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KiwiRail will be sold, opposition says

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KiwiRail will be sold, opposition says

3News NZ

KiwiRail's assets will be written down to $6.7 billion

KiwiRail's assets will be written down to $6.7 billion

Opposition parties are convinced the Government is going to sell KiwiRail despite ministerial denials.

It announced on Wednesday KiwiRail's network and ferry assets will be written down from $13.4 billion to $6.7b and put into a new state-owned enterprise.

Finance Minister Bill English says it's "just part of a clean up" designed to turn KiwiRail into a viable business.

"I think everyone agrees this company was not worth $13b," he said.

The move will leave the commercial arm of KiwiRail carrying assets of just over $1.1b.

Labour says the Government is setting it up to fail.

"KiwiRail is being lined up as the next asset to go on the auction block, just 24 hours after a law was passed allowing it to sell off our power companies," state-owned enterprises spokesman Clayton Cosgrove said.

"It has no intention of turning the company around, it is simply softening up New Zealand for the news that KiwiRail is part of the asset sales agenda."

NZ First leader Winston Peters says KiwiRail is being deliberately devalued so it can be "flicked off cheap" to a private investor.

"Given our disastrous history of rail infrastructure when it was sold to private owners by National in the 1990s, this latest threat needs to be taken seriously," he said.

"The rail network is a critical part of our transport infrastructure, not a financial bauble to be parcelled around to National's financial friends."

Mr English says that isn't the Government's intention.

"We are not trying to sell KiwiRail," he told reporters.

"The commercial value of it would be pretty low."

The railways was privatised in 1993 and bought back by the last Labour government for $665 million in 2008, when it was re-named KiwiRail.

NZN

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Comments

9/07/2012 9:06:45 p.m.

James wrote:

As an older Kiwi, a wide traveller and worker overseas, I was always very proud of our nation in its abilities as a cohesive society, remarkable in its standards and achievements in education, the arts, engineering, and sports and in competent, honest governments. No more. What a bunch of directionless bellyachers, always looking for the easy answer and quick fix, oblivious of the dangers to a cohesive society posed by economic rationalism of the type fostered on the nation by the greedies without a care for the lessons of history or long-term planning for the future. With all the short-sightedness of native kiwis, New Zealanders will continue to bicker and to blink uncomprehendingly as national performance indicators slide downwards when compared to once similar smaller advanced societies such as those of Scandinavia and Europe. What has this got to do with NZ railways. Everything, when one considers the railways as an example of the subsuming of national interest to provide private benefit to knowing few fellow traveller friends of government. Not true? Look at downward social performance indicated by international statistics and the history of privatisation of NZ railways. Kiwi's, you are in trouble but too dumb to comprehend its cause or its inevitable result.

28/06/2012 3:26:33 p.m.

Darryl S wrote:

All leading to the next biggest transfer of public wealth into private hands ... Thanks to John Key and his National Government. Watch that space!

28/06/2012 2:01:02 p.m.

Robert M wrote:

While Fay Richwhite doubtlessly could have run the Railways succesfully for a long time with some line closures and huge leveraging of assets had Prebble and Richardson actually allowed any investment in such things as fuel efficient modern US diesels and the unrealistic Transport and Finance Acts not being passed by the anti public transport Ruth Richardson, in reality it is doubtful if their is much place for long haul rail freight in the 21C except for huge tonnage long haul coal traffic in the USA and Australia. The $4.5 billion proposed in rail freight investment by English is a ridiculous throwback and gravy train for low level employment and green sentiment.
For a while it might be useful to retain the Auckland- Tauranga , Hawera- Napier dairy route and West Coast coal line, but that is about all, given that the rail ferries will need replacement for another billion in five or six years and that the Picton-Christchurch line is too earthquake prone and too steeply graded to be economic or replacable, there is little point in the rest of the Sth Island system.
Auckland should have scrapped suburban rail except possibly for Newmarket-Papakura. For Auckland far more sensible and abut a tenth of the cost would be to relay a few extended old tram routes- using the Symonds st route out from the position of the Britomart corner- to Remuera- extended thr Meadowbank to Mission Bay- Koromiko. The seocnd route would an extenstion from Newmarket to Onehunga and thirdly an Eden Park route - which might extent west partly on street trackage and partly utilise the current west rail route to Henderson. A fourh tram route might go over the existing harbour bridge and up the motorway centerline or replace the buslane to Takapuna. It would be remarkably cheap and we could dispense with heavy rail altogether.

28/06/2012 1:30:10 p.m.

Robert M+ wrote:

NZ Railways proved completly unprofitable under the control of highly professional rail companies, Toll and Wisconsin Central. Had the privatisation of rail being carried out in a realistic manner,with say an annual subsidy of say $20 million for long distance passenger services, the closure of the hopelessly uneconomic, Northland, gisborne and Taumaranui-Stratford lines, plus the purchase of say 40 new Dash 8 locos during Prebble's period as Minister of Rail- Fay Richwhite may have been succesfully able to run rail with 25 years through a high degree of leveraging

28/06/2012 11:07:56 a.m.

Iron side wrote:

That is what yesterdays article indicates. Much of the land owned by the railways is prime real estate that holds the interest of overseas developers for various projects that would not enhance the NZ landscape or cater to NZ needs. Other rail assets are ripe for exploitation at the expense of all good kiwis

28/06/2012 8:46:57 a.m.

johnson wrote:

National knows we need Kiwi rail in government hands because the countries roads will fall apart without it. They also know that no private company can turn a profit from it without reducing it into a useless profit-only entity.

Cycle of stupidity: National sells kiwi rail cheap to the private sector (because that's all its worth to the private sector), the country struggles without a decent subsidized rail service, Labour is forced to buy it back at its real value to the country (four times more than what national sold it to their mates for).

Q. What happens to our roads when everyone decides that trucks are cheaper and easier than rail.

A. The cost of our roads goes through the roof and congestion due to thousands of extra trucks pisses everybody off.

Solution. Create a national rail network to take the pressure off our roads so that NZ as a whole saves time and money.

National doesn't like teamwork. So lets all try and live as simpleton individuals shall we (user pays) and see where that gets us.

28/06/2012 7:37:12 a.m.

vicki wrote:

the announcement regarding low valuations seems like propaganda given the timing.