Reference: 20180454

21 December 2018

s9(2)(a)

Dear s9(2)(a)

Thank you for your Official Information Act request, received on 2 November 2018. You requested the following:

Communication associated with the KiwiRail upgrade in Northland and all activities associated with a rail link to Northport and Marsden Point.

We clarified with your office that the request covers the time period from the 2017 General Election to the date of the request. The due date for the response to your request was extended to 21 December 2018.

Information Being Released

Please find enclosed the following documents:

Item Date Document Description Decision

1. 8 November 2017 Ministry of Transport Briefing: Release in part Passenger Rail Networks in the Regions

2. 13 December 2017 Ministry of Transport Table: Rail Release in part projects that are possibly suitable for PGF Funding

3. 19 January 2018 Email: KiwiRail Options Release in part

4. 19 January 2018 Email: AH (draft content for FEC Release in part briefing)

5. 25 January 2018 Treasury Briefing: Meeting with Release in part Harrison Grierson and Silk Road Management Limited to Discuss Northland Rail and KiwiBuild

6. 26 March 2018 Ministry of Transport Rail A3 Release in part

7. 25 June 2018 Ministry of Transport Briefing - Release in part Meeting with KiwiRail about Marsden Point

8. 28 June 2018 KiwiRail Document - Agenda and Release in part Ministerial Briefing Northland Update

9. 4 September Email – Re: Marsden Release in part 2018

I have decided to release the relevant parts of the documents listed above, subject to information being withheld under one or more of the following sections of the Official Information Act, as applicable:

• personal contact details of officials, under section 9(2)(a) – to protect the privacy of natural persons, including that of deceased natural persons,

• advice still under consideration, section 9(2)(f)(iv) – to maintain the current constitutional conventions protecting the confidentiality of advice tendered by Ministers and officials,

• names and contact details of junior officials and certain sensitive advice, under section 9(2)(g)(i) – to maintain the effective conduct of public affairs through the free and frank expression of opinions,

• commercially sensitive information, under section 9(2)(b)(ii) – to protect the commercial position of the person who supplied the information, or who is the subject of the information, • direct dial phone numbers of officials, under section 9(2)(k) – to prevent the disclosure of information for improper gain or improper advantage.

We have redacted the direct dial phone numbers of officials under section 9(2)(k) in order to reduce the possibility of staff being exposed to phishing and other scams. This is because information released under the OIA may end up in the public domain, for example, on websites including Treasury’s own website.

Information Publicly Available

The following information is also covered by your request and is publicly available on the Ministry of Business, Innovation and Employment website:

Item Date Document Description Website Address

10. 24 May 2018 Provincial Development Unit Briefing https://www.mbie.govt.nz/dm – Northland Announcements – 1 sdocument/3139-doia-1718- June 2018 1884-northland- announcements-pdf

2

Accordingly, I have refused your request for the documents listed in the above table under section 18(d) of the Official Information Act:

• the information requested is or will soon be publicly available.

Some relevant information has been removed from documents listed in the above table and should continue to be withheld under the Official Information Act, on the grounds described in the documents.

Information to be Withheld

There are additional documents covered by your request that I have decided to withhold in full under the following sections of the Official Information Act, as applicable: • advice still under consideration, section 9(2)(f)(iv) – to maintain the current constitutional conventions protecting the confidentiality of advice tendered by Ministers and officials, and

• commercially sensitive information, section 9(2)(b)(ii) – to protect the commercial position of the person who supplied the information, or who is the subject of the information. As requested, below is a list of the titles of the withheld documents:

Item Date Document Description

11. 13 August 2018 Provincial Development Unit Briefing – Regional Economic Development Ministers Briefing

12. 17 August 2018 Provincial Development Unit Draft Cabinet Paper – Provincial Growth Fund: Investment in the Growth and Development of the Regions

13. 5 September 2018 Provincial Development Unit Draft Cabinet Paper - PGF Investment in Enabling Infrastructure – Land Transport

14. 18 October 2018 Provincial Development Unit Cabinet Paper - Provincial Growth Fund Investment in Skills and Infrastructure

In making my decision, I have considered the public interest considerations in section 9(1) of the Official Information Act.

Please note that this letter (with your personal details removed) and enclosed documents may be published on the Treasury website.

3

This reply addresses the information you requested. You have the right to ask the Ombudsman to investigate and review my decision.

Yours sincerely

David Taylor Manager, National Infrastructure Unit

4

OIA 20180454 Information for Release

1. RE: Marsden 1 2. 180628 - Agenda: Ministerial briefing - Northland update - Ministers Pe.._ (002) 3 3. Meeting with KiwiRail about Marsden Point - OC180511 (002) 8 4. Page 2 Rail A3 (002) 13 5. Aide Memoire Meeting with Harrison Grierson and Silk Road Management Ltd to 14 discuss Northland Rail and KiwiBuild (002) 6. AH 17 7. RE: KiwiRail options 18 8. Passenger rail networks in the regions (003) 20

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Deleted - Not Relevant to Request

From: Mark Donnell [TSY] Sent: Tuesday, 4 September 2018 1:37 PM To: ^EXT: Angus Hodgson Subject: RE: Marsden

s9(2)(g)(i)

I think it is fair to: • say that KiwiRail is investigating options for a line to NorthPort, • note that the Government has the Upper Freight Study work about to commence, • may fund improvements to Northland rail via the PGF

s9(2)(g)(i)

From: Angus Hodgson [mailto:[email protected]] Sent: Tuesday, 4 September 2018 1:33 p.m. To: Mark Donnell [TSY] Subject: RE: Marsden

What do you propose Minister Peters’ response be? Sounds like it’s still under consideration and not yet announced.

Hei konā

Angus Hodgson Private Secretary (Finance and State Owned Enterprises)

s9(2)(k)

Sent from iPhone

From: Mark Donnell [TSY] Date: Tuesday, 04 Sep 2018, 1:29 PM To: Angus Hodgson Subject: RE: Marsden

[UNCLASSIFIED]

Not that I’m aware of. I believe the current status is:

s9(2)(f)(iv)

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s9(2)(g)(i) •

• I believe Minister Jones & the PGF may be waiting on some developments from the Upper North Island Freight Study s9(2)(g)(i)

From: Angus Hodgson [mailto:[email protected]] Sent: Monday, 3 September 2018 8:32 p.m. To: Mark Donnell [TSY] Subject: FW: Marsden

Is there a start date already? Please advise.

Hei konā

Angus Hodgson Private Secretary (Finance and State Owned Enterprises)

s9(2)(k)

Sent from iPhone

Deleted - Not Relevant to Request

Deleted - Not Relevant to Request

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AGENDA KiwiRail and Ministers of State Owned Enterprises and Regional Development Thursday 28 June 2018 10.30am – 11.00am 7.4 Beehive Executive Wing

Attendees: Rt Hon , Minister of State Owned Enterprises Hon , Minister of Regional Development Peter Reidy, KiwiRail Chief Executive

Items Time Paper required 1 Northland Rail See attached – Paper 1: 25 mins x Overview of KiwiRail’s progress in Northland Rail Update Northland x Next steps

2 General business 5 mins Verbal update

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Ministerial Briefing COMMERCIAL IN CONFIDENCE

To Rt Hon Winston Peters, Minister of State Owned 28 June 2018 Enterprises Hon Shane Jones, Minister of Regional Development

Cc Trevor Janes, KiwiRail Chairman

From Peter Reidy, KiwiRail Chief Executive

SUBJECT: NORTHLAND RAIL UPDATE

PURPOSE

1. This briefing provides information about KiwiRail’s progress on rail projects in Northland, potential future work and funding requirements if work is to continue.

CONTEXT

2. The North Line (NAL) is a 281km long track that links Auckland with the Far North, terminating in the Bay of Islands at . The line has one branch running to , which is used by a rail cart tourism operation and one branch running to the port at Whangarei, which is mothballed. Freight services operate between Auckland and Kauri (13km north of Whangarei) and commuter services operate from Swanson to the Auckland CBD. There is also a designation, but currently no railway, leading to Marsden Point (Northport).

3. Historically there was a more extensive network in the north. Putting aside the very early lines in the area, more recent closures were:

x The Branch from Otiria running via Kawakawa to Opua - closed in 1985; x The Okaihau Branch from Otiria via to Okaihau - closed in 1987.

4. In the subsequent 14 years, as minimum capital was spent on the line given its poor commercial returns, the following closures occurred:

x KiwiRail ended services initially from the Dargaville line; x KiwiRail then ended services on the NAL north of Kauri; x KiwiRail last year ended passenger charter services on the line south of Kauri due to its condition.

5. Of the main lines within NAL is an orphan on a couple of key dimensions:

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x Its maximum speed is 70kph (v 80kph for other main freight lines), and in practice, there are a number of sections operating much less than 70kph; x The maximum axle weight is 16 tonnes (v. 18 tonnes for other main freight lines); x It cannot accommodate a standard 9’ 6” hi-cube export container on a KiwiRail standard flat-top wagon.

6. On 23 February Minister of Regional Development Shane Jones announced an Upper North Island Supply Chain Strategy which will focus on the respective roles, opportunities and options for Northport, Ports of Auckland (current location and alternative locations) and Port of Tauranga.

7. On 1 June, Ministers Jones and Twyford also announced funding for a Business Case into rail in Northland which is being managed by the Ministry of Transport, with KiwiRail contributing.

PRESENT SITUATION

Costs to upgrade the line

8. The high-level costs to build the route to Marsden Point, upgrade the NAL and Dargaville Lines, and create long-term network maintenance and renewals budget have been quoted by KiwiRail in the public domain as:

x Marsden Point = c$200m x NAL South of Whangarei Upgrade = c$100m x NAL North of Whangarei & Part Dargaville Line = c$60m x Ongoing maintenance & renewals = c$15m

9. These costs were developed by KiwiRail by escalating previous estimates in the case of Marsden Point, and for the other lines based on knowledge of current conditions and application of unit rates. There is a need to do more detailed exploration for certain work packages where the risk/opportunity is high, or where more knowledge could materially influence the build concepts and hence costs.

Work completed to date

10. With public and shareholder interest in the and the possibility of a spur line to Marsden Point, KiwiRail has completed early investigative work with its contractor partners in the following areas, to bring the line to a level where export containers could be carried by standard wagons towed behind standard locomotives:

x Investigation of tunnels which has confirmed that all 13 tunnels along the line require work and that one (Tunnel 2) presents significant and costly challenges; x Early geotechnical investigations into what would be required for a spur line to Northport;

x A project plan outline for resources required, should the project proceed.

11. This work has been undertaken by KiwiRail without project funding. Any next stages of investigation will require Government funding before work can proceed.

PGF APPLICATION FOR FURTHER WORKS

12. KiwiRail is preparing a detailed application for Provincial Growth Fund investment of approximately s9(2)(f)(iv) to progress the next stage of investigation and planning which

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will be required for the business case into rail in Northland. s9(2)(f)(iv)

and funding to undertake urgent work on the existing line south of Kauri to ensure freight services on the line do not decline further. This work will also go some way towards retaining the prospect of passenger charters in future.

13. The investment would be used for the following activities:

Existing rail corridor x High level review of track, civil, structural, tunnel and communications assets on the NAL and Dargaville lines; x Design and construction options review for Tunnel 2 which is the most challenging of the 13 tunnels.

Marsden Point Construction x Three stage geotechnical investigations and reporting on the route; x Design and construction options review for Mata Hill; x Design and construction options review for the coastal marine area; x Options and value engineering for the Oakleigh Junction; x s9(2)(f)(iv)

14. KiwiRail believes that this work is needed to ensure accurate costings are provided for the Northland Rail Business Case.

15. s9(2)(f)(iv)

16. s9(2)(f)(iv)

ACCELERATED WORK PROGRAMME

s9(2)(f)(iv)

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s9(2)(f)(iv)

18. There are risks around construction procurement and delivery in an accelerated programme, including beginning physical works s9(2)(f)(iv) s9(2)(f)(iv) and having to overlap design and build with the resulting lack of price certainty.

19. s9(2)(f)(iv)

20. Critical to the programme’s success will be a Whangarei Project Office to ensure local accountability, community engagement and a clear focus on contract management.

CONCLUSION

21. s9(2)(f)(iv)

22. KiwiRail cannot, however, progress any further on the Northland rail project without additional funding from Government.

23. s9(2)(f)(iv)

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BRIEFING

Meeting with KiwiRail about Marsden Point

Reason for this You are meeting with KiwiRail on 28 June 2018 to discuss the proposed briefing construction of a branch line to Northport at Marsden Point. You have asked for a briefing to support your meeting.

Action required Read the material provided and discuss it with officials if you wish.

Deadline 28 June 2018.

Reason for This is the date of your meeting with KiwiRail. deadline

Contact for telephone discussion (if required) Telephone First Name Position Direct line After hours contact Erin Wynne Manager, Rail and s9(2)(k) √ Freight s9(2)(a) Senior Adviser Siobhan Routledge Director, Strategy and Investment

MINISTER’S COMMENTS:

Date: 25 June 2018 Briefing number: OC180511

Attention: Hon Shane Jones Security level: In confidence

Minister of Transport’s office actions

 Noted  Seen  Approved

 Needs change  Referred to

 Withdrawn  Not seen by Minister  Overtaken by events

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Purpose

1. You are meeting with KiwiRail on 28 June 2018 to discuss the proposed construction of a branch line to Northport at Marsden Point. You have asked for a briefing to support your meeting. We note that KiwiRail has already provided you with a briefing that covers a number of technical and cost issues relating to possible construction of a branch line.

2. We have taken the opportunity to comment on progress on the North Auckland Line (NAL) business case.

Rail and ports

3. The purpose of constructing a branch line to Marsden Point would be to enable freight to be moved to and from Northport by rail.

4. Use of rail to move freight to and from ports offers a number of potential benefits. These include reduced road congestion, reduced emissions, greater road safety and greater freight efficiency (where there is sufficient scale).

5. The Government has signalled its expectation that upgrading the NAL will support economic growth and development in Northland. The NAL business case will consider the scale of the benefits to Northland from upgrading the NAL.

6. There is some evidence that the use of rail can support the success of container ports because rail enables economies of scale. However, achieving benefits from rail is dependent on there being sufficient freight demand.

7. Use of rail by New Zealand’s four most important container ports is shown in Table 1 below. Tauranga is New Zealand’s most successful port; it also makes the greatest use of rail. Port of Tauranga has successfully competed for business throughout much of the North Island by using freight hubbing and rail freight to capture market share.

Table 1: Port use of rail, four largest container ports (2017 freight information gathering system data)

Port Percentage of containers that arrive at or leave the port by rail

Tauranga 48.1

Auckland 6.3

Lyttelton 17.6

Napier 7.6

8. The ports of Lyttelton and Auckland are seeking to make greater use of rail freight. In the case of Auckland, use of rail is constrained by the capacity of the rail line to the south of the port. The line is congested. The Alignment Project (ATAP) includes an initiative to build a third rail track between Westfield and Wiri to address congestion issues.

9. The costs and benefits of constructing a line will be analysed in detail by the NAL business case.

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Northport freight volumes

10. Export logs: In 2017, 2.9 million tonnes of logs were exported through Northport. This made Northport New Zealand’s second most important export port for logs, behind Tauranga. Log exports and wood chips make up the majority of Northport’s exports. Northport handles very few containers.

11. Imports: In 2017, Northport handled 5.8 million tonnes of non-containerised (bulk) imports. The majority of these imports were petroleum and petroleum products.

12. In the short to medium term, the vast majority of the freight business for a branch line to Marsden Point would be export logs. These would largely come from north of Whangarei. KiwiRail’s existing log yard at Otiria would be one possible location where logs could be transferred to rail from trucks.

13. Containers: Containerised freight from Northland is currently transported by truck to Auckland for export. A branch line to Marsden Point might assist Northport to compete for this freight. Potentially, Northport could compete for freight from Auckland if it was able to offer competitive pricing.

14. Northport’s future as a container port will depend to a large extent on decisions that are yet to be taken about the future of the Ports of Auckland. The Upper North Island Supply Chain Study will assist in providing more detailed information on the opportunities and will provide advice to Government on transport infrastructure investment in the upper North Island.

15. Northport has recently started to host a fortnightly visit from a container ship with an on- board crane. If container volumes grow, it might give the port the confidence to invest in a gantry container crane.

Marsden Point freight corridor

16. Marsden Point is currently served by a two lane highway, State Highway 15A. All freight travelling to and from Northport is carried along this road corridor by truck. The road is beginning to get congested. The Northland Regional Land Transport Plan identifies upgrading this road, and the relevant part of State Highway 1 to Whangarei, as its number one priority, with an estimated cost of s9(2)(b)(i)

17. The rail corridor to Marsden Point has been designated in the Plan. Most of the required resource consents are in place for construction of the rail line. The Northland Regional Council (NRC) has already acquired a large proportion of the land required for the rail corridor. KiwiRail has estimated the cost of the branch line at s9(2)(b)(i)

18. In a recent conversation with officials, the Chief Executive of NRC told the Ministry of Transport that NRC would like to see the branch line constructed. If it is not possible to construct the branch line, NRC would like the rail corridor to be used as a dedicated freight corridor for trucks.

19. s9(2)(f)(iv)

NAL business case development

20. The Ministry is currently going through the procurement process to recruit a consultant to assist with the business case, we expect that an appointment will be made within the next

Page 3 of 5

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two weeks. The Ministry has received bids from four consultancy organisations wanting to undertake the work.

21. We are setting up a -based multi-agency officials group to support the business case development. Agencies that we expect will participate are the Provincial Development Unit (PDU), the New Zealand Transport Agency (NZTA), KiwiRail and the Ministry of Transport.

22. You have asked us to establish a reference group to support the business case. We are in the process of setting this up. We hope to have the first reference group meeting in Whangarei in the next two to three weeks.

23. We have been in discussions with NRC, Northland Inc and Te Puni Kōkiri about the reference group. All three organisations have indicated that they are keen to support the reference group.

Meeting with KiwiRail

24. KiwiRail is preparing an application to the Provincial Growth Fund for s9(2)(f)(iv) s9(2)(f)(iv) initial engineering design work on the NAL. This application will need to be decided upon by Ministers. The PDU and the Ministry of Transport will provide advice to support Ministers’ consideration of the application. s9(2)(f)(iv) s9(2)(f)(iv) we anticipate that the PGF’s Independent Advisory Panel will need to provide advice to Ministers.

25. s9(2)(f)(iv)

26.

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Recommendations

27. It is recommended that you:

(a) note that the Ministry of Transport is progressing work on the NAL business case and expects to appoint a consultant in the next two weeks (b) note that KiwiRail is making an application to the PGF for funding for initial engineering design work s9(2)(b)(i) (c) share this briefing with your colleague the Minister of State-Owned Enterprises.

Siobhan Routledge Director, Strategy and Investment

MINISTER’S SIGNATURE:

DATE:

Page 5 of 5

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Deleted - Not Relevant to Request Northland Specific We are finalising a briefing and Cabinet paper for you which considers options for investment in the North Auckland (rail) line (NAL) within the broader context of Northland regional economic development.

The components are: • upgrade of the rail line from the edge of Auckland City to Whangarei • upgrade of the rail line from Whangarei to the north including the branch line to Dargaville • construction of a branch line to Marsden Point from Whangarei.

High level cost estimated by KiwiRail - s9(2)(b)(ii)

s9(2)(b)(ii)

Next steps - we recommend that the detailed costs and benefits of upgrading the NAL need to be tested in a full business case before investment decisions can be taken through the Provincial Growth Fund. This would include detailed analysis of the potential freight volumes that the NAL could capture and the economic benefits to Northland.

s9(2)(b)(ii)

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IN-CONFIDENCE

Reference: T2018/112 SH-11-5-0

Date: 25 January 2018

To: Minister for Infrastructure (Hon Shane Jones)

Deadline: None

Aide Memoire: Meeting with Harrison Grierson and Silk Road Management Ltd to discuss Northland Rail and KiwiBuild

Purpose of the meeting

You are meeting with James Leach, Business Development Lead, Harrison Grierson, and John Dalzell, Managing Director, Silk Road Management Ltd at 9am on Thursday 1 February at your office.

Harrison Grierson has requested the meeting to brief you on:

• proposals to integrate the proposed upgrade of the rail line from Auckland to Northland with the Government’s KiwiBuild project and;

• opportunities to provide greater economic value from the rail line and assist the mass building of affordable housing.

Harrison Grierson is an engineering advisory and design consultancy working in four key market sectors; Land and Buildings, Water and the Environment, Utilities and Transport. The company operates throughout Australasia and the Pacific Rim from a regional base in New Zealand (Auckland, Hamilton, Tauranga, Whakatane, Wellington and ).

Deleted - Not Relevant to Request

Treasury:3910571v1 IN-CONFIDENCE 1 20180454 TOIA BINDER Page 15 of 22

IN-CONFIDENCE

The North Auckland Line

The North Auckland Line (NAL) runs from Westfield Junction in the middle of the Auckland Metro Area for 281kms, terminating in Otiria in the Bay of Islands. It also has a mothballed branch line to Dargaville.

Limited freight services currently run on the NAL. Long distance passenger services from Auckland to Whangarei ceased in 1976. A trial for a service between Auckland and was operated in 2008-2009 but was cancelled as patronage targets were not met.

You have signalled your intent to invest in an upgrade of the NAL at a cost of up to s9(2)(f)(iv) and to investigate the future of the Upper North Island supply chain, including serious consideration of moving the Port of Auckland to Northport.

Over time, the Auckland metro area could extend further north to and Helensville. This could create further commuter demand on the NAL. Passenger demand could also be generated following completion of the , as the new rail tunnel will reduce the journey time from West Auckland to the Central Business District by 15 minutes.

Deleted - Not Relevant to Request

Talking points

• We suggest that you discuss Mr Leach and Mr Dalzell’s proposal and how they see it could provide greater economic value from the rail line and assist the mass building of affordable housing.

Treasury:3910571v1 IN-CONFIDENCE 2 20180454 TOIA BINDER Page 16 of 22

IN-CONFIDENCE

• You may also wish to outline your vision across all of your Infrastructure, Regional Economic Development and Transport portfolios, and in particular your thoughts about the development and role of the North Auckland Line.

Jon Butler, Senior Analyst, National Infrastructure Unit (NIU), s9(2)(k) David Taylor, Manager, National Infrastructure Unit, National Infrastructure Unit (NIU), s9(2)(k)

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Deleted - Not Relevant to Request

From: Angus Hodgson [TSY] Sent: Friday, 19 January 2018 1:59 PM To: Mark Donnell [TSY]; Jon Butler [TSY] Subject: AH

[IN-CONFIDENCE]

Deleted - Not Relevant to Request

Regional Rail

s9(2)(b)(ii)

In the second area, KiwiRail expect that in Budget 2018 they will request in the order of s9(2)(b)(ii) to fund “quick win” projects associated with the North Auckland Line and the planning for a possible connection to Northport depending on the advice from the independent Upper North Island Supply Chain Strategy due by December 2018. In order of magnitude, likely rail projects to enable a relocated Ports of Auckland to Northport could cost s9(2)(b)(ii) to deliver the North Auckland Line from Auckland to Whangarei and s9(2)(b)(ii) to build a rail spur to Marsden Point. Deleted - Not Relevant to Request .

Ngā mihi o te wā me te tau hōu

Angus Hodgson | Analyst – Kaitātari | The Treasury – Te Kaitohutohu Kaupapa Rawa s9(2)(k) | [email protected]

CONFIDENTIALITY NOTICE The information in this email is confidential to the Treasury, intended only for the addressee(s), and may also be legally privileged. If you are not an intended addressee: a. please immediately delete this email and notify the Treasury by return email or telephone (64 4 472 2733);

1 20180454 TOIA BINDER Page 18 of 22

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From: Mark Donnell [TSY] Sent: Friday, 19 January 2018 12:47 p.m. To: Darian Woods [TSY] Cc: Angus Hodgson [TSY] ; Jon Butler [TSY] Subject: RE: KiwiRail options

Hi Darian,

Our emails almost crossed … I was drafting a response to you when your email came in. The response I was writing was as follows:

Deleted - Not Relevant to Request

20180454 TOIA BINDER Page 19 of 22

In the second area, KiwiRail expect that in Budget 2018 they will request in the order ofs9(2)(b)(ii) to fund “Quick Win” projects associated with the North Auckland Line and the planning for a possible connection to NorthPort. s9(2)(g)(i)

Deleted - Not Relevant to Request

Regards,

Mark

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s9(2)(k)

s9(2)(a)

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Pages 13 - 18 have been deleted - Not relevant to request

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