Clifford Bay study – ‘waste of public funds’

Funding more studies of an alternative Clifford Bay rail terminal is a shocking waste of money, Pacifica Shipping chief executive Steve Chapman says.

A couple of weeks ago, Transport Minister Gerry Brownlee announced that a specialist team from the Ministry of Transport, Treasury and the NZ Transport Agency would undertake further studies.

More than $650,000 has recently been spent in the most recent to study a Clifford Bay ferry terminal.

Mr Chapman says the idea is being pushed by KiwiRail as part of its turnaround plan. It would be the only beneficiary of huge taxpayer-funded handouts.

“They’re talking about the cost being $425 million. That amount has doubled in as many years and it only accounts for the terminal. They haven't even factored in the cost of connecting a rail link across the main highway. It’ll end up being twice as much.

“Any saving is negligible when you consider the costs to Blenheim and Picton and to businesses that will have to pay for it in higher freight charges.

"Business people in Christchurch want timely delivery of goods from places like Auckland but they don’t give a damn if they arrive 50 minutes earlier.

“No one has considered the effect on most of the trucking industry. Mostly, it will hit owner drivers whose earnings will be shaved and their costs will go up.”

Transport consultant Rod Grout has also joined the chorus against Clifford Bay and KiwiRail’s three-year financial forecasts.

He says the reduction of nearly $70 million in KiwiRail’s 2013-15 projections effectively reduced revenue growth from 41% to 21% and call into question its ability to be commercially self-sustaining, as required by the government’s turnaround plan.

“The government has already committed over $800 million for capital investment and is being asked for a further $268 million for 2014-15, leaving $2-3 billion to be found for the second half of the 10-year programme.

Mr Grout said that to reach financial independence within the plan’s timeframe, KiwiRail would need to lift freight revenue growth from about 7% a year to over 30% for five consecutive years.

“This would be a staggeringly difficult task requiring huge increases in freight rates. Mr Brownlee needs to explain how this can be achieved without continued large scale equity funding by government.

“What is needed is immediate action to build its profitable operations such as inland bulk freight and less emphasis on loss-making activities such as inter-island rail freight services,” Mr Grout says.