Dr Cullen has released a list of services that was the centrepiece of Toll’s ‘Plan B’ which hung over negotiations with the government over the subsidy for the Australian firm’s operation.

The Labour-led government bought back the rail operation and launched KiwiRail yesterday.

“A modern rail system is vital for New Zealand’s economic future,” Dr Cullen said. “With the rising cost of petrol and the threat of global climate change, New Zealanders know we have to use more efficient transport methods.

“This is especially true for regional economies. The communities who have already lost their rail services know the pain that closures can cause.

“John Key says we should have left Toll in charge and refused to pay for any infrastructure investment. I invite him to travel to the regions that could have had their services axed and to explain his stance.”

The services that could have been closed under ‘Plan B’ are:

• The Overlander passenger service
• The Central North Island section of the Main Trunk Line (Te Kuiti to Palmerston North)
• Northland Line
• Taranaki Line
• Hawke’s Bay Line
• Napier to Gisborne Line
• Wairarapa Line north of Masterton
• Picton to Christchurch (freight + passenger services)
• Greymouth to Hokitika Line
• Invercargill to Bluff Line
• Invercargill to Wairio Line

ENDS

See also:

Toll wanted to close regional rail says govt as mud flies

NZPA: July 2 2008

Toll threatened to close down much of New Zealand's regional rail service during its negotiations with the Government, Finance Minister Michael Cullen said today.

As details over the renationalisation of the rail service began to emerge, Prime Minister Helen Clark said under parliamentary privilege that National Leader John Key had personally profited during the rail network's chequered financial history.

The attack came as Finance Minister Michael Cullen defended the $690 million deal saying it was influenced by plans to close regional rail services throughout New Zealand.

These included the central North Island section of the main trunk line, the Picton to Christchurch line as well as lines in Northland, Taranaki, Hawkes Bay, Wairarapa and Invercargill.

Dr Cullen said the closure threat hung over negotiations with Toll concerning the subsidy for the Australian firm's operation.

In the end the Government decided it would be better to purchase the assets and make the investment themselves.

In Parliament, National MPs accused the Government of being "suckered" and Mr Key said ministers seemed to have little idea of how much investment was needed or what it was getting itself into.

Miss Clark attacked Mr Key saying during the original privatisation of New Zealand Rail he was a director of Bankers Trust, which had advised over the sale.

"That sale was worth $400 million to the New Zealand Government... in 1993," Miss Clark said.

"That same year, the Bankers Trust, of which Mr Key was director, pocketed $39 million in profit... who benefited from the sale? Mr Key and his friends."

Mr Key later said it was a fact that he was a director with the Bankers Trust, but was involved in a different division.

His performance bonuses were based on his division's work.

Miss Clark also accused Mr Key's family trust of holding $30,000 worth of share in TranzRail in 2002.

"As associate transport spokesman for the National Party in 2003, Mr Key commented on whether we should be buying back the (rail) track and we can find no record of Mr Key disclosing his financial interest."

Mr Key later said the trust had sold the shares before he made those comments and Miss Clark's spokesman said she accepted his word on that.

During heated debate, Labour MPs accused National of wanting to sell off KiwiRail.

Mr Key said Labour was using smear tactics because it was behind in the polls.

Rail services Toll threatened to close down according to the Government:

*The Overlander passenger service;

*The Central North Island section of the Main Trunk Line (Te Kuiti to Palmerston North);

*Northland Line;

*Taranaki Line;

*Hawke's Bay Line;

*Napier to Gisborne Line;

*Wairarapa Line north of Masterton;

*Picton to Christchurch (freight and passenger services);

*Greymouth to Hokitika Line;

*Invercargill to Bluff Line; and

*Invercargill to Wairio Line.

See also:

Prime Minister Helen Clark gave this speech at the launch of KiwiRail today

NZ Herald: July 01, 2008

Today, 1 July, is a proud day for the railway system in New Zealand.

Our country's rail and ferry services were today transferred into government ownership.

Shortly I will announce the name of the new rail company, and unveil its new logo and livery on the train beside us.

A century ago, on 7 August 1908, the first train left Wellington for Auckland via the main trunk line.

That line was built for strategic reasons, and it represented a great leap forward in passenger and freight transport.

A century later our government has bought back the rail business for strategic reasons.

In the 21st century, just as in 1908, our rail system needs major investment so that it can play a growing role in our transport system.

With growing worldwide awareness of climate change and the need for our country to be more sustainable, and with the price of a barrel of oil reaching an historic US$142, many nations are looking at rail as a central component of their economic infrastructure - and so must New Zealand.

A modern and well resourced rail system will lessen the carbon footprint of our transport network, and therefore of our whole economy.

The reasons are simple. Fuel efficiency for diesel-powered trains is four times better than using the road to carry the same load; and electric trains are ten times more fuel efficient.

One locomotive can pull the equivalent freight of 65 trucks.

The benefits of rail for moving passengers are equally compelling. A small move off road and onto rail reduces road congestion; allows business to move goods and services to the public more freely; reduces fuel consumption; and reduces the pressure to build more roads.

Our government has a vision for a transport system which is affordable, integrated, safe, responsive, and sustainable.

We need all transport modes working together effectively and efficiently.

With our rail system back in public ownership we can make the strategic decisions and investments necessary for rail to play its full part in building a more sustainable New Zealand.

By 2040 total freight transport movements in this country are expected to more than double. We are looking to rail - and to coastal shipping which is also fuel efficient - to carry a lot of that extra load.

It should be acknowledged that Toll Holdings has made good progress in our rail system in recent years. But it also has become clear that our rail system cannot survive without substantial government subsidies into the future.

That, together with the need to develop a more sustainable and integrated transport system for our country, makes the case for public ownership compelling in the 21st century.

This is a strategic investment in New Zealand's future.

A new establishment board will manage the services, pending determination of the final shape of the relationship between the new entity and OnTrack - the SOE which runs the railtrack.

The establishment board will be chaired by Rt Hon Jim Bolger. He will work with a board of experienced directors.

It is now my pleasure to reveal the name and the logo and livery of Zealand's new rail company: KiwiRail!

See also:

Full text: Michael Cullen's speech 'NZ rail back in NZ hands'

NZ Herald: July 01, 2008

Dr Cullen gave this speech at the launch of KiwiRail today

Good morning. I am very pleased to be here at Wellington Station on the first day of operation for KiwiRail - an important day for our nation's economy.

15 years ago New Zealand became the first country in the world to fully privatise its rail operation as a single entity. Our great experiment of privatisation was carried out under two governments - one Labour and one National - and there is no point today in revisiting the political debates of those years.

I think it is fair to say, however, that the failure to develop a strong, efficient rail system is for many New Zealanders the enduring symbol of what went wrong with privatisation.

For a decade after its sale, there were stories of financial scandal, of asset-stripping, and of neglect. In recent years, Toll Holdings has worked hard to turn this around, but in the end all have acknowledged that it is not possible to run an effective rail network in New Zealand without significant financial support from the New Zealand taxpayer.

Confronted with the urgent need for major investments in rail infrastructure, the government had two fundamental questions to address.

First, is it in New Zealand's interests to have a strong rail system? For the Labour-led government, the answer is an unequivocal 'yes.'

As the Prime Minister has outlined, rail's ability to make our transport sector more sustainable and more efficient is huge. We also know how important rail is to regional economies. And we know that moving freight off road and onto rail and also coastal shipping will make our highways safer and cheaper to maintain.

The truth is that New Zealand must have a strong, thriving rail network if we are going to live up to our full economic and environmental potential.

And having answered that question, the government was forced to confront another. If the government is going to have to pay for the investments in rail that we must have, are we willing to do so in a way that essentially subsidises the profits of a private overseas firm? This is not a short-term question Toll had a monopoly right to the operation of the rail system through to 2070. It is a question whose answer would impact several generations of taxpayers.

And for the Labour-led government, the answer had to be 'no.' We refused to accept that New Zealand taxpayers should indefinitely subsidise a private, foreign operation and then not make sure that the investment would deliver social and economic returns for New Zealand.

We knew that with a rail system owned by all New Zealanders, we would finally be in a position to make sure that rail system worked in the interest of all New Zealanders.

The government has been heartened by the enthusiastic response the buy-back of the rail system has received. New Zealanders especially those in provincial New Zealand know that rail has a vital role to play in our future and know that public ownership is the right way to go.

Some of this enthusiasm has been criticised as nostalgic, linked to some belief in the glory days of rail. But to me, the only nostalgic view in this debate is the one that sees State Owed Enterprises as unable to be highly successful economic forces. The truth is that our SOEs are performing very well and I have every confidence that whatever the final structure of the new rail system it will be a huge success.

And I am very pleased that the man who has in recent years played a major role in the SOE success story, former Prime Minister Jim Bolger, has agreed to guide our integrated rail system as chairman. Jim, we are very lucky to have someone with your skills and your dedication to New Zealand on board with us.

Thank you.

See also:

KiwiRail launch marks end of 'failed' privatisation

Railway Gazette International: 02 Jul 2008

KiwiRail locomotive livery

NEW ZEALAND: Prime Minister Helen Clark unveiled KiwiRail as the name for the rail and ferry operations which were transferred from Toll New Zealand into government ownership on July 1.

Services will initially be unchanged, with KiwiRail controlled by an establishment board chaired by former Prime Minister Jim Bolger; the other members are Brian Corban, Mark Franklin, Ross Wilson, Brian Jackson, Linda Constable and Ross Martin.

A Rail Development Group is due to present the government with recommendations for the future structure of the rail businesses in early August. One option is the formation of a single organisational structure with two divisions, KiwiRail and infrastructure manager Ontrack, which took over the 4 000 km network when it was bought back by the government for a nominal NZ$1 in 2003. Another option under consideration is the creation of a state-owned enterprise which would function commercially, and a separate Crown Entity.

'With our rail system back in public ownership, we can make the strategic decisions and investments necessary for rail to play its full part in building a more sustainable New Zealand', said Clark during launch of KiwiRail at Wellington station. 'Over time, we will be able to move more and more freight off our roads and onto rail. Rail will also play a bigger role in public transport in our major centres.'

Finance Minister Michael Cullen said the privatisation of Tranz Rail in the 1990s had clearly not worked. 'From asset-stripping to trading scandals, New Zealand's experiment with rail privatisation failed to produce much-needed investments in this critical part of New Zealand's transport infrastructure. Toll Holdings had made good progress in recent years, but it has become clear to all that the rail network could not be run without substantial government subsidies into the future.'

The government paid NZ$655m to acquire assets with a book value of NZ$430m. Toll retains the Tranzlink rail and road forwarding business, warehousing and logistics operations, and having rent-free use of premises for six years. Cullen described the deal as 'a long-term investment in New Zealand's future.'