BUILDING a SUSTAINABLE FUTURE Redevelopments at Both Picton and Wellington Are Part of the Ferry Replacement Programme
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STATEMENT OF CORPORATE INTENT 2022-2024 F.18a BUILDING A SUSTAINABLE FUTURE Redevelopments at both Picton and Wellington are part of the ferry replacement programme. Front cover: KiwiRail plays an important role in shi ing logs as New Zealand continues to move towards peak “Wall of Wood”. 2 KiwiRail Statement of Corporate Intent 2022-2024 CONTENTS OUR PURPOSE .....................................................................4 ENVIRONMENT AND SUSTAINABILITY ..........................22 INTRODUCTION ....................................................................6 HOW KIWIRAIL CREATES VALUE ...................................... 24 NATURE AND SCOPE ........................................................... 8 ASPIRATIONS AND OBJECTIVES ...................................... 26 COVID-19 STRATEGIC RESPONSE ...................................... 9 FINANCIAL CAPITAL ........................................................27 MARKET OUTLOOK AND ECONOMIC ASSUMPTIONS ...... 9 RELATIONSHIPS CAPITAL ............................................. 28 STRATEGIC PRIORITIES .....................................................11 ASSETS CAPITAL ............................................................ 29 FINANCIAL .....................................................................12 PEOPLE CAPITAL ............................................................31 RELATIONSHIPS ............................................................ 13 SKILLS AND KNOW-HOW CAPITAL ................................32 INVESTMENT IN ASSETS ............................................... 16 ENVIRONMENT CAPITAL ............................................... 33 PEOPLE .................................................................... 18 REQUIRED INFORMATION ............................................... 34 SKILLS AND KNOW-HOW ...............................................21 APPENDIX 1: PERFORMANCE MEASURE DEFINITIONS ....37 3 OUR PURPOSE WHANGĀREI STRONGER CONNECTIONS BETTER NEW ZEALAND AUCKLAND TAURANGA HAMILTON NEW PLYMOUTH NAPIER WHANGANUI PALMERSTON NORTH WELLINGTON GREYMOUTH CHRISTCHURCH KEY SECTOR LOCATIONS Ports Inland Ports /Freight Hubs Coal DUNEDIN Major Forestry Major Dairy / Meat / INVERCARGILL Manufacturing Plants 4 KiwiRail Statement of Corporate Intent 2022-2024 Freight Freight task Infrastructure Moves around 19 million Carries 36% of the tonnes of freight each year New Zealand freight task that is deemed to be available to rail 3,100 signals Track 1,500 public level crossings Freight 106 tunnels services 1,344 bridges Operates and maintains 3,700km of track, including Operates 43,000 mainline six million sleepers, of freight departures each year Exports and imports which 50 per cent are 172 mainline locomotives concrete Transports around 20% of Property New Zealand’s exports and Interislander imports Manages more than 18,100 hectares of land Owns more Tourism Operates three ships than 1,350 carrying 830,000 buildings Oers long-distance tourism passengers on 3,800 experiences between sailings per year** Manages 10,000+ leases, Auckland and Wellington, licences and grants Picton and Christchurch, and Christchurch and Commuters Greymouth Sustainability Helps commuters make 35 million low-carbon journeys Our team each year on our network** Reduces heavy vehicle 4,200 employees impact by more than 1.1 18% female Value million trucks per year 15% under 30 years old The total value of rail Every tonne of freight to New Zealand’s economy carried by rail delivers a 70% is approximately emissions saving over road $1.7-$2.1 billion every year* * The Value of Rail in New Zealand – 2021 ** Figures are pre-COVID 5 INTRODUCTION for KiwiRail. The new funding regime allows for the division of the so-called “below rail” (i.e. infrastructure) More than at any other time in its recent history, costs and activities associated with the network, such KiwiRail is looking ahead with optimism, confidence, as track maintenance, and the “above rail” costs and and certainty. Aft er years of managed decline, and operating activities, such as our freight services. The against the backdrop of investment rejuvenation, and new structure heralds reliable, transparent, and timely increasing global and domestic concern about climate funding from the Government for the “below rail” costs - change caused by greenhouse gas emissions, rail is working to an agreed, published plan. Over time, KiwiRail now competing to become the premier linehaul freight will be responsible for the full “above rail” costs of its operator. operations. Thanks to the Government's New Zealand Rail Plan, rail While the above and below rail funding streams can is currently experiencing an unprecedented level of be seen as separate, they are inextricably linked and capital investment in projects that are improving the inter-dependent. The shared objective of both above resilience and reliability of the national rail network, and and below rail funding is to grow the role of rail in provide the foundation for KiwiRail's commercial growth. New Zealand’s transport sector for both freight and The introduction on July 1 of a new funding model for passengers. This will only happen through KiwiRail network investment represents a welcome turning point 6 Investment in rail is creating job opportunities. providing more services, and progressively more reliable The vision of a more reliable network also includes our services, and it will do that only with a more reliable and Interislander service on Cook Strait. The signing of a resilient network. contract to provide two larger new, more energy-efficient rail ferries heralds an exciting new era on this vital At the same time as this change in approach to funding, connection. Redevelopment of old infrastructure at the rail has enjoyed several years of significant Government ports in Wellington and Waitohi Picton will be required to investment both in the network and for capital projects receive the new ferries from 2025. and new assets, through various sources. This includes $1.3 billion for rail in Budget 2021, $1.2 billion in Budget We are pursuing further commercial utilisation of our 2020, and $1 billion in Budget 2019. On top of Budget property portfolio which includes 18,100 ha of land, on funding, with investment via the New Zealand Upgrade which we manage more than 10,000 leases, licenses and Programme and the Provincial Growth Fund, the grants. company is busier than it ever has been. It is focused We are refining our commercial focus and using on delivering projects, while running an active national technology to improve and enhance our relationships freight network and metro networks in Auckland and with our freight customers. Wellington. The latest assessment of the Value of Rail shows that With 4,200 people in the KiwiRail team, we are a benefits range in value between $1.7 billion to $2.14 significant employer. Our union partners are important billion per annum. This analysis captures costs which are to us, with 79 per cent union membership across often hidden, including reductions in air pollution, fuel the company. We have a High-Performance High- consumption and road maintenance. Engagement strategy in place, we value diversity and have an unrelenting focus on health and safety with In the year since the last Statement of Corporate Intent impressive improvements in our safety measures. (SCI), KiwiRail has learned to adapt in a timely and effective way to changing Covid alert levels while at all Part of the backdrop during this current period of times making the safety of the public and our KiwiRail investment is a growing determination for New Zealand team our paramount concern. The uncertain economic to reduce its greenhouse gas emissions. KiwiRail’s target environment has been harder to manage. Having is a 30 per cent reduction in carbon emissions by FY30 New Zealand’s borders closed to overseas visitors for a compared with FY12 and to achieve net zero carbon year has caused a significant drop in revenue on our long- emissions by 2050 in line with the Climate Change distance passenger trains. We have used this opportunity Response [Zero Carbon] Amendment Act. A multi- to consider offering additional services once borders re- pronged approach will be needed to achieve these goals open, and a fresh marketing approach. We will continue with emissions savings anticipated through a variety of to closely monitor border and market changes, and we means including truck trips avoided by moving more plan to respond and adapt accordingly. freight from road to rail, cleaner technology on our new ferries and more energy-efficient locomotives. KiwiRail is registered as a State-Owned Enterprise (SOE) and operates within the policy and regulatory framework Our investment is also offering diverse career of the State-Owned Enterprises Act 1986 (the Act). This opportunities and long-term employment. Our most SCI sets out the business objectives and performance recent annual report recorded that KiwiRail and a range targets for the three years to June 2024 and is submitted of funding partners have spent more than $2.3 billion by KiwiRail pursuant to Section 14 of the Act. in renewal and upgrades of the network, rolling stock, property, and ferries over the last five years. This is a significant contribution to the New Zealand economy, especially in the regions. 7 NATURE AND SCOPE • an inter-island shipping business offering services to KiwiRail moves people and freight by rail and sea and is road, rail and passenger markets the steward of the national rail