Highways Of Steel - NZ Rails Critical Future Challenges

On September 1st, 2023, the review into KiwiRail’s Handling of Recent Disruptions to Passenger Services was released by the Ministry of Transport (MoT).

See the insightful report here as authored by Rick van Barneveld and Greg Pollock: Final Rapid Review KR 26 June 2023 (heriot-edievale.com)

It really is a very interesting report and touches on many of the bigger existential challenges that rail in New Zealand faces that I have been touching on over the last 12 years since I left the direct employment of the New Zealand Rail industry to spread my wings into aviation for nearly 2 years before going overseas to further my overseas rail career for many years.

For me there are no major surprises in the report and in many ways it is as expected. I will not labour the point on the EM80 track evaluation car issue that impacted Wellington Metro services back in May 2023 - for me that is a sideshow that is simply one symptom of many challenges that the rail industry face in New Zealand.

First up a key message through the report is that the rail industry people in New Zealand are passionate and care very much about their industry and generally without major exception know their jobs very well.

However, it is noted quite early on that there is a strong element of people in the industry (not just in KiwiRail) existing and working in silos. You might argue this is inevitable with each area of the industry doing its best to serve its direct stakeholders - Auckland One Rail focused on its Auckland metro passenger, Transdev Wellington focused the same way on its Wellington metro operation - as they both should. KiwiRail is focused on its core business of being Network provider and Commercial freight operator. Greater Wellington Regional Council and Auckland Transport, as rail clients, are focused on their own needs as they see them.

The review found a $20-30m annual shortfall in funding needed to maintain KiwiRail’s assets in both Auckland and Wellington and that KiwiRail needs to increase its focus on commuter rail alongside freight. It proposed a new agreement in which metro services were given priority across more of the day.

New, more joined up governance arrangements were called for involving KiwiRail, AT, and its Wellington counterpart, the regional council. The safety regulator, Waka Kotahi, was noted as needing to be more proactive noting that the Director of Land Transport at Waka Kotahi needs to more rigorously address safety performance risks that are increasingly arising from the growth of metro services. This last part might give some insight as to why, whilst the report was being considered, Waka Kotahi's rail regulator arm did what it did after the Te Huia Signal Passed At Danger (SPAD) in June. Some now see this as a knee jerk over reaction based more on a need of being seen to do something, when this report criticizes them of not doing enough in the past in regard to regulatory intervention.

Also, it is noted that many areas of staffing and resourcing in Metro Rail maintenance etc at KiwiRail, once the CRL is delivered, will effectively need to double in size. As such the review noted, KiwiRail was buying more, and more expensive, track maintenance equipment but that it would still be insufficient. Asset management practices are improving, but they heard from stakeholders it is not fast enough. The report for example also stated “Our assessment is that the cost of having metros out of action, poorly maintained or with excessive line speed restrictions, is likely to far outweigh the cost of not having to wait for plant to become available.”

It also calls for KiwiRail to improve its management of vital equipment, its communication with public transport authorities, and its focus on metropolitan rail and passengers as opposed to freight.

One thing is very clear is that KiwiRail need to better communicate with the Metropolitan Rail stakeholders such as Greater Wellington Regional Council and Auckland Transport as well as their respective Metro rail operators. For their part KiwiRail acknowledge this and are getting on with doing that.

However there seems little understanding of the trade-offs between all the users and beneficiaries of the rail system. Sure, some individuals in the industry may know this but institutionally there are major blind spots balancing all the competing priorities across the rail network. For example, criticism is levied at the priority matrix on the "Common Access terms" (CAT's) for users that access the network in Metro areas. These CAT's provide relative prioritization of the services in respect of each of the Auckland Network and Wellington Networks. However, comments alluding to compare Auckland to say Sydney, show little understanding of the national New Zealand Rail system compared to that of the major Australian Metros. I know something about that as I have worked in the industry in both nations. Just because Sydney says Freight must wait for passenger doesn't mean that is the simple answer to fix New Zealand's Metro passenger woes. New South Wales rail freight task is entirely different from that which rail faces in Auckland - you cannot easily compare the two - it is not that simple. There are whole rail freight markets that the industry has given away in the States of NSW or Victoria, Australia, that KiwiRail still perform relatively well in. Do we want to reduce congestion and carbon emissions, whilst increasing rails economic effectiveness? Well, it's not just Metro passenger rail journeys that do that - freight by rail does it too and they help to make our Ports, exporters of primary product like Fonterra and Freight Distribution sectors equitable and internationally competitive. By many accounts rail freight in New Zealand has done relatively well compared to Australia in this space.

As I said, it appears that tradeoffs between Freight and Passenger Rail in New Zealand's mixed heavy use networks are not as well understood as they need to be and looking across the Tasman is not necessarily the best way to do it. Saying Freight must wait for Passenger in all cases could easily kill the remaining vestiges of commercial rail freight in many markets we have in New Zealand. Sydney to Melbourne priority freight by rail is virtually dead because Just in Time ("JiT") freight between these cities (Both intra and interstate) has been killed off partly by rail freight being not able to access congested Metro networks in Sydney and Melbourne in a timely fashion. It is a different story there for longer distance freight in Australia (Say Brisbane to Melbourne on ARTC tracks) and projects like Inland Rail are being progressed to address that - but this is entirely different to the New Zealand situation.

As the report notes benchmarking is very important but great care needs to be made in doing this of course to compare like with like. It notes: "Whether for metro, freight, or maintenance, access to the network has significant value in a constrained environment. We believe the levers used to incentivize efficient and effective access to the network need reviewing. We have not determined an appropriate outcome but are strongly of the view that there needs to be greater use of benchmarking."

When I was a KiwiRail in the development of what was then termed the "Turnaround Plan" - the NIMT priority freight was seen as critical to NZ rail freight's competitiveness to road and therefore its revival. If rail was to gain market share in a way suitable for shippers / freight forwarders like Mainfreight and Toll, then it had to offer overnight time competitive freight services which means - guess what - that the Freight entries and exits to the Metropolitan rail networks at Auckland had to be around shoulder peaks and that to prioritize them down would see KiwiRail kissing goodbye to much of that freight market. Also shippers don't wait - if we are to ban freight trains from the Auckland network in busy times should we also ban freight trucks from accessing the Auckland Motorways at these times? See how well a truck ban north of Bombay for all trucks entering Auckland between say 6:30am and 9am would go down. Why would anyone suggest such a thing? Yet here we are - perhaps arguing exactly that for rail!

Make no mistake - Mixed passenger and freight use rail networks in Metro areas are a real challenge. I believe in many ways that is why Auckland Transport planning has increasingly moved away from a reliance on Heavy Rail options towards Light or Metro Light Rail on an entirely separate system to get rid of this conflict headache. It certainly is behind the move to reactivate the vision for the Auckland Southdown - Avondale heavy rail corridor proposal a cost of $6 Billion plus to get all freight out of the central Auckland rail isthmus.

Do we really want passenger and freight rail to co-exist? Well, the Auckland Rail Program Business Case currently under development will address this issue - at least in part. The reality is that it is rather shameful that the Fourth Main in Auckland is not being built at the same time as the current Third Main. Four mains through the isthmus are now being promoted by KiwiRail in their future planning and both political parties Labour and National now seem to broadly support it - a bit late though. In fact the then National Patty campaigned on it in their 2020 election manifesto to do so. Clearly many Billions of dollars of investment are required in Auckland's rail system - including things like Level Crossing eliminations on top of third and fourth mains. Auckland needs to realize its rail network is not just for its own Metro Trains, just like its Motorway systems is not just for its own private cars and buses and until four mains in Auckland are delivered it will have to share the pain of access with freight over simply increasing metro capacity otherwise you may as well kiss good bye to large chunks of KiwiRail freight flows in and out of Auckland and even Wellington for that matter. Of note is that the problem of course is much less pronounced in Wellington in that context. Further inter-regional passenger rail needs the capacity also and to promote it otherwise ahead of this is very challenged.

People are asking a lot of KiwiRail, and I do feel somewhat sorry for them, but they need to front foot this - now! They need to be up there saying if you want a us to be a commercial freight railway and deliver metro passenger rail in the way that Auckland and Wellington want for the future then we need extra network capacity and that means further investment. Otherwise CRL doesn't solve as much as people want - in fact it could make it worse for a while, until capacity is added elsewhere, as it will bring more Metro users to conflict with existing Freight and Regional Passenger Rail elsewhere on the Auckland network! It is true that Wellington have released their network development plan and Auckland are developing the Auckland Rail Program Business Case, but these plans are likely to have a Metro Passenger Rail bias.

Train pathing is important and KiwiRail are not shy about allowing for freight and inter-regional passenger rail in their pathing alongside Metro. As noted, to suggest that rail freight should be totally deprioritized, like it is in some capital cities of Australia, will see the same outcomes as those states have had. Compared to Australia we have much better freight on rail and performance than them over shorter distances. Freight - other than long interstate freight - which NZ doesn't have due to our much smaller size - is almost non-existent. KiwiRail do well here on this benchmark by most international standards and this should be celebrated - but instead they get castigated for it. Put simply - they can't seem to win by any metric.

In relation to the report, I agree whole heartedly on its recommendations re greater Governance. Yes KiwiRail, Waka Kotahi and MoT need to sharpen up their respective acts on balancing these competing priorities for rail, but neither should anyone be bullied into submission by some areas saying that certain key parts of the network are ours and not for the nations use at large.

Further rail governance should not be buried way down in the Waka Kotahi organization and should be represented at the top table with Tier Two management representations - like a Chief Rail Planner or a Rail Tsar. Likewise, the MoT need to step up and not obfuscate by saying they are just policy setters. KiwiRail on the other hand need to sharpen up significantly on their understanding of key Metro operations and client understanding. None of this should necessarily mean the deprioritizing of rail freight - it means a balanced conversation where all parties have their say so trade-offs can be examined, and everyone can understand all perspectives. Again, shutting out freight from Metro networks is not an option otherwise you will see the poor outcomes for rail freight that the likes of Victoria and New South Wales see where JiT freight interstate has largely been lost from rail to road - between the main eastern board cities it is all but 100% on road. I am sure that Mainfreight and Toll who have invested rather a lot in recent years in trying to get greater share of their distribution freight onto rail off road would have a thing or two to say about that outcome, and rightly so. The Ports, Fonterra and the Shipping Lines too would be rather displeased with that outcome.

It seems from the outside that both Auckland and Wellington transport agencies lack an understanding of the competing priorities from freight and to a lessor, extent inter- regional passenger rail in Auckland mainly. On the other hand, KiwiRail don't seem to fully appreciate the challenges that its key clients are under to meet their targets for improved Metro Rail performance to meet their aspirations and objectives. This is where both the Ministry of Transport and Waka Kotahi need to step up and take some charge of the situation to ensure that Rail works for all the stakeholders of New Zealand. That is their job. It seems that this has not been a priority for any of the Government agencies, although to their credit I note it has improved somewhat over the past few years - just nowhere far and fast enough!

There is no Adam Smith "Invisible Hand" to make the rail system work in New Zealand - it really does require people that understand the whole system for all aspects (Metro Passenger, Regional/Long Distance Passenger, Priority Freight, General Freight and other users such as charters) - not just their own big little bits that they know or care about. Nor can people rely on osmosis to communicate things and get the right result for all stakeholders of their organizations and industry - it needs to be more proactive.

As Trevor Hayward, former General Manager of New Zealand Railways, said in 1979 - It is "Time for Change!"

Recommendations of the report as follows:

KiwiRail and Metropolitan Rail

A1 That KiwiRail’s Chief Executive considers establishing a second-tier role focused exclusively on improving and growing Metropolitan Rail.

A2 That KiwiRail implements regular internal communication that regularly feeds back to all teams the importance of metro services.

A3 That Waka Kotahi work with KiwiRail, Auckland Transport and Greater Wellington to agree a scope of work to deliver an independent benchmark of metro maintenance activity in terms of cost, efficiency and modern work methods.

A4 That shareholding Ministers ensure that KiwiRail undertake, with rail participants, a first principles review of Common Access Terms to prioritise growing metro passenger rail services while also meeting objectives for freight mode shift to rail.

A5 That KiwiRail, AT and GW agree and appoint a facilitator to support the parties in negotiating new access agreements consistent with the revised CAT (from Rec A4) that introduce a sustainable commercial regime that incentivises performance of all parties to meet agreed shared objectives aligned with Government priorities, and including a contemporary abatement regime that recognises the value of access for all purposes.

A6 That KiwiRail implement a targeted capability management plan recognising the significance and critical risks associated with KiwiRail metro capability

A7 That KiwiRail deploy best practice change management to deliver metro transformation program and ensure this is for Auckland and wellington

A8 That KiwiRail, AT and GW put in place improved communication principles and practices with AT and GW

A9 That KiwiRail, bring in a partner with maintenance experience to coach and support KiwiRail to speed up their rate of progress towards asset management maturity and modern maintenance methods and performance.

A10 That Waka Kotahi strengthens its independent verifier role in relation to funding of all KiwiRail's below rail metro services functions, with reference to benchmarking outcomes as required.

Broader Arrangements and Practices

B1 That Ministry of Transport review the funding settings under the Metro Rail Operating Model given ongoing unaffordability for GW and AT in maintaining and renewing the metropolitan rail networks.

B2 That KiwiRail report metro and non-metro below- rail performance separately in their Statement Corporate Intent and Corporate Reporting.

B3 That Ministry of Transport, with Waka Kotahi, AT and GW, administer their respective funding through the RNIP to provide a single coherent view of metro infrastructure funding aligned with agreed outcomes. Page 55 Rapid Review: KiwiRail Metro Performance

B4 That Ministry of Transport urgently investigate whether: § the Auckland network upgrade works currently being delivered will ensure rail renewals backlog are addressed, to eliminate the risk of ongoing major disruption from Day 1 of commissioning of CRL; and § the Wellington network upgrade works currently being delivered will enable the implementation of the RS1 timetable

B5 That Waka Kotahi with Ministry of Transport as soon as practicable implement a pragmatic solution for addressing the current circa $20-30m annual renewals and maintenance funding shortfalls in Auckland and Wellington through appropriate reprioritisation of transport funding.

B6 That Waka Kotahi’s Chief Executive consider establishing a second-tier role that is focused on metropolitan operations as a core focus.

B7 That KiwiRail prioritise additional resources to speed up the Auckland Metro Transformation Programme and expand it to include Wellington.

B8 That Waka Kotahi, Greater Wellington, Auckland Transport, KiwiRail, Auckland One Rail and Transdev formally reconstitute the Joint Governance Groups as ‘alliance-like’ entities to eliminate the consequences of ongoing misalignment.

Priorities for Maintenance

C1 That KiwiRail accelerate development of its asset management capability to ensure the Auckland network will function as expected after CRL opens, and in Wellington to support the increased frequency of services expected by the RS1 timetable.

Track inspection methodology

D1 That KiwiRail should accelerate closure of its second line of defence gap with ATIS technology to include cover for both Auckland and Wellington Metro, which would have first call on the equipment.

D2 That KiwiRail executive should confirm that codes and standards specific to metro across all asset classes are required, and then expedite their completion.

D3 That KiwiRail executive should satisfy itself that it has actioned and implemented the recommendations of the Rolling Contact Fatigue (AMR Report, February 2022) review and if not elevate this as a critical governance risk.

D4 That Waka Kotahi as the safety regulator satisfy itself that KiwiRail has a program to implement its actions arising from the Rolling Contact Fatigue (AMR Report, February 2022) review.

Managing the EM80 Line wide TSR

E1 That Auckland Transport and Greater Wellington share customer data relating to patronage, complaints and compliments with KiwiRail on a regular basis, so that deeper metro-customer insight can inform KiwiRails change programs and day to day operations.

E2 That KiwiRail develop a comprehensive Plan B for a future EM80 failure that might occur before ATIS is available. This should take a customer-centric focus and seek to ensure safe operation of the metros at full line speed. EM80 Maintenance Scheduling Page 56 Rapid Review:

KiwiRail Metro Performance

F1 That KiwiRail complete by end July 2023, and share with Greater Wellington, a follow up audit to ensure that the planned remedial actions have been systematically implemented and are working as intended.

Critical points of Failure

G1 That KiwiRail include in its workforce planning the need to ensure critical human resources, such as signalling expertise, is expedited to realise the benefit of investments made.

G2 That KiwiRail should complete with urgency a specific review to consider critical points of failure that would create significant unplanned metro service disruptions.

G3 That the Minister of Transport establish an appropriate implementation accountability regime for those recommendations of this review that are adopted.

Plant and Equipment Redundancy

H1 That KiwiRail prepare an agreed list of equipment (taking account of benchmarking (A3) be identified, funded, and stationed within the metro for priority use.