Wednesday, March 05, 2008

Don't want to buy a railway?

Tough - Dr Cullen is going to make you, if he can get away with it.

Not satisfied with spending $81 million for the Auckland rail network, when Treasury valued it at best at $20 million, not satisfied with spending $1 for the rest of the national network.

Not satisfied with spending from general taxation:

- At least $450 million to upgrade the Auckland rail network (track, signals and platforms) from 2005;
- $100 million per year for six years from 2007 to upgrade Auckland and Wellington rail networks;
- $25 million in 2008/09 and again in 2009/10 to upgrade the national rail network;
- $100 million upfront in upgrading the national network from 2003, and $25 million annually from 2004 to 2007.

Noting than absolutely none of that spending will boost the net financial value of the rail network at all (it is unlikely to be able to be sold for the amount being spent on it), now he wants to spend $500 million buying the whole lot according to Stuff. Toll wants $700 million, but presumably Dr Cullen will threaten "the state is sovereign" to force a compulsory nationalisation.

Toll is already paying the government $9 million per annum less than Ontrack (the Crown company which owns the rail network) is charging for its use. You might think Ontrack could simply tell Toll to stop trespassing, or to tell Toll that it will invoke the rail access agreement which means other companies can provide rail services on the network if they drop below a certain level. Yes, in case you didn't know, the "ownership" the Crown has of the track also gives Toll a monopoly on the use of the track, as long as it maintains a minimal level of service on the track.

Now a business minded government would take Toll to court to pay what is owed, or start confiscating rolling stock for part payment of the track access charges. After all, if a trucking firm doesn't pay road user charges to use the government's state highways, it faces being fined and the unpaid charges recovered, likewise airlines using airport.

No, after pledging to spend over $1 billion on its OWN assets, it wants to spend over $500 million buying the company that uses them which doesn't even pay what the government charges.

What this will mean is we will be back to the days before privatisation, when the railways lost money - and either were subsidised heavily (1982-1988) or getting bailed out regularly (1982, 1988, 1990).

Maybe the truth just hurts too much, maybe the government needs to give Toll the rail network back and say - make a go of it, and if you can't, then sell it to whoever wants it. While it's at it, it could sell the state highways as well, now that WOULD be worth a fair bit.

but what would John Key do?

1 comment:

Railways of New Zealand said...

Basically it comes down to Labour's lurch to the left and their long held ambition of buying back the entire rail operation, not that there is any merit in it.