By Pam Graham of NZPA

Wellington, Feb 11 NZPA - The Government was advised on taking office that $2 billion needed to be spent on rail over five years.

About $1b of that can be funded from state-owned KiwiRail's revenue.

In an overview for shareholding ministers obtained by NZPA, KiwiRail said $14b has been spent on state highways since rail was privatised in 1993.

The document detailed $2b of necessary investment as KiwiRail sees it.

It broke down to $700 million on so-called above rail assets, including locomotives, wagons and ferries, and $1.363b of investment in so-called below rail, essentially the network itself.

KiwiRail was looking for a quick decision on new locomotives because the lead time for buying them is a year.

NZPA understood about 20 new locomotives were wanted at the cost of about $60m.

It was believed to cost about $700,000 more each to build them from parts in New Zealand than to buy them in China.

Building them from parts would provide work here at a time when the Government is looking for levers to stimulate the economy. But it was faster to buy them in.

The Rail and Maritime Transport Union said today that its members were part of a team currently in China looking at locomotives but it was unsure if the Government will invest in new locomotives.

KiwiRail, as expected, argued in the briefing that the country needs the rail system the previous Labour-led government bought back and painted red.

The document said there will be a million more truck trips a year and 1.8 million passengers a year will be looking for different ways to get about if there is no rail.

Also, 3300 people working for KiwiRail would be out of a job.

Traffic on roads in the Waikato would increase as 40 percent of the freight in and out of Port of Tauranga was railed. Auckland to Tauranga is the country's busiest rail freight corridor.

Rail freight flows are forecast to rise by 70 percent in the next 20 years.

KiwiRail said Fonterra wanted to put more milk on rail in the next season and this business was at risk because of the time it takes to order new locomotives. One milk trains carries a load equal to 28 milk tankers.

A significant increase in log volumes was expected in the next five years and coal companies were looking to put more freight on rail.

Not all the numbers in rail were ugly. KiwiRail said $13 million of investment in new and extended passing loops on the Tauranga to Hamilton line doubled its capacity.

The out-going government approved spending of $80m on new carriages for Tranz Scenic and some wagon and locomotive upgrades as well as $121m on equipment and infrastructure upgrades.

KiwiRail's forecasts for the current financial year provided for a government contribution of $90m a year over the next five years.

Rail's average freight haul was 283km compared to 118km for road. Rail carried 6 percent of total freight tonnes.

Investment in locomotives and wagons were clearly the pressing issues.

KiwiRail has 149 locomotives and the youngest is 20 years-old.

The average age of the wagons is between 25 and 30 years and most have an axle load of 14 tonnes.

"To meet international industry expectations and compete with road, wagon axle loads need to be 18 tonnes, moving to 20 tonnes," the document says.

If promised locomotives are delivered to the Auckland commuter network and not replaced elsewhere there will be service cuts.

"The rail network in New Zealand is under-utilised, meaning there is significant capacity for growth," KiwiRail said.

"It should be noted that rail is a more energy efficient form of transport than road with significant safety advantages," the document said.

The document revealed KiwiRail was intending to end outsourcing of rolling stock maintenance when a contract with United Group expired on March 22.

Previously outsourced track maintenance has already been taken back in house.

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