Rail transport in New Zealand

Michael Cullen’s economic sabotage continues to bite

It was a dog when Labour bought it.

It’s required taxpayers propping it up to the tune of $2 billion plus, and now it turns out that they want to blackmail us into more, because without Kiwirail, its customers will no longer have taxpayer subsidised rail.

KiwiRail has been given two years sort out its finances or faces being shut down by Treasury, as the value of its network continues to decrease.

The company’s chief executive Peter Reidy says it’s not all doom and gloom and that rail continues to be a valuable commodity for the country.

The value needs to be measured not just in direct economic terms, but by what the cost would be if there was no rail network, he says.   Read more »

Opportunist Labour ignores their own history

It is always fascinating to see the opportunists of left lining up behind the BERL Report which claims the Napier-Gisborne Rail Line ‘might’ one day break-even – fingers crossed.

Labour is trying to re-write history with its opportunist politicking on this issue.

“This is an economic lifeline we cannot afford to lose and the Government should intervene.”

But the facts are that this line’s been in jeopardy since before 2001 and Labour didn’t want a bar of it.

“Tranz Rail announced that it was looking at closing the Napier-Gisborne line. Anderton raised the possibility of renationalisation but was rebuffed by the PM, Helen Clark, who said that the Government could not afford it.”

The argument never went away, and in 2006 Trevor Mallard said a Labour Government would not subsidise the rail line but ‘let it die’Read more »

Make Cullen Chairman

The Herald reports:

The Labour Party has asked tough questions about the state of KiwiRail after it won a temporary injunction preventing the publication of sensitive material from a leaked business plan.

The state-owned company yesterday won a temporary High Court order after it was leaked to Radio New Zealand.

But parts of it were read in Parliament yesterday by Labour MP Phil Twyford under the absolute privilege MPs have, without the source document being identified.

Labour have obtained the report from their union mates and are desperately trying to sabotage Kiwirail. David Farrar tries to say this but has gone a bit soft in the execution.

The bottom line is these documents would most likely have been leaked by the Rail and Maritime union (a significant Labour sponsor).

I do wonder though why the unions are sabotaging their own jobs by continually bagging KiwiRail.  This approach will turn off customers and cause an ever decreasing spiral for the members who pay the union’s bills.

Union members should ask themselves “how many more jobs will this cost us” everytime their militant union leaders leak damaging material to score political points.

This disloyalty ends up costing jobs – and the taxpayers of NZ who’ll eventually have to pick up the pieces. Those jobs are also the oft-mentioned Waitakere Man in all likelihood, and Labour and their union pals seem hell bent on ensuring they all lose their jobs. Just like with the leaks at MFaT, every time the union leaks – more of their members lose their jobs.  That’s the effect of their destabilisation campaign. Perhaps Trevor Mallard is running their campaign.

Meanwhile I think the government should appoint Sir Michael Cullen to chair Kiwirail. He bought the clapped out thing for way above market value, he should be the one to go fix it.

Mythbusting – Rail in NZ

Liberty Scott

The Labour party and other train spotters would have you believe a whole load of nonsense about rail in New Zealand that is frankly all motherhood and apple pie fantasies.

Liberty Scott bursts those bubbles:

Here’s a good summary I wrote before...

1. Rail network shrinked due to privatisation. Wrong. Almost all line closures were under state ownership when rail had a statutory monopoly on long haul freight!  The track network length has barely changed in 20 years.

2. Rail stopped being viable after free market reforms. Wrong, it stopped being consistently financially viable by 1945. It had short pockets of profitability since then. The early 1970s saw it drift from profitability to losses, which weren’t recovered until 1983 after debts had been written off and it started being paid by government to run commuter rail services in Auckland and Wellington under contract (and a host of unprofitable freight lines, such as the Otago Central Railway).

3. Track Maintenance was run down after privatisation. Wrong, it was already being run down in public ownership, track was run down more, but sleeper replacement under private ownership increased.

4. Rail is worth a lot as an asset. Wrong. The NZ$12 billion book value of rail that was on the Treasury accounts was a nonsense, equating it to all other SOEs combined (e.g. 3 power companies, Transpower, NZ Post) which all make profits. Most of the value is based on a replacement cost if it was built today, which of course would never be done. I’d argue it is probably worth 4% of that at best.   It’s worth noting that this has only been partly fixed as of late.

5. Rail only needed rescuing after privatisation. Wrong. It has been rescued several times before. It has long had serious economic viability issues.   In recent history it was bailed out in 1982 (all debts cancelled, and the operation commercialised), 1990 (had the debt of the North Island Main Trunk line electrification written off as a “Think Big” debt, then NZ$350 million, and another $1 billion wiped off to pay for the restructuring to make it viable).

6. Rail is good to reduce accidents, congestion and environmental problems Wrong. “the optimal level of externalities is not zero – at some point it becomes more expensive to lower them than the welfare created by their further abatement” Rail related deaths are only slightly lower than truck related. No evidence that rail reduces congestion. Sea freight is twice as fuel efficient than rail, but little interest in that mode.  Indeed Greens actively oppose international ships carrying domestic freight along the coast to placate their unionist mates.

Like I said before, the presentation basically says that rail is not as fuel efficient as is quoted, and that only 30% of the current network handles 70% of the freight. It suggests concentrating on the main trunk, and lines to the Bay of Plenty and the West Coast

NZ dearest trainset?

Dompost and Keeping Stock

The Dompost wonders if at $30,000 a man who has bought a Wellington train is buying NZ most expensive trainset:

With a last minute bid, a man has bought a piece of Wellington’s railway history.

Metlink listed the full sized English Electric 2-car train on Trade Me last week.

However, with the exception of a four-year-old who bid the $29,990 asking price – which was removed – the train had received no bids  until today.

At 11.05am today a Nelson bidder named “Hans” bid the reserve price and was unchallenged.

The train has operated in the Wellington area since the late 1940s

Keeping Stock says no way:

We can provide an answer. It’s not New Zealand’s most expensive train set; not by a long shot. That rather dubious honour goes to Sir Michael Cullen, who spent far too much reacquiring Kiwirail from Toll Holdings in 2008

But even the nearly $1 billion is small change compared with what Len Brown wants to spend on Auckland’s rail loop.

All the appeal of a dry root


Vernon Small points out the obvious.

Perhaps the oddest element of the Budget is the first round allocation of over $500m from the proceeds of the planned asset sales through the so called Future Investment Fund.

Almost half – $250m – goes to KiwiRail. Not so much an investment in the future, as a way to pay for an underfunded loss-making liability from the past … paid for by the sale of a profitable stake in an energy company.

Please make Michael Cullen chair of Kiwirail. He was the dopey bastard who bought it, so he should have to run it.

What would be a death blow then?

Trainspotters and lovers of spending other peoples money like to make claims, more frequent of lat, that we need commuter trains between Hamilton and Auckland:

KiwiRail has cancelled Hamilton train services to this weekend’s Rugby World Cup quarter-finals in Auckland after selling only 23 tickets for commuters going to both matches.

But a spokesman advocating commuter trains between Hamilton and Auckland says the canning and lack of demand is not a death blow for the proposed rail service.

If bugger all people wanting to pay for s ervice isn;t the death blow then what on earth is?