The History and Future of Rail in New Zealand

Abstract

Did the 2002-08 re-nationalisation of New Zealand railways represent the end of a failed experiment in the privatisation of essential infrastructure and herald the renaissance of socially-desirable environmentally-friendly rail? Or was it a misguided attempt to stem the inevitable decline of a 19th century technology that has no place in a modern transportation infrastructure?This report examines the economic viability structure and role of New Zealand's rail network since 1863. Rail has become increasingly econmically unviable over time. Reflecting this it has been largely unresponsive to changes in governance and ownership arrangements. Technological change in rail has been minor when compared with changes in sea road and air transport. The role of rail has changed as it has adapted to competition from these substitutes.Also examined are various arguments proposed as to why the future may be a break from the past including externalities (e.g. greenhouse gas emissions and congestion) together with government policy to induce modal shift towards rail and predicted increases in freight demand. These factors do not appear to be sufficient to make the current rail network economically viable in the long run. Rail is strategically and economically vulnerable to pressures on one side from more environmentally-friendly sea transport and on the other side from more flexible road transport.Closure of at least part of the rail network appears socially desirable if not inevitable. The analysis considers whether there is a viable subset of the current rail network. There is evidence that such a subset exists and compelling arguments to move towards that goal.