Strong case for KiwiRail to build rolling stock for Auckland urban rail development

Media release on behalf of The Rail and Maritime Transport Union (RMTU), the Dunedin City Council and the New Zealand Council of Trade Unions  - Monday 3 May 2010

If KiwiRail builds the electric units and locomotives required for Auckland's urban rail development in its workshops, New Zealand would benefit nationally from additional jobs, economic output, tax take, and improved trade balance according to a study by economic consultancy BERL released today.

BERL’s analysis shows that the benefits compared to production overseas include:

• Between 770 and 1,270 additional full-time equivalent jobs over the construction period (depending on its length).
• $232 million to $250 million added to GDP.
• An increase in Crown revenue by a net $65 million to $70 million.
• A benefit to the trade balance of $114 million to $122 million.

BERL concludes that overseas manufacturers would need to produce the rolling stock at 62 percent less than the price of manufacture in New Zealand to offset the benefits to New Zealand GDP of producing the trains here. There are also likely to be further economic benefits including developing and maintaining skills in New Zealand; the opportunity to capture part of a NZ$15 billion international rolling stock industry; opportunities for innovation and technology spillovers to other industries; ongoing maintenance contracts with associated jobs and contribution to GDP; and reduced exchange rate risk or risk-minimisation costs.

The Rail and Maritime Transport Union (RMTU), the Dunedin City Council and the New Zealand Council of Trade Unions are calling on the government to ensure that KiwiRail puts in a bid and for it as 100% shareholder to provide capital investment if needed.

The ‘business case’ for the local production of the rolling stock was commissioned by the RMTU and the Dunedin City Council.

“NZ rail workers are skilled, experienced, and want to do this work. Now we know the economic case backs us up,” RMTU General Secretary Wayne Butson said. “From both a job creation point of view, and in wider benefits to the New Zealand economy, there is a strong case to build these trains at the Lower Hutt and Dunedin rail workshops. We will be using this study to launch a ‘NZ work for NZ workers’ campaign at noon on Monday.”

Dunedin City Council and the Dunedin Chamber of Commerce have welcomed the report. “This BERL report confirms what we have long believed in Dunedin - that in many specialist areas the city has the expertise and resources to compete with anybody, anywhere,” said Dunedin City Councillor and Chair of the Dunedin City Council Economic Development Unit John Bezett. “This is clearly demonstrated with the Hillside operation which is renowned for its innovation, commercial competitiveness and quality workmanship. It is imperative that New Zealand retains the long term viability of such a business.”

The Auckland development requires 38 Electric Multiple Units (EMUs) and 13 electric locomotives to improve urban passenger transport in the region. KiwiRail is in the process of asking for bids for their supply. KiwiRail's Hillside workshop in Dunedin and its Woburn workshop in the Hutt have experience in building and maintaining similar units.

New Zealand Council of Trade Unions Secretary Peter Conway said an advance copy of the report had been sent to the Prime Minister John Key, Economic Development Gerry Brownlee and Minister of Finance Bill English last week asking them, in the light of the significant economy-wide benefits, to ensure that KiwiRail makes a bid for the production of the EMUs and locomotives. They have also been asked to consider capital investment if required.

“We acknowledge the support the government is already giving to KiwiRail,” said Peter Conway, “but have pointed out the significant benefits to Crown revenue if KiwiRail proceeds with this project.”

Welcoming the report, Dunedin Chamber of Commerce CEO John Christie said, “This is all about jobs for New Zealand and Dunedin, and anything we can do to increase the skills of our workforce has got to be good for the long term future of our country.”

ENDS

BERL Report - Economic benefits of building rolling stock in New_Zealand (409 kb)

For further information contact:

BERL:
Kel Sanderson, Director
Phone: (04) 931 9212
Mobile: 021 503 753

Rail and Maritime Transport Union (RMTU):
Wayne Butson, General Secretary
Phone: (04) 473 6693
Mobile: 027 496 2461

Dunedin City Council:
John Bezett, Dunedin City Councillor and Chair of the Dunedin City Council Economic Development Unit
Phone: (03) 477 9046

New Zealand Council of Trade Unions Te Kauae Kaimahi:
Peter Conway, Secretary
Phone: (04) 802 3816
Mobile: 027 493 9748

Dunedin Chamber of Commerce:
John Christie (CEO)
Mobile: 027 491 5916

Fraser Pettigrew, Communications and Campaigns Advisor
04 802 3817 / 027 243 7031 / fraserp@nzctu.org.nz