Will KiwiRail Be Privatised Again?


The Rail Workers Union is asking whether KiwiRail’s move to separate its business in two is a foreshadow of future privatisation.

After releasing its annual report, KiwiRail announced that it is seeking government endorsement to separate into two businesses, one owning the rail corridor land and the other owning the rolling stock, properties and other assets.

RMTU General Secretary Wayne Butson said that this structure sets up the company for privatisation.

“KiwiRail CEO Jim Quinn has said it is essentially a paper transaction and won’t change how they operate.  If that is the case, then we question the point of the move.”

He said the Railways Corporation was formed in the late 1980s and has always owned the below rail assets.  The rail operating entity has since the early 90s owned all of the above ground assets. The renationalisation and formation of KiwiRail brought the businesses back together.

“For such a radical write-down of assets and to re-establish the clear separation makes us fearful there has been a hidden agenda at work for the last 12 months to add KiwiRail to the privatisation stakes.”

KIWIRAIL: What's ahead?

Wayne Butson said that a myth perpetuated by the proponents of privatisation was that the privatisations were not wrong, but rather that the structure of them was flawed.

“It cost Kiwis $1.2b to set up rail for privatisation in the 90’s and now it looks like it is costing us another $6 Billion in write downs.”

“Rail privatisation between 1993 and 2008 was a mistake, that ended costing citizens and taxpayers unnecessarily. It is clear to workers in rail that a re-election of a National government is for Kiwi’s to repeat the privatisation mistakes of the past.”





  1. Travis says:

    I dont think it will be….The government has sunk too much money in now to let it go…….

  2. Matt says:

    Travis, I don’t trust them as far as I could chuck them over Niagara Falls, Otago.

  3. rtc says:

    Of course it will be, National views Kiwirail like a chain around their neck and the only transport mode that they think should be subsidised are roads - rail for some reason they hate. What’s it about non asphalt based means of transport that right-wing parties hate? I’ll never understand it.

  4. Geoff says:

    rtc, if they hated it, they wouldn’t be investing the billions that they are. There’s been a lot of upgrading in recent years, and now new locos and wagons coming on stream, with new trains and new business as a result. It’s a lot more positive now than at any time in the past 15 years.

  5. aucklander says:

    National will sell their soul , so it wouldn’t surprise me if they try privatisating rail again.
    They spent a large sum helping Air NZ get back on it’s feet and now they want a partial flog off of Air NZ along with other kiwi assets !

  6. Matt says:

    Geoff, the only reason they’re playing the game is that there’s already money sunk into it. Had Labour not bought back the assets, National would happily have let NZ’s rail network wither and die. Joyce is already subjecting it to the death of a thousand cuts by refusing to invest some real money into a proper comeback operation. Foregoing dividends and injecting $750m over three years is not a significant investment when you compare it to how much is being spent on the RODS.

    If National get a second term, I wouldn’t be surprised if KR is on the block by the end of it, once it’s shown that it can turn a profit. After all, you can’t be having Crown assets that turn profits, that’s just evil Socialism.

  7. Kris says:

    This a repeat of the of the Wisconsin Central Railway, Berkshire Partners and Fay, Richwhite fiasco of 1993, where NZ Railways Corporation (Est 1982 under the New Zealand Railways Corporation Act 1981) created New Zealand Rail Ltd & sold off by National for $400 million?

    Its increasing apparent, that Kiwirail Ltd is on National’s list of asset sales when they get re-elected.

    This time the Government (through NZ Railways Corporation) will hold 51% of shares in Kiwirail Ltd & the remaining 49% will be held by private investors, probably by the Chinese Government through their investment company.

    It is following the Booz Allen Hamilton report of 1984 to the then National government on how a viable rail network could be created. The report recommended, amongst other things:

    -> Reducing staff numbers
    -> Re-orienting freight services towards bulk commodities
    -> Increasing the length and weight of freight trains
    -> Rationalising the locomotive and wagon fleet
    -> Rationalising railway workshop
    -> Re-focusing long-distance passenger services towards tourists.

    With the two agreements concerning the Auckland & Wellington suburban networks rolling stock & stations being handed over to the Greater Wellington Regional Council & Auckland Transport, it means that Kiwirail Ltd has disposed of the suburban networks from Rail Passenger Group.

    This makes way for Rail Passenger Group (Tranz Scenic/Kiwirail Passenger services) to be set up as a separate company 51% owned by NZ Railways Corporation & the remaining 49% will be held by a joint venture partner possibility CAF of Spain.

    It is interesting to note, that CAF has established a NZ company and with it experience in managing/operating rail networks around the world and providing the EMU’s for Auckland, it would a good

    We all know that Kiwirail Ltd lacks entrepreneurial flair and is conservative in its business dealings, its going to be interesting to see how it the ‘New’ Kiwirail is going to perform under private investors?

    I wonder if ONTRACK brand will be re-created as NZRC’s infrastructure arm??

  8. Matt says:

    Kris, if National get reelected. Please, let’s not treat it like a foregone conclusion, we need everyone who’s opposed to their policies to vote like their individual vote could be the difference; and it could very well be that it is the difference.

  9. swan says:

    The write down is because the previous asset values were ridiculously over inflated.

    If and when the CRL gets built, we will see a similar write down as some point - from 2.4b to somewhere closer to zero.

  10. Matt says:

    Swan, the final construction cost of the CRL will be capitalised, and amortised over the IRD’s determined lifetime for that kind of infrastructure. There will be no uncertainty to its initial purchase value, so a write-down should never occur.

  11. Kris says:

    For Matt - Unless the electorate has a major change of heart regarding Labour policies (there might be some change in regards to CRL, no asset sales, etc) or labour comes up with election promise that will ‘Wow’ the electorate, the way the National is doing in the polls only 21 Days from the election, Labour even with the Greens, Maori & Mana party coalition, could not form a workable government, as Labour will not have the majority.

    Therefore, the electorate may have to be resigned to a re-elected National government, if we like or not which is currently 90% on the cards that will happen.

    Hence the ‘restructuring’ of Kiwirail Ltd for ‘Asset’ sale, as National knows it will be re-elected.

    By the way - I am not a supporter of any of the parties.

  12. George D says:

    Kris, the polls are tightening. National need only lose a couple and Labour Greens gain a couple, and it’s neck and neck. Don’t be surprised if this is a close election indeed.

  13. Matt says:

    On current polling, Labour and Greens are good for 41%, National for 53%. There’s not much of a shift required to change the outcome dramatically, especially if Banks takes Epsom but doesn’t bring any MPs with him or, even more desirably, loses Epsom to Goldsmith and thus passes on Act’s percentage of the party vote to the other parties.

    This election is far from a foregone conclusion, particularly now that there’s an actual campaign going on. Based on what I’ve been reading, Labour’s opening broadcast went down very much better with voters because it emphasised the cooperative, team-based nature of their potential Cabinet, as opposed to National’s “It’s all about the smiley-wavey guy” effort where the only person who appeared was Key.

    I’m also aware of one very stalwart National Party member who has publicly stated that he’s going to be party-voting Green unless something dramatic changes on how National’s campaigning. That’s a pretty serious situation for National to be in, where members of several decades’ standing are so unhappy with the party’s direction that they’ll vote for another party.

  14. Geoff says:

    Kris wrote: “I wonder if ONTRACK brand will be re-created as NZRC’s infrastructure arm??”

    Infrastructure stays with KiwiRail - it’s the land that’s going.


Leave a Comment


XHTML: You can use these tags:
<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>