Investment in rail

For the land transport system to work effectively, we need to ensure all travel options are playing to their strengths. A well-maintained rail network contributes many benefits for people in New Zealand, including reduced congestion and emissions, and improved safety and resilience across the land transport system.

Over the last three years, we’ve been part of the Future of Rail review, led by the Ministry of Transport. In 2021, Government released the New Zealand Rail Plan (the Rail Plan) which sets out the long-term vision for rail.

New Zealand Rail Plan

The Rail Plan outlines the commitment to the significant investment needed to achieve a resilient, reliable and safe rail network. We were involved in the development of the Rail Plan, alongside the Ministry of Transport and KiwiRail.

The Rail Plan sets out two strategic investment priorities for delivering a resilient and reliable rail network:

• Investing in the national rail network to restore rail freight, and provide a platform for future investment for growth.
• Investing in the metropolitan rail networks to support growth and productivity in our largest cities.

To support the implementation of the Rail Plan, legislation was passed introducing a new funding and planning framework for the heavy rail track network under the Land Transport Management Act 2003.

The changes mean KiwiRail can receive funding from the National Land Transport Fund (NLTF) for investment in the rail network. KiwiRail owns the rail network and is responsible for managing, operating and maintaining it.

Reflecting the Government’s priorities, the Government Policy Statement on land transport 2021 (GPS) has identified the Rail Plan as one of the four government commitments, and a new Rail Network activity class was created to support implementation of the Rail Plan.

NZ Rail Plan on the Ministry of Transport website(external link) 

GPS 2021 on the Ministry of Transport website(external link)  

Rail Network Investment Programme

KiwiRail is required to prepare a Rail Network Investment Programme (RNIP) every three years to be eligible for funding from the NLTF. The RNIP must take into account the purpose of the LTMA, as well as the current GPS on land transport. The RNIP sets out the rail network activities that KiwiRail proposes, and that require investment from the NLTF.

Rail Network Investment Programme 2021-24

The development of the first RNIP has been guided by the GPS 2021 and the NZ Rail Plan.

The Minister of Transport has approved the first RNIP at a total cost of $1.35 billion, with an initial $1.27 billion from the NLTF approved for rail activities contained in the RNIP. This includes:

• $1.2 billion for maintenance and renewal of the national freight network – and Government is contributing Crown funding of $834.4m into the NLTF to support this. This will be funded from the Rail Network Activity class
• an initial $70 million for metro rail improvements in Auckland and Wellington, funded from the Public Transport Infrastructure activity class
• a further $80 million from the Public Transport Infrastructure activity class is expected to be approved for metro rail improvements, subject to successful business cases. If approved, this would bring the total investment from the NLTF up to $1.35 billion.

As required under s22C and s22G of the LTMA, we provided advice to the Minister on the RNIP and recommended that the Minister approve the RNIP, pursuant to s22B of the LTMA and KiwiRail’s request for funding for rail activities pursuant to s22F of the LTMA.

• The RNIP on KiwiRail’s website(external link) 
• RNIP advice to the Minister of Transport [PDF, 947 KB]
• RNIP advice to the Minister of Transport – update 1 [PDF, 738 KB]
• RNIP advice to the Minister of Transport – update 2 [PDF, 746 KB]

Overview of the assessment methods

We applied our existing Investment Prioritisation Method to assess the RNIP. The IPM was used for the development of the 2021-24 NLTP, and we adapted it as appropriate for the RNIP.

Investment Prioritisation Method 

We engaged an external consultant with heavy rail network expertise to assist with the assessment. The scope of the external review was to cover:

• the costing methodology assigned to different rail activities
• the degree to which the proposed programme can be delivered
• whether KiwiRail’s proposed approach to prioritisation of activities is appropriate
• advice on how the proposed RNIP interacts with other rail investments and the degree to which the different investments may complement each other
• advice on any aspects of the RNIP that may need further examination by subject matter experts (for example, proposed improvements of signalling infrastructure).

We have assessed the RNIP using a combination of approaches:

• a continuous programme style assessment on the national renewal and maintenance programme (funded from the Rail Network activity class), and
• the business case approach for metro improvement projects (for activities to be funded from the Public Transport Infrastructure activity class).

For this first RNIP, we have focused on whether the processes and methodologies KiwiRail is using to build its asset management plan and operational decision making are robust. We also helped to ensure alignment of the RNIP with the Wellington and Auckland Regional Land Transport Plans, working with Auckland Transport, Auckland Council and Greater Wellington Regional Council on rail investment, alongside KiwiRail.

KiwiRail procurement procedures

The LTMA requires KiwiRail to approve one or more procurement procedures that will apply to the delivery of rail activities and to consult with Waka Kotahi before approving its procurement procedures.

KiwiRail provided us with its procurement procedures that cover outsourced expenditure required to deliver rail activities in the RNIP.

We reviewed the procurement procedures and concluded that they are consistent with the Government Procurement Rules (GPR) and the advice provided by the Ministry of Business, Innovation and Employment (as the government Procurement Functional Leader).

KiwiRail’s procurement procedures(external link)

Annual report on the Rail Network Investment Programme 

The Land Transport Management Act (LTMA) requires Waka Kotahi to monitor the delivery of approved activities in the Rail Network Investment Programme (RNIP), and the extent to which the RNIP is consistent with the Government Policy Statement on land transport. 

We are required to report annually on these findings to the Minister of Transport. 

Rail Network Investment Programme annual reports