Horizons Regional Council's chairman is insisting on pushing the case for a Capital Connection train subsidy even though the NZ Transport Agency remains firmly against being involved.

The agency has said it will not help fund the rail service that has been losing an estimated $500,000 a year, putting an end to the possible collaboration between itself, Greater Wellington regional council and Horizons. But both regional councils are still intent on putting a business proposal together to present to the agency.

Horizons chairman Bruce Gordon said at the regional transport committee meeting yesterday that the money needed to keep the service afloat was a "drop in the bucket" for NZTA. He said he had support from mayors and Palmerston North Labour MP Iain Lees-Galloway and would be lobbying Otaki National MP Nathan Guy to back any proposal they put forward.

Cr Gordon did not think they were "flogging a dead horse" and said it was short-sighted to let the service go.

"All it takes is a drop in the dollar or a rise in oil prices and we will see a massive swing back to public transport." But the transport agency said its position was unchanged. "The Capital Connection does not fulfil our basic requirements for making investments in new public transport services – that is, helping to reduce congestion and providing good value for money," regional director Jenny Chetwynd said.

"We have consistently communicated since 2010 that we cannot justify funding the Capital Connection at the expense of other existing public transport services.

"Capital Connection has been leaking money and passengers for some time, and it would be a far-from-watertight investment to burden the taxpayer with."

Cr Gordon said while it was fair to say the train looked "a little skinny" when it left Palmerston North, it picked up plenty of passengers at stations after that. KiwiRail figures show about 15,000 people travel on the train each month.

"The public already subsidises a service from Waikanae to Wellington. It would be a questionable use of taxpayer money to subsidise one train service that bypasses an existing train service which the public already subsidises, particularly when a commercial coach service to and from Waikanae is understood to be feasible," Ms Chetwynd said.

Cr Gordon said small, regular fare rises could keep the service viable and passengers on board. "Fares need to be kept more current with the costs of running a motor vehicle. Large increases give a push-back and people drop off. Costs are moving regularly and we should do what we do with our buses and have small, regular fare increases."

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