Investment into the Ashburton Rail Hub
The Government intends to invest $2 million into the Ashburton Rail Hub to unlock a $14 million upgrade to freight operations in the area. This partnership with local freight company Wareing Group, KiwiRail and Ashburton District Council is expected to triple rail freight capacity, helping to get more trucks off the road, reducing emissions, and supporting the regional economy.
The investment is part of the re-allocation of NZ Upgrade Programme (NZUP) funding, which has seen a number of difficult and mostly unpopular, decisions by the Government to take account of the need to decarbonise transport, to manage escalating costs, and to respond to clear public views.
The Government says NZUP is moving ahead strongly with five projects completed, nine projects in construction, 18 in design and consenting, and over 900 people employed around the country.
Trouble in our Three Waters
Whether you are glass half empty or glass half full, there’s trouble in our Three Waters. The numbers are huge, the opposition loud and the narrative increasingly murky. But it’s clear our drinking, waste and stormwater is failing New Zealanders and our environment. In this paywalled article for the New Zealand Herald, INZ General Manager Claire Edmondson makes the case for change.
Official cash and inflation rates aim for the sky
Last month’s InfraRead made the call that the OCR was set to rise by 25 basis points. The Reserve Bank of New Zealand did exactly that on 6 October, raising the OCR for the first time in seven years, to 0.5%.
New Zealand has also recorded its highest inflation rate since mid-2011, rising to 4.9% in the September quarter, compared to the same period last year. (The quarterly inflation rate was 2.2%.)
The inflation rate is expected to rise further and with annual inflation rate well outside the Reserve Bank’s inflation target band of 1-3 percent, larger hikes to the OCR are now to be expected. Rising interest rates will be welcome news to some investors but will be a major cause for concern for many others, from businesses having to deal with increased cost of doing businesses to the housing sector having to adjust to higher mortgage rates.
New InterIslander ferries on order
KiwiRail has also ordered to two new, large, rail-capable ships from South Korea to replace its existing three ship fleet.
The two new ferries will be nearly 40 metres longer and at least five metres wider than the current vessels, to meet the expected freight and passenger growth over the next 30 years. They will be able to carry twice as many passengers as the current three ship fleet, 300 percent more rail wagons and almost double the number of trucks and other vehicles.
The new ships will be much more fuel efficient and produce significantly lower emissions. They will also be able to run on battery power at times with the ability to adopt to new fuel sources in future.
Infrastructure New Zealand attended a briefing on the new Interislander ferries and the proposed Wellington Ferry Terminal Upgrade earlier this month.
Proposed upgrades to the ferry terminal will include reconfiguration of terminal facilities, walking and cycling improvements, and some land reclamation. KiwiRail is seeking a fast-tracked resource consenting process which, if successful, could mean construction starting as early as mid-next year.
The first ship is due in New Zealand in September 2025. The delivery timeline is as follows:
Auckland Light Rail update
Minister of Transport Hon Michael Wood has briefed Infrastructure New Zealand on the next steps for the Auckland light rail project. Because the details are currently under embargo, we are unable to provide details just yet. The embargo will be lifted tomorrow (Friday, 28 October) and we will provide an update to members then.
New locomotives for KiwiRail’s South Island operations
KiwiRail has contracted Stadler Rail Valencia to build 57 latest-generation, low-emissions locomotives. As well as being fuel-efficient, the new locomotives will be more powerful, meaning less need to use multiple locomotives to pull heavy trains.
The average age of the current fleet of 65 locomotives is 47 years, with some being close to 60. On average they are 17 years beyond their economic life.
The contract marks a shift from the 1970s technology KiwiRail has been using in its South Island fleet.
The locomotives will be made in Spain and will enter service in New Zealand between early 2024 and 2026. The contract price for the new fleet is NZ$403 million.
First Home Partner initiative
Kāinga Ora – Homes and Communities has launched a new shared-ownership product, First Home Partner, through which Kāinga Ora will take an equity share in a property to assist first home buyers who can service a mortgage but need help raising their deposit. This model has been used in the UK for years.
Bank of New Zealand (BNZ) and Westpac are the two founding partner banks for the scheme.
The scheme sees Kāinga Ora take an equity share in ownership of a new home with the new household, which the household then buys out over time. Kāinga Ora will typically contribute equity up to the value of 15% of the purchase price, up to a maximum of 25% or $200,000, while bank finance will provide the rest of the financing of the purchase price.
The initiative is part of the Government’s Progressive Home Ownership Fund and lends directly to households who do not require the kind of intensive support to manage their finances as offered through the Provider pathway.
Government update on MIQ
The Government announced today that from 14 November international returnee managed isolation stays would decrease from 14 to seven days, with isolation at home for a further three days before a final Covid-19 test.
Low risk, fully vaccinated travellers from several Pacific Island nations would be able to bypass MIQ altogether from 8 November.
Covid-19 Response Minister Chris Hipkins said the Government would also allow fully vaccinated travellers to isolate at home sometime during the first quarter of 2022, with the length of isolation to be informed by what was known about Covid-19 at that time.
Infrastructure New Zealand welcomes any development that allows more people to return through the border.
Transpower takes responsibility for a rare blackout and vows to do better
Over 34,000 customers were affected by electricity cuts on 9 August, when New Zealand saw its highest electricity demand ever due to cold temperatures across the country.
The Electricity Authority launched a review soon after which was covered in InfraRead’s August and September editions. Transpower contributed to the phase one review and has since accepted all the recommendations. Work is already underway on implementation. It is also contributing to the review being led by the Ministry of Business, Innovation and Employment.
Transpower also commissioned its own review into the power blackout and released the independent report earlier this month. The review put blame at a shortage of generation due to the combined effect of planned generation outages, the lack of market pricing signals to incentivise the offer of available slow-start thermal generation and the unexpected loss of hydro and wind generation at peak demand. Transpower’s operational procedures, communication and error in demand allocation exacerbated the issue. The report, including one on a review into communications with stakeholders surrounding the blackout, can be accessed here.
The company has apologised for the inconvenience caused to electricity consumers and has committed to learning from it. Chief executive Alison Andrew said the country had not experienced an event like this since 1992 and said it was Transpower’s intention to avoid a repeat.
Major contract awarded to power NZ Battery investigation
The Government has awarded a major contract to a consortium of specialist firms to advance the New Zealand Battery Project’s feasibility investigation into a pumped hydro storage scheme at Lake Onslow as part of New Zealand’s dry year electricity problem.
The consortium, Te Rōpū Matatau, will be led by engineering consultancy Mott MacDonald New Zealand, with engineering consultancy firm GHD, and environmental planning and design consultancy Boffa Miskell.
The investigation’s first part will look at the design and environmental effects as well as determining the geotechnical fieldwork programme. The second part will refine the design, informed by fieldwork investigations of key geotechnical aspects. The environmental planning work will look at consenting options and what further work may be needed to assess the environmental effects.
The fieldwork investigations are likely to include drilling shallow and deep boreholes to better understand the underlying geology, the best route for a tunnel and the best location for a potential underground powerhouse.