A Proposal from the Rail and Maritime Transport Union regarding the future of Dunedin Railways Limited, which will be presented to the Dunedin City Council today

Summary

1. Dunedin Railways Limited (‘DRL’) has failed to properly consult stakeholders, including the Rail and Maritime Transport Union (‘RMTU’), on a so-called proposal to ‘mothball’ rolling stock and track together with associated redundancies of staff.
2. Dunedin City Council (‘DCC’) has instructed Dunedin City Holdings Ltd (‘DCHL’) to investigate alternative options for DRL operations.
3. The RMTU proposes an immediate feasibility study into suburban commuter rail and investigation of potential funding via the Provincial Growth Fund.
4. As part of the above the RMTU proposes a six-week trial of suburban commuter rail services between Mosgiel and Dunedin commencing as soon as possible.

Background

1. The Rail and Maritime Transport Union (“RMTU”) represents almost 50 workers at Dunedin Railways Ltd (“DRL”). These staff have between them, hundreds of years of accumulated service. The RMTU and its antecedent unions have been involved in rail in New Zealand for over 150 years and have represented staff at what was originally Taieri Gorge Railway since its establishment.
2. On 6th April Dunedin City Council (‘DCC’) held an extraordinary meeting. The meeting considered a confidential report from Dunedin City Holdings Limited (DCHL) outlining the future of DRL and containing options for its operation. The reasons cited for confidentiality were the commercial sensitivity of the report .
3. The report outlined three options for DCC to consider and recommended the first be adopted:

a. Close the business (DCHL’s recommended option)

b. Mothball the business for ~18 months (or until tourism market recovers), with a view to re-opening train services on the Taieri Gorge line

c. Mothball the business with a view to exploring feasibility of a small number of alternative options for the company’s assets.

5. In the event DCC passed a resolution to:

a) Instruct Dunedin City Holdings Ltd (DCHL) to mothball Dunedin Railways Limited (DRL); and

i) Where possible, redeploy employees made redundant across the DCHL Group and elsewhere; acknowledging that

ii) DCC has no view on what a permanent outcome might look like; and

iii) Provide up to $1.05m for the mothballing costs from July 2020 - December 2021, noting that any investment in future options would need to be subject to a separate business case and approval process.

b) Requests a report from DCHL, as soon as is practicable detailing [our emphasis]

i) Options for DRL’s operating and governance structure in the interim; and

ii) An asset management schedule to protect current assets.

c) Requests, in time for Long Term Plan deliberations; an update report outlining the longer term options for DRL and its assets.

6. At no point before the extraordinary council meeting on 6th April were DRL staff or the RMTU consulted on what was being considered regarding potential closure or mothballing and/or restructuring of the business.

7. This failed to achieve the statutory and contractual good faith obligations to consult

8. This is a wasted opportunity that disregards the wealth of experience and knowledge amongst the staff and their union that, had it been tapped, would have added considerable value to the deliberations that took place.

9. A proposal that is flimsy and ill thought out has been advanced which, should it be adopted, will entail significant job losses, risk to assets, and damage to Dunedin tourist industry. Opportunities for alternative uses of DRL and its assets are also endangered.

9. On 20th April the RMTU received a ‘proposal’ from DRL that outlining an intent, inter alia, to mothball and restructure the business. That so-called proposal has been challenged by the RMTU and at the time of writing we are currently waiting on DRL’s final delayed decision as management deferred it until ‘the middle of next week’ i.e. the week beginning Monday 4th May.

10. The RMTU has no trust and confidence in DRL management or the Board and does not accept this so-called consultation and ‘deferment’ of the decision is genuine. In fact we believe DRL have delayed promulgating a decision they have already taken to create an impression they are consulting in good faith when this is not the case.

11. Accordingly the RMTU is proposing that DCC investigate other options regarding DRL, including but not limited to the provision of suburban commuter rail services, and this document proposes a trail of such services.

Proposed Trial of Suburban Commuter Rail in the Greater Dunedin Area

1. Given that in its own proposal DRL does not envisage wholesale job losses taking effect until 30 June then there is clearly sufficient time to investigate alternative options as per the DCC’s instruction arising out of the extraordinary council meeting on 6th April.
2. Our proposed trial would consist of: a) Establishment of a limited suburban service between Mosgiel and Dunedin as follows: b) Up to three return morning services, one return lunchtime service, three return afternoon/evening services. c) Costings are provisional at this stage and are contingent on ticket pricing, capacity of train sets, uptake and any subsidy provided. Our estimate is around $250,000 cost for a six week trial with variability contingent on the above.
3. Clearly the first step would be a feasibility study and establishment of a business case. In our view this could be expedited very quickly, including commencement of the trial (see below).
4. Such a study would also involve investigation of access to the Provincial Growth Fund. 
5. DRL has availed itself of the Government’s twelve-week wage subsidy and has signalled in its ‘proposal’ for mothballing that any redundancies would come into effect from 30 June. We propose deferment of any decision around mothballing and associated job losses with the aim of commencing the trial from the wage subsidy end date on or around 12 June or before depending on Government decisions regarding lifting of COVID19 lockdown restrictions on travel and approval to go ahead.

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