25 September 2006

Overlander statement

Acting Finance Minister Trevor Mallard said today that ONTRACK would retain the North Island main trunk network in its existing condition to enable prospective tourism operators to commence a tourist rail service, but Cabinet had decided against further financial support for the Overlander service.

"In making this decision today not to extend further financial support for TOLLs Overlander passenger service beyond 30 September 2006, Cabinet recognised that there was no prospect of the current Overlander service becoming commercially viable. It was not a fuel-efficient operation and at an average passenger rate of 50 passengers each way per day, it was used by relatively few people.

"The fares already overlap with airfares, and the reality is that the service is just not well-used. It can not compete with low-priced air travel and coaches," Trevor Mallard said.

"While there have been a number of propositions about retaining the Overlander service, all of the propositions would require government funding in one form or another.

"With respect to subsidising rail services, I should highlight that the government would do so only in those areas where there would be a significant benefit to the broader community.

"Were the government to subsidise the Overlander service as has been suggested, it would require $1.75 million per annum to maintain. In considering potential rail subsidies, ministers were aware that there are a large number of other infrastructure areas where extra government funding could provide benefit.

"Cabinet considered the regional implications of ceasing the Overlander service and accepted that the current bus services run by the InterCity Group met the needs of those communities.

"Finally, the government does recognise and value the importance of a viable and efficient rail network in New Zealand’s transport infrastructure. This was a critical factor in the government’s decision to buy the rail network back from Tranz Rail. The government has also committed $200 million to upgrade the national rail network between 2004/05 and 2007/08. A further $600 million has been provided to upgrade the Auckland rail network between 2005/06 and 2009/10. "

ENDS

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