By Kate Chapman
Any international company would have to build Auckland's new electric units and locomotives 62 percent cheaper than they can be produced in New Zealand to outweigh the benefits to the economy and jobs created by local manufacture, according to a report released today.
However, KiwiRail was not even expected to tender a bid.
Thirty-eight electric multiple units and 13 locomotives are needed to improve Auckland's urban rail transport. The manufacturing contract was expected to be around $370 million.
KiwiRail has workshops in Dunedin and Lower Hutt capable of building and maintaining the rolling stock.
The report, commissioned by the Rail and Maritime Transport Union and Dunedin City Council, found 770-1270 full-time equivalent jobs would be created over the construction period, $232-$250 million would be added to gross domestic product, Crown revenue would rise by a net $65-$70 million and the trade balance would benefit by $114-$122 million.
Manufacturing the units and locomotives locally would also develop and maintain the skill base in New Zealand, opening the industry up to the $15 billion international rolling stock industry, BERL said.
It would also allow for ongoing maintenance contracts to remain domestic, and innovation and technology opportunities could spillover into other industries, the report said.
Do you think the units needed to improve Auckland's urban rail transport should be built in NZ or offshore?
The Rail and Maritime Transport Union, New Zealand Council of Trade Unions and Dunedin City Council called for the Government to front up with the capital needed to support a bid by KiwiRail.
Dunedin Chamber of Commerce chief executive John Christie said it was about jobs for New Zealand and Dunedin.
"Anything we can do to increase the skills of our workforce has got to be good for the long term future of our country."
Transport Minister Steven Joyce told NZPA it was important for KiwiRail to make the best commercial decision it could.
KiwiRail needed to be free from political pressures, he said.
"My sense is that they think it's too big a commercial risk."
He understood KiwiRail was not intending to enter a bid, they had never done anything similar before and there were international companies with a lot of experience.
"It would be a bit like saying we need a fleet of high-end cars, let's go and get our mechanics to build them instead of buying them off Audi or BMW or somebody who does this sort of stuff for a living."
There was domestic experience and there were opportunities for maintenance contracts and further work if the successful tenderer decided to do other work in New Zealand, Mr Joyce said.
"I think there's definitely work (domestically), but this is at the outer end of what's practical.
"We've just got to take the practical, commercial, sensible outcome and in all honesty got to look at people that have been building these things for a long time."
Rail and Maritime Transport Union general secretary Wayne Butson said the report helped make a strong case to build the trains in New Zealand - both from a job creation view and wider economic benefits.
Labour's transport spokesman Darren Hughes said the Government should listen to the report and keep the jobs in New Zealand.
"The costs of ongoing maintenance could be minimised with the workforce and skills being based in New Zealand and it would also reduce the risk of costs spiralling out of control due to exchange rate volatility."
The Government had been given a "credible plan", Mr Hughes said.
NZPA