Auckland’s rail network renewal to cause disruption

A $330 million rail network rebuild set to begin in December will see much of the Auckland passenger rail network closed progressively until 2025.

The rebuild addresses significant historic underinvestment and will prepare the tracks for the City Rail Link. Work will be undertaken to replace the rock foundations underlying the network – which haven’t been renewed since the Auckland network build was begun in the 1870s.

The renewal work will update the network and prepare it to better serve Auckland’s growing population and enable more successful mode shift into the future.

However, the planned closures will affect tens of thousands of rail users in the interim. Many of whom have been affected by intermittent closures since 2020.

Rail replacement bus reliability during that period is expected to be made worse by ongoing bus driver shortages which, in combination with Covid and other winter illness absences have led to 10 per cent of the city’s bus services being delayed over the past few months.

As Auckland tries to reduce its emissions by 64 per cent by 2030 – largely through a reduction in light vehicle use – the reliability of the public transport system and the equity implications of inaccessibility if transport pricing is progressed should be of high importance to Auckland Transport. The successful delivery of rail replacement services for transport users will be critical to ensuring that Auckland Transport can deliver on its climate targets and keep the public on side as the CCO plays its part in the delivery of a suite of major transport projects in the coming years.

Fast-tracking New Zealand’s largest solar farm

UK-based renewable energy firm Harmony Energy has received consent under the COVID-19 Recovery (Fast-track Consenting) Act 2020 to build New Zealand’s largest solar farm.

The proposed 147MW solar facility is planned in the Waikato region, covering 182ha of a 260ha site at Te Aroha West, 140km south of Auckland. Upon completion, the solar facility, Tauhei Solar Farm, will generate enough clean energy to power 30,000 homes. Harmony also has an additional pipeline of more than 500MW in solar capacity planned in New Zealand.

In the UK, the company is developing a battery energy storage facility near Cottingham, East Yorkshire. Once completed, this will have the capacity to store up to 198MWh, making it the UK’s largest battery energy storage facility.

INZ welcomes this important progress towards New Zealand’s renewable energy goals and the opportunity it presents to bring valuable international expertise onshore which will hopefully also contribute to domestic thinking on the next challenge in our journey – battery energy storage. 

KiwiRail to remain a SOE

Following a review by the Treasury and Ministry of Transport looking at the sustainability of KiwiRail as a state-owned enterprise (SOE), the Government has decided that it will remain an SOE on a ‘pathway to profitability’ by 2024-2025.

The review found that changes to entity form might be disruptive to the work programme already underway and instead encouraged continued improvements to reporting transparency as well as integrated oversight arrangements.

The Future of Rail Review made significant changes to KiwiRail’s operating environment, with its planning and funding arrangements being re-worked – including through changes to below-rail funding, now provided through the National Land Transport Fund. Going forward, KiwiRail is expected to help the Government deliver on its vision for the rail system as outlined in the New Zealand Rail Plan and has received $8.6 billion in recent Budgets to do so.

KiwiRail plans to double its operating surplus by 2025 to become self-sufficient and has an expectation that there will be no new capital provided for above-rail businesses, including its freight, scenic and ferry operations.

Ministers have decided that New Zealand Railways Corporation, which owns the land that KiwiRail operates on, will also remain a state-owned enterprise.

New Zealand Energy Strategy underway

The Government recently released the terms of reference for its upcoming New Zealand Energy Strategy, due to be developed over the next two years and finalised in December 2024.

The development of an energy strategy is a key action contained in the Emissions Reduction Plan, released in May. The terms of reference set the scope, objectives and approach to the development of the Strategy.

The vision for the Strategy is for a net-zero carbon economy in 2050, where energy is accessible and affordable, secure and reliable, and supports New Zealanders’ wellbeing. To achieve that, its stated purpose is to address the strategic challenges in the energy sector, and signal pathways away from fossil fuels.

The Strategy will have the following high-level objectives:

  • Energy affordability and energy equity for consumers
  • An energy system that transitions at the pace and scale required to support a net-zero 2050
  • Energy supply that is secure and reliable, including as we adapt to the effects of climate change and in the face of global shocks
  • An energy system that supports economic development and productivity growth aligned with the transition.

The development of New Zealand’s energy strategy comes, of course, at a particularly unstable time internationally for energy supply, and in the face of the challenge of carbon emission mitigation as we journey towards our net-zero 2050 ambitions. INZ welcomes this announcement as a first step in setting a coherent direction for decarbonisation in the energy sector while remaining aware of the risk of leaving New Zealand’s energy supply vulnerable to market shocks and overseas conflict.

The terms of reference are available here. The Ministry for Business, Innovation and Employment will provide opportunities for public input into the development of the Strategy in the coming months.

National public transport ticketing solution welcome

New Zealanders will soon be able to use a single payment system on public transport services across Aotearoa after Waka Kotahi signed a contract with US company Cubic Transportation Systems on 21 October for the delivery of the National Ticketing System. The Government has also confirmed partnership agreements with Auckland Transport, Greater Wellington Regional Council, Environment Canterbury, and a regional consortium of ten smaller public transport authorities to deliver the system nationwide.

Users will be able to pay using contactless debit or credit cards, as well as digital payment methods like Apple Pay or Google Pay, while services will still have the option of using a pre-paid transit card. The rollout is expected to begin in Christchurch in 2024, before delivered nationwide by 2026.

This is an important step forward in providing joined-up and reliable public transport alternatives as we seek to dramatically reduce carbon emissions from transport by facilitating mode shift. Overseas, Cubic has seen a 10-15% increase in public transportation use once systems like this have been introduced.

The Government has been considering versions of a nationally-integrated payment system since the early 2000s, so it is encouraging to see a nationwide partnership come together to deliver on that ambition.

$280 million claim for Pūhoi to Warkworth

Waka Kotahi has received a $280 million claim relating to the progress and delays on Ara Tūhono – Pūhoi to Warkworth, additional to the 2020 settlement costs to Waka Kotahi related to the project.

The initial settlement consisted of a $85 million costs incurred as a result of the Covid-19 pandemic, and a further $83 million also paid to cover extra costs and delays to work at the northern end of the project which had been agreed before the pandemic began.

The most recent claim of approximately $280 million was detailed in the Government’s Financial Statements to 30 June 2022. The claim comprises current and estimated future elements and is being assessed ‘using internal and external resources’.

Waka Kotahi has indicated that it has not been presented with any evidence to indicate that a claim of that size will be supported by the independent reviewer.

Light Rail and harbour crossing preferred bidders

The next stage of the Auckland Light Rail and Waitematā Harbour Crossing projects are underway with Auckland Light Rail and Waka Kotahi selecting their preferred bidders in late September.

Five New Zealand and international companies are included in the alliance. These are WSP, Beca, SYSTRA and Cox Architecture for the Waitematā Harbour Connections. Two companies, Arup and Aurecon, will form the alliance to progress Auckland Light Rail.

It is encouraging to see these major projects procured together in what will hopefully see improvement to our tendering processes as we better integrate planning across major projects.

These are going to be two of the largest infrastructure projects in the history of New Zealand, with the potential to provide a pipeline of work for the next 10 – 20 years. Projects of this scale and duration allow the sector to respond, upskill and deliver accordingly.

Skilled migrant category to reopen

The skilled migrant category will reopen on 9 November under current settings while the Government consults on a simplified and uncapped points system. The parent visa category will also be reopened with the number of visas available set to more than double from 1,000 to 2,500, and income thresholds expected to reduce.

The first selection under the skilled migrant category will take place in November for those migrants with 160 points, before they are subjected to a higher bar for entry – 180 points – ahead of introduction of the new system.

The Government has framed the announcement as a response to the skill shortages afflicting industry across the country. While improvement is welcomed by businesses across the infrastructure sector and the wider economy, we encourage the Government to acknowledge the need to bring in migrants for lower-skilled roles as well.

How Immigration New Zealand will be able to process the incoming applications on top of its already well-publicised applicant backlog is, of course, yet to be seen.

Next tranche of Infrastructure Acceleration Fund investment 

The Government is investing $192 million into a range of projects in eight centres across the country. The money comes from its contestable $1 billion Infrastructure Acceleration Fund (IAF) – part of the Government’s Housing Acceleration Fund announced last year.

The IAF funding is allocated to infrastructure projects that are expected to enable housing development in areas facing delays as a result of infrastructure underinvestment. This round of investment is expected to enable more than 11,000 new homes over the next 15 years.

Projects allocated funds under this round of investment include Lower Hutt’s RiverLink project which will receive $98.9 million for major stormwater upgrades, $36 million for Three Waters and transport infrastructure in central Nelson, $24 million to Lake Hāwea for Three Waters projects, including a new reticulated wastewater treatment connection, and $18.5 million to improve road access and the wastewater network in Hastings.

As with any investment in the sector at the moment, delivery capacity constraints will be the next challenge to overcome but enabling investment like this is an encouraging step towards building the homes that New Zealanders deserve.