Railways

The Dominion post front page (today and yesterday) have articles detailing proposals by the Government to re-nationalise the railways, by purchasing them of Toll, although disputes exist as to the amount, with the Government offering $500 million, but Toll wanting $1 billion. There is the possibility that the Government could force Toll to pay  $57 million per year for track access, to cover costs, instead of the $48 million per year it has been paying to date. In addition Toll will have to pay $7 million this year, $14 million next year, $21 million in 2010 and so forth as part of a depreciation and interest charge. This makes it no surprise that Toll wants to sell. I actually support increasing the charges Toll has to pay, as it was part of a 2003 agreement, and the Government shouldn’t subsidise private enterprise without good reason. What I oppose is the renationalisation of the railways. Although there are some good arguments in favour of state ownership of rail (such as it is a natural monopoly, and when in private ownership it was run down), when it was in state hands it was very inefficient, a huge burden on the taxpayer, complete with featherbedding (i.e. employing surplus staff at union demands) and ferry strikes on holidays. However a Public Private Partnership could be a good idea, especially if the Government will invest heavily in rail as part of its climate change policy.

Despite my views, I think the sale will go ahead. National has condemned the move and made it clear it will get out of any deal Labour has gotten into, and while I agree with National’s position, there is a strong knee-jerk reaction against privitisation from many New Zealanders, and running on a policy of re-privatisation of railways could hurt national come the election.

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