Joyce Gives A Reluctant “No” To Call To Sell KiwiRail
With a thinly disguised sneer in his voice the minister told NewstalkZB’s Mike Hosking: “There is a lot of romanticism attached to rail,” adding that the Metro lines in Auckland and Wellington would always need government subsidies and that freight posed challenges.
The rail assets that cost taxpayers’ $690 million last year are now valued at just $349 million, according to Treasury.
The minister joked that “you wouldn’t get anything like it today” but if someone appeared who was willing to buy back the assets for $690m “give them my phone number” .
But he added that in the circumstances, the government was determined to mininise the situation but make the best of it. He said there was a “futureproofing” argument in the purchase and he didn’t accept some of the “drastic” calls for closing present lines, calls that were “unrealistic.”
An Australasian right-wing think thank, The Centre for Independent Studies, has sparked today’s debate by releasing a report that KiwiRail is worthless as a business and the environmental and strategic reasons given for the buyback are not compelling.
The report’s main points (you can read the 15 page report here)
With many fiscal pressures looming in the medium term for New Zealand, KiwiRail is becoming an increasing financial burden on the Government’s balance sheet. The reform, rationalisation and resale of KiwiRail should be a top priority for the Government.
Privatisation of KiwiRail should be seriously considered. The Government may have trouble making any substantial money off the deal. A viable rail network could be maintained in New Zealand on a greatly reduced scale, closing or mothballing unprofitable lines by shrinking track distances from 4000km to 2300km. The freed up land could then be sold.
KiwiRail should then be split up into different businesses such as freight, Wellington and Auckland passenger services.
Some lines could be sold directly to businesses such as Fonterra and ports that were interested in maintaining them.
Ownership of KiwiRail could be tendered out for a peppercorn price and selling to which ever bidder had the best long term plans.
Although the taxpayer would lose significantly on these transactions, it would cut future tax liability.
The group’s NZ policy analyst Luke Malpass, described on their website as being formerly a teaching assistant at the University of Canterbury, where he will soon complete a Master of Arts in political philosophy, said the Labour party bought Kiwirail for ideological reasons and for environment reasons that are far “over-stated” especially when it comes to railfreight compared to road.
Prime minister John Key, also asked today about the report, repeated National’s election policy that there will be no asset sales before the next election.
That of course does not rule out Kiwirail being sold next time around.