$250,000 spent on study to find out West Coast railway is 'uneconomic'
Tuesday, 12 May 2020
Plans to establish a scenic West Coast rail trip have been scrapped as uneconomical, even before the coronavirus pandemic decimated the tourism industry.
The Government spent $250,000 and 18 months investigating the feasibility of a passenger rail service between Hokitika and Westport. It found it would cost $92 million and patrons would have to be charged a prohibitive $400 return to make the railway work. The price was deemed unrealistic because the average cost of a TranzAlpine or Coastal Pacific train ride is $240 return.
The project was aimed at boosting the West Coast's economy, Regional Economic Development Minister Shane Jones said when announcing the investment from the Provincial Growth Fund (PGF) in July 2018.
**READ MORE:
* New West Coast rail trip, port upgrades, to be investigated
* $6.2m in PGF funding sees rail line reopened to log trains
* Prime Minister splashes $140m cash on West Coast**
The existing TranzAlpine scenic trip, which travels between Christchurch and Greymouth, is worth $25m in tourism spending annually to the West Coast economy.
KiwiRail group chief executive Greg Miller said the state-owned company had decided not to seek any further PGF funding for tourist rail services between Hokitika and Westport.
'The feasibility study … found that while there is some demand for tourism rail services on the West Coast, the service would struggle to be viable.'
'Significant investment' would be needed to upgrade the rail line and other infrastructure — such work would cost about $45m just between Hokitika and Greymouth alone.
The proposal had been to run a daily two-way passenger service on the route, which already has a freight service, and add a new station at Hokitika and a maintenance facility in Greymouth.
The company was working to determine when and how its tourism services would resume, Miller said.
Jones said KiwiRail's tourism infrastructure projects would be put into 'hibernation', but the company would keep the $40m already promised to it.
'We have asked [Miller] to put forward projects that will improve the rail resiliency on the Coast and that can be done with velocity and pace.'
He acknowledged spending $250,000 on a feasibility study for an uneconomical project would raise eyebrows but the Government needed to get data before it could decide whether to invest further.
'We needed to know if it could wipe its own backside from a fiscal point of view.'
Similarly, rail enthusiasts wanted a passenger rail link between Gisborne and Napier, but KiwiRail could not do it because it was not financially viable.
He had asked the three West Coast mayors for 'shovel-ready' ideas that would create jobs in the short-term.
The Coast was promised a 'surge' in funding by Jones and had already received $140m from the PGF.
He pledged $4m for Westport and Greymouth's ports and $1m for two cycleways – the West Coast Wilderness Trail and the Old Ghost Rd. About $26m was provided to redevelop Dolomite Point and build a new visitor centre at Punakaiki, and $5.6m was awarded to upgrade the road and walking tracks at Karamea's Oparara Arches. Those projects would still be going ahead, Jones said.
The Greymouth i-Site, which operates from the Greymouth train station, would reopen for the domestic market under Alert Level 2.
Owner Philip Barnett said he was pleased the Government had put money into exploring the idea of a new link between Westport and Hokitika, but he accepted it was not feasible.
'The reality is we are fighting just to keep the TranzAlpine — that's how fast things have moved on [since Covid-19].
'I haven't been told what is going to happen but I can understand how KiwiRail would look at an Excel spreadsheet and make a decision to shut it down. The impact of that on small and medium business on the West Coast would be massive.'
Development West Coast chief executive Heath Milne said he had been very concerned that Covid-19 would have put the large PGF tourism projects on hold. However, he had been reassured that the Dolomite Point and Oparara Arches upgrades would go ahead.
He said it would be ideal to start the projects now to keep people employed and because it would be easier to complete them without international visitors there.
A controversial $350,000 PGF grant for a waste-to-energy plant in the Buller District has already been put on hold, while some West Coast companies withdrew their applications after they were offered PGF loans, including Westland Milk Products ($9.9m), Williams Hotel Group ($3.3m to build hot pools in Punakaiki), and Barton Mines ($10m for a garnet mine near Hokitika).
Tasman Mining still needs to raise about $35m before it can access a $15m loan for a gold mine near Reefton.