PPP possibility for Auckland electric trains

Transport Minister Steven Joyce is looking at whether a public private partnership (PPP) could be used to fund the purchase of the new rolling stock required for the electrification of Auckland’s rail network.

Mr Joyce has just returned from a visit to Australia where the PPP model has been used on a number of occasions to fund passenger rail stock, including a current agreement to secure 78 new commuter rail cars worth A$2 billion for Sydney.

“The use of public private partnerships can be a sensible way to procure this kind of expensive, long-life asset,” he says.

“I have asked Ministry of Transport officials to look into how this might work in the New Zealand context and expect their initial report in a few weeks.

“I do not want this investigation to delay the electrification project.

Mr Joyce says, after double tracking, electrification is the important next stage in the development of Auckland’s rail network.

“There are a number of options for funding the purchase of electric trains, including:

The Crown increases investment in KiwiRail, enabling it to purchase the trains.

KiwiRail borrows the money and the Crown provides an additional direct passenger subsidy until patronage increases.

Some form of PPP, most likely on an ‘availability’ basis.

“The government is committed to electrification. We must ensure it goes ahead in a way that both meets the needs of Aucklanders and ensures the most efficient use of government funds.

“Public private partnerships are one way to provide value for money for taxpayers by reducing the upfront cost to the public purse and shifting a reasonable element of financial risk away from the public sector,” says Mr Joyce.