rail infrastructure through New Zealand, prioritised according to levels of risk and growth opportunities. This is fundamental if KiwiRail is to run services on time and get more freight on rail.
  • The investment will include the most critical parts of the national rail network with the highest expected freight demand, such as the Golden Triangle (Auckland-Hamilton-Tauranga), the North Island Main Trunk Line, the Midland Line from Rolleston to Stillwater and Main South Line from Lyttleton to Rolleston, as well as raising the standard of other regional rail lines that have seen significant underinvestment.

Seismic Upgrades to Wellington Railway Station ($10M):

  • Since the Kaikoura Earthquake KiwiRail has undertaken a range of seismic strengthening work on the historic building, particularly in the public areas.
  • This $10M investment will allow further work to be undertaken in the building’s stairwells, in particular around the National Train Control Centre.

$421 million: over four years towards replacing rolling stock that is at the end of its useable life and to continue upgrades to maintenance facilities which are no longer fit for purpose.

Enables KiwiRail to continue its locomotive replacement programme and is expected to cover:

  • 10 new main line locomotives for the North Island
  • The first tranche (25) of new mainline locos for the South Island – replacing 48-year old locos
  • 10 electric/battery powered shunting vehicles for rail depots¬† – new green technology replacing old diesels
  • The first tranche of 20 short haul locos
  • The first locos are expected to arrive in New Zealand in late 2022/early 2023.

Continued work to upgrade key maintenance facilities at Westfield (Auckland), Hutt (Woburn) and Waltham (Christchurch) and an electronic train control system for locomotives operating in Auckland:

  • KiwiRail’s major maintenance facilities are a crucial part of the national rail network, being used to maintain locomotives, wagons and passenger carriages.
  • Some are 80 plus years old and necessary upgrades are long-overdue.
  • Building on investment through Budget 2019, this additional funding will be used to improve safety and efficiency at our main facilities – such as completing workshop building upgrades, seismic strengthening, and improving track layouts.
  • Installation of electronic train control systems on locomotives operating in Auckland. This is an important safety measure, because while freight and commuter trains use the same network, only commuter trains currently have this technology installed on-board. Note: The electronic system is a failsafe system that automatically stops trains if they run signals, etc which is used internationally.)

$400 million: for KiwiRail to progress the purchase of two rail-enabled ferries and landside infrastructure.

  • The $400M investment represents the Government’s contribution to replacing the three aging Interislander ferries, which are nearing end-of-life, and KiwiRail’s landside infrastructure. The whole project is expected to cost more than $1 billion, with KiwiRail looking at financing options to cover the remaining cost.
  • The Cook Strait ferry crossing is an extension to State Highway 1. Each year the Interislander ferries transport about 800,000 passengers, about 2.7 million lane metres of cars and trucks, and 450,000 lane metres of train wagons.
  • This is an investment in a critical piece of the national transport network, which will ensure a resilient and reliable freight and passenger connection between the North and South Islands.
  • The Government investment provides funding certainty that will allow KiwiRail to commit to the purchase of two new ships and progress to construction contracts for new landside infrastructure (for items such as link spans and upgrades to rail/vehicle marshalling yards).
  • The new ferries will be nearly 40 metres longer and at least five metres wider than the current vessels, so are able to meet the expected freight and passenger growth over the next 30 years.
  • The new ships will be much more fuel efficient and produce significantly lower CO2 emissions. They will also be high tech, including the latest propulsion systems, and able to run on battery power at times. KiwiRail is also future-proofing the design so new fuel sources can be adopted as they become available.
  • The two ships are planned to arrive in 2024 and 2025 respectively.

$29M: to cover the cost of historic underpayment of holiday pay for current and former employees.

  • A wide range of businesses and Government Departments have had issues with the calculation of employee entitlements under the Holidays Act.
  • This funding settles this underpayment issue for KiwiRail and ensures current and former staff receive their full entitlements.