Fears road user discounts could shift freight from trains to trucks


Transportation

Government refuses to extend rebates to road users to reflect cuts in petrol excise duty and road-use costs, sparking concerns

Shortly after the announcement in March that fuel excise duties and road charges would be subsidized, Kiwirail wrote to the Minister for Transport asking for a similar reduction on its track usage charges – although these charges have nothing to do with oil prices.

However, ministry officials told Michael Wood that a reduction in charges was unnecessary and inappropriate and advised against it.

“The track usage charge is paid by Kiwirail’s rail freight business and is passed on to its commercial customers through a surcharge and is in no way linked to fuel costs. KiwiRail pays the Track Charge to ensure that it fairly and transparently contributes to the wear and tear caused by its rail freight operation on the national rail network.

“The reduction in fuel excise duties and road user charges is focused on reducing the cost of living impacts for households, rather than subsidizing the road freight industry. “

Officials said a fee reduction would result in the loss of up to $1.4 million in National Ground Transportation Fund revenue.

A spokesman for Wood’s office said the reduction was agreed to, against official advice, because companies feared switching to using road freight during the reduction period.

“The intent of the road user charge reduction was to support New Zealanders and the transport industry through the global energy crisis caused by the war in Ukraine. The transport industry plays a vital role in supplying food and other essential goods across the country.

“To ensure that this assistance does not unintentionally favor one mode of transport over another, lane usage fees have also been reduced.”

The budget confirmed an extended road user fee reduction for July and August 2022, but despite earlier concerns about the mode change, the lane user fee reduction was not extended concurrently.

Kiwirail began paying the charges in November last year as part of a new national rail network planning and financing framework allowing it to access funding from the National Land Transport Fund.

Kiwirail will receive a maximum allocation of $1.3 billion for the period 2021-2024 from the Land Transportation Fund and track user fee payments are expected to yield nearly $45 million over the same period.

Kiwirail commercial general manager Alan Piper said reductions in track usage charges have been passed on to commercial customers.

“The 36% discount currently in place reduces the track usage charge rate paid by KiwiRail from $1.18 per 1,000 gross ton-kilometres to $0.75, plus a small administration fee… L he intention of the reduction was to support households with the cost of living, and we passed all of this reduction on to our customers.

One of Kiwirail’s biggest customers, Fonterra, said it had received a discount due to the reduction in track usage charges, but did not confirm whether this meant it would then offer a discount to its customers. own customers, citing commercial sensitivity.

The budget confirmed an extended road user charge reduction for July and August 2022 but, despite earlier concerns about the mode change, the lane charge was not updated in parallel.

KiwiRail does not pay a road user charge on the diesel used to power its locomotives or fleet of inter-island ships.