Sunday, March 16, 2008

Toll NZ demands you subsidise its investment

The Toll NZ CEO David Jackson is in the NZ Herald pleading the case for you being forced to pay to prop up its investment, having done a deal with the government a few years ago that has gone sour.
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Oh dear, how sad. Having already NOT paid what it was meant to in track access fees to OnTrack to cover the maintenance of the network it uses to make a profit - it wants more and the reasons it gives are worth closer investigation. Below are some of his points and my response:
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"Statistics show a significant conversion of freight from road to rail (meeting the Government's objectives), and the industry is poised to move forward, more so, arguably, than at any other time in the past 50 years."
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Well fine, so you've had success. Good for you.
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"We have taken no dividends, we have improved the efficiencies, we have motivated staff and we have a business that is now viable. We have done a lot of this with fundamentally the same set of tools (people, rolling stock and assets) that we started with."
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This puts paid to the doggerrell spread by the Standard that Toll has been asset stripping, which is a complete lie.
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"We are prepared to invest more but require reasonable returns. We want a regime that puts tensions in place to achieve the most cost-effective outcome, that all stakeholders are accountable in this essential service to the country, and that a true, positive economic outcome is achieved. With limited funding, maximising value is critical."
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Ohhh wait for it. "All stakeholders accountable", I know what you want, because you then say...
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"For that to occur, a subsidy is required in some form."
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Ah, so we all have to prop up your investment, by force. Some investment.
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"Road transport in itself does not carry its full costs. There is no recognition of road operators receiving a subsidy but arguably they do. "
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Neither does rail, since you are getting a subsidy on maintenance of the rail network. The only subsidy of road transport is spending on local roads from rates. Besides, since you operate a trucking network you already get a subsidy then? So presumably charges for your trucks should rise then instead? No, didn't think you'd advocate that.
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"Rail operations the world over do not meet their costs and require significant subsidisation."
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Oh really? So that's why British rail freight operations are commercially operated, why US railways are commercial and privately owned, and so are most Australian rail freight operations. What nonsense.
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"I think it needs to be understood that in a country of four million people, with distances which make rail difficult to run commercially and growth opportunities that restrict the opportunity for scale improvements, there can be no room for inefficiencies."
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In other words you bought something marginal, and it's proving harder than you thought.
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"A final word of warning - customers are key. Without their buy in and satisfaction of their needs, rail has no future. If a subsidy is required, it is ultimately the customers along with the country as a whole, which is so desperate for infrastructure improvement, who will be the true beneficiaries."
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There we have it. So Fonterra, Solid Energy and the various forestry companies and freight forwarders - give Toll an offer. You are the true beneficiaries - so you should pay for it. The average family with two kids shouldn't be subsidising your freight movements. Oh, and all those on the left who think it is strategic - you chip in too, since you think it is so important put YOUR money where your mouth is - oh you don't tend to do that do you?

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