The Government leaned on KiwiRail to stop it closing the Hillside workshops but the company couldn't find a way to keep them open, Prime Minister John Key says.
KiwiRail confirmed on Monday it was axing 90 jobs at the Dunedin workshops with redundancies beginning on January 31.
There will be 18 jobs for Hillside workers at the foundry, which has been sold to an Australian company, and seven others are being kept on to run the heavy lift crane.
Unions have attacked the Government for the state-owned company's decision but Mr Key says it was made by KiwiRail's board and management.
"In defence of the Government, when the board informed us of the likely intention to close Hillside we pushed back reasonably strongly and asked them to fully examine their decision," he said.
"KiwiRail's perspective was it wasn't viable to keep Hillside going... the only way we could have overridden that decision was to financially compensate the company and we just don't want to act in that way."
Rail and Maritime Union general secretary Wayne Butson says the workshops are being closed because of "ideologically driven decisions by the Minister of Transport and his political puppets on KiwiRail's board".