Rail is uneconomic and we can’t afford it

25 May 2011

Rail is uneconomic and we can't afford it

It is appreciated that there are people who are very emotional about the railway line, but at least up until this point the debate has been grounded around what was best for Gisborne Inc.

We now have a councillor implying that the forestry industry should pay significantly extra to use an inefficient form of transport to rail logs from Matawhero to Napier Port. Why would anyone rail product an extra 200km when there is fit for purpose infrastructure on their to doorstep?

Apparently this is justified because it will provide some un-quantified social benefits associated with having less logging trucks running through the city.

What about the economic and social consequences of making our forestry industry uncompetitive, taking volume away from the locally owned port and the loss of jobs from an industry that is a major employer in the region?

The Gisborne to Napier railway line is an uneconomical piece of infrastructure that has no prospect of being able to pay its own way now or in the foreseeable future.

It is accepted that there are many people who support keeping the railway operational but they are driven mostly by nostalgia and they seem to miss the point that it can only survive with an ongoing subsidy.

In these tough economic times it would seem irresponsible for taxpayers or ratepayers to continue to fork out over $2 million annually to fund obsolescent infrastructure.

It is uneconomic as a passenger railway, it is uneconomic as a tourist railway or as a historic railway for WA165, it is uneconomic as a freight railway and it is extremely unlikely that any of these potential revenue sources, singularly or collectively, will ever be able to provide the necessary volumes.

The facts are plain and simple; there is no industry that will provide the volumes that rail needs to survive without a subsidy.

Eastland Group has worked hard to provide a port that is efficient, effective, that meets the needs of industry and is financially sustainable. The forestry sector is the primary driver of economic growth in this region and Eastland Port, as the second biggest log export port in New Zealand, is a key part of the supply chain.

In the 2005 financial year the port exported 350,000 tonnes of logs, last year it was 1,500,000 tonnes, so the port log volumes have grown over 500% during this period. In 2005 the railway took 0 tonnes of Gisborne logs to Napier, last year it took 0 tonnes of Gisborne logs to Napier. The market has spoken and industry has already decided that rail plays no part in the export of local logs.

For the record it is also uneconomic to use rail to shunt product from Matawhero to Eastland Port and even if the numbers did work, people seem to have forgotten that trains operating 24/7 through the middle the city would potentially be as nosey as trucks. The reason nobody is complaining about trains is that there aren’t any!

Some of the traditional argument for retaining the railway has been based on future volumes of processed forestry product that could be containerised and therefore could go to Napier by rail. New investment in forestry processing has been continually delayed and this doesn’t look like occurring any time soon.

The simple truth is if processed containerised volume does arrive it would be a comparatively easy and a more cost effective option to put a small coastal vessel on between Gisborne and Napier to transport these containers.

The people trying to save the railway believe they are doing so for noble reasons, but it is misguided to try and anchor its future to an industry that doesn’t want to use it and it is doubly misguided for this solution to destroy jobs and lower economic productivity as a consequence.

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