The Regional Land Transport Strategy, which decides on funding for major transport projects in the province, has criticised the inability of Government policy to help integrate rail and road networks.
In the strategy's annual report, to be tabled at a meeting of the Regional Land Transport Committee in Dunedin tomorrow, a paper is presented on the need to integrate road and rail through transport planning.
The committee's membership includes all Otago territorial authorities, police, Transit New Zealand and the Otago Chamber of Commerce.
The report said the recent decision made to transport logs by road from Mt Allan illustrated how changes in Government policy and legislation were needed if rail and road were to be better integrated.
The movement of freight underpinned much of the economic activity in Otago and the strategy seeks efficient infrastructure and systems within the region.
Last year, forest owner Wenita decided to cart logs out of the Mt Allan forest by road, despite the transport strategy and Dunedin City Council's transportation strategy wanting to make greater use of rail transport.
The basic problem was railing logs was not economically viable under the Government's policy regime.
Rail users pay 77% of their costs, while truck companies directly pay 56% of their costs.
The only subsidy available to rail was on backloading, but that was limiting and could not be spent on capital projects, was limited to three years, and the project had to be self-sustaining within three years.
"When choosing between rail and road, these forest owners do not have to take into account such factors as relative levels of emissions, road safety, noise and water pollution," the report said.
"Instead, the costs of these key negative environmental effects are borne outside the road and rail system."
The Government's national rail strategy and the New Zealand transport strategy sought greater use of rail, yet there was no legislative or funding policy framework capable of delivering the switch to rail freight, and only lip service was given to the concept of transport integration.
Legislative change was needed to give councils the power to ensure companies take into consideration the complex mix of social, environmental and economic consideration, included in plans and policies of Otago territorial authorities.
The Government was urged to improve the competitive position of rail by putting a cost on externalities associated with various forms of transport, reflecting their environmental and social costs.
It should also provide a higher subsidy for rail, the report said.
