NZ | Public Transport Projects + Development

[jarbury]

$175m power windfall may buy back rail
5:00AM Wednesday March 26, 2008
By Paula Oliver

A $175 million windfall in power company profits could help the Government buy back the national rail service.

Finance Minister Michael Cullen said yesterday the special dividend from Meridian Energy would be used for capital purposes - potentially the purchase of the rail and Cook Strait ferry operations of Toll New Zealand.

The state-owned company announced the dividend on top of a $60.9 million interim dividend.

The extra money comes at a good time for the Government, which is in negotiations buy back Toll's rail and ferry assets.

Dr Cullen said the Meridian money would be used for capital expenditure of some kind - such as "trains and boats and planes".

It is not the first time Meridian Energy has come forward with a big sum of money for the Government at an opportune time.

In 2006, the Government used the proceeds of an $800 million special dividend from the power generator to help pay for a big transport package in that year's Budget.

Dr Cullen said the Government and Toll were closer to agreeing a price for the rail and ferry business.

He confirmed a fortnight ago the Government had made an offer for Toll's rail and ferry business, but the Crown and company remained more than $200 million apart on agreeing a fair price.

Dr Cullen said negotiations at the weekend had seen the two parties move closer together.

"We're not as far apart as we were a week or so ago, by quite some margin," he said.

"I wouldn't want to say it's imminent, but as I say I think we're a lot closer than we were a week or so ago."

Dr Cullen said he expected to discuss the issue on the sidelines of a function he and Toll's chief executive would attend on Thursday evening.

The Government is expected to make Toll start paying the full price of access to the rail track network, which the Government owns.

Toll has been paying about $48 million a year since an access deal was struck in 2004.

The Government has been picking up the shortfall of about $10 million needed to maintain and improve the tracks.

Improving the rail system is central to the Government's plans to curb greenhouse gas emissions.

- NZPA

[jarbury]

Government buys back rail and ferries


Photo / Kenny Rodger

The Government has bought back Toll's rail and ferry business for $665 million.

The Crown has been in negotiations with Toll over a buyback for several months.

It comes against a backdrop of wrangling over Toll's access agreement to the rail tracks, which are already owned by the Crown, with the Government saying it has been failing to pay its fair share.

Prime Minister Helen Clark today said the deal would pave the way for the modernisation of the rail network, which formed a key part of the Government's sustainability agenda.

"Modernising our transport sector is central to transforming our economy and making it truly sustainable," the PM said.

"With rising fuel prices and growing awareness about the challenge of global climate change, many nations are looking to rail as a central part of 21st century economic infrastructure."

She said a modern rail system could reduce the emissions of the overall transport network, take pressure off our roads and allow trucking and shipping to operate more efficiently.

The Government will pay a purchase price of $665 million for the rail and ferry business with settlement on June 30.

Finance Minister Michael Cullen said buying the rail operating business was the best way to increase investment in the industry and make it more responsive to customers' needs.

Rail assets had been run down after the sale of the public rail system in the early 1990s and the Government would now look at upgrading rolling stock.

The New Zealand First party will welcome the announcement, as their transport spokesman Peter Brown called for rail to be nationalised last December.

"The failure (of negotiations between the Government and Toll) is yet another chapter in the sorry history of our rail services. Sold for a song in 1993 by the National Government to its rich mates Fay and Richwhite, rail has been run into the ground by a succession of owners. It is time to face facts - privatisation has failed.

"Government ownership could open the door to improved flexibility, innovation, efficiency and service, which are currently lacking," he said.

Dr Cullen said Toll had done a good job increasing freight volumes and streamlining the operation of terminals, but it had struggled to run a "commercially viable" business without government support.

"The Government will now avoid paying subsidies to third parties and we also avoid the on-going disputes over the implementation of the National Rail Access Agreement that had the potential to destroy value in the business and erode the morale of the people who work in it."

The negotiations reportedly took place against a backdrop of the Government manoeuvring to make Toll start paying the full price of access to the rail track network.

Toll has been paying about $48 million a year since an access deal was struck in 2004, with the Government picking up the shortfall of about $10 million needed to maintain and improve the tracks.

Great news! I wonder if we'll see a return of inter-city trains (beyond the Overlander) from this?

[ZEALand]

Seems like good news, would the government contract the services out like ARTA does with Veolia I wonder ?

[minimum chips]

I'll be watching this one with interest. I remember I didnt approve when we sold our rail network to the Australians- I think they paid us the sum of a single solitary $1! Not a bad profit on their behalf.

[jarbury]

Note that this sale isn't about the tracks - they were bought back a few years ago when ONTRACK was formed. This is about the rolling stock (largely freight trains, except for the Overlander) and also for the Cook Strait Ferries.

Someone correct me if I'm wrong here.

[sensible]

Originally Posted by jarbury

Note that this sale isn't about the tracks - they were bought back a few years ago when ONTRACK was formed. This is about the rolling stock (largely freight trains, except for the Overlander) and also for the Cook Strait Ferries.

Someone correct me if I'm wrong here.

Tranz Scenic was purchased back by Tranz Rail/Toll rail a few years ago after the diminished operations were sold to Australian buyers around 2001. so id imagine the sale actually also includes the Overlander, Capital Connection, Tranz Coastal and Tranz Alpine rolling stock and engines. It will be interesting to see what other infrastructure is included although workshop and maintenence facilities appear to be doing quite well in their current state. I would imagine Toll Rail will become a state owned enterprise type beast and be renamed something silly like 'KiwiRail' and be kept seperate from OnTrack. hopefully the govt works with the entire transport industry i dont think it should either monopolise nor strip for full on competition.

This is excellent news and is good for everyone, but shows how extreme and hurtful the 1980's/early 1990's political reform were for some sectors. In many places they simply went too far with neo-liberal thought being applied ideaologically rather than on a case by case individual and independent basis.

[Svartmetall]

I can't see passenger rail expanding at all in NZ due to this sale, however, freight rail I see expanding immensely due to the positioning of the trunk railways. Hopefully now that freight is going to be overseen by the Government there will be a few less lorries on NZ roads!

[jarbury]

Yes it seems like the main changes will be increased rail freight. Wonder if we'll see the Avondale-Southdown planned line getting back on the drawing board.

[sensible]

Originally Posted by Svartmetall

I can't see passenger rail expanding at all in NZ due to this sale, however, freight rail I see expanding immensely due to the positioning of the trunk railways. Hopefully now that freight is going to be overseen by the Government there will be a few less lorries on NZ roads!

i dont wanna open a can of worms again but it would be nice if eventually some adequate long distance pax. services got up and running again. Speedy railcars trundling along at least at 120km/h... cheaper than flying, more comfortable than bus, more enviro. friendly and with food & beverages plus audio and/or video entertainment... its so sad that its a dream cos it shouldnt be... we should have it now really. It would cost $$$ though BUT it would really be an investment i believe... for now though they will just concentrate on freight & commuter rail. Ill hve to fly and drive everywhere.

i realy hope the government works WITH transport company's to get trucks off the road rather than against them (by this i mean offering inentives to company's like Mainfreight to shift more by rail). oh yeah just so you know big logistics company's 'double handle' as well which is something many mistakenly see as a negative about rail against road transport)

[jarbury]

I think an Auckland-Hamilton-Tauranga triangle of high-speed passenger trains might be viable in 20 years time. If Auckland's up to around 1.8 million, Hamilton around 250,000 and Tauranga possibly 150,000+.

[Svartmetall]

Yes, we had this discussion in the past and almost everyone decided that it was an excellent idea, but misplaced for now. It's highly unfortunate as I'd love to be able to zip around NZ by train. I know I'd see far more of the country if I could do so, but til then I'll continue to be confined to my little area around Auckland (at least til I can afford air travel, not that I enjoy flying at all...).

[metroman]

At the moment 16,000 people per day use commuter rail in Auckland while the figure for Wellington is around 35,000. The truckies could get a little worried that the road user taxes they pay are used by government to form a freight company which is in opposition to them. I think it is great that government have finally bought back rail. Lets hope something gets started in Christchurch in regard to commuter rail.

[sensible]

Originally Posted by minimum chips

I'll be watching this one with interest. I remember I didnt approve when we sold our rail network to the Australians- I think they paid us the sum of a single solitary $1! Not a bad profit on their behalf.

our network wasnt sold to the Australians... it was sold to those crooks Michael Fay and David Ritchwhite and some Americans... plus it was the tracks that were sold for a token $1 NOT rollingstock etc. The NZ Government bought back the track for another token $1 some time ago and TOll (the Australians in this story) bought the rolling stock and the right to operate the frieght dervices and later bought back the passenger services so as to stop any back door entry into the rail freight market from other company's such as Mainfreight. It is the later that has been bought back by the Government yesterday for $665 million. Im not sure what it was all sold for, although in the first place it was sold for peanuts...

[Kane007]

Originally Posted by sensible

our network wasnt sold to the Australians... it was sold to those crooks Michael Fay and David Ritchwhite and some Americans... plus it was the tracks that were sold for a token $1 NOT rollingstock etc. The NZ Government bought back the track for another token $1 some time ago and TOll (the Australians in this story) bought the rolling stock and the right to operate the frieght dervices and later bought back the passenger services so as to stop any back door entry into the rail freight market from other company's such as Mainfreight. It is the later that has been bought back by the Government yesterday for $665 million. Im not sure what it was all sold for, although in the first place it was sold for peanuts...

sold I think for $200 odd million, by ruth rat-shit-son

[Kane007]

Just received an email back from Nationals transport spokesman

Thank you for your email addressed to the Hon Maurice Williamson MP. He has asked me to let you know that National’s transport policy will be announced later in the year.



Yours sincerely

Bridie Wilkinson

Umm, isn't the election later this year ????

[UglyBob]

Sadly looks like pie in the sky to me ...

‘Profit’ in southern passenger rail link
ODT Tuesday, 6th May 2008

THE Government can expect early pressure from southern interests to reinstate some form of passenger rail transport between Dunedin and Christchurch now that it has renationalised the industry.

‘‘There definitely is a good future for passenger transport in this region if the Government is prepared to pick up the capital cost,’’ Taieri Gorge Railway chief executive Murray Bond said when contacted yesterday.

He was responding to the Government spending $655 million to buy back the rail and ferry business from Toll New Zealand, with settlement on June 30.

When the Southerner rail service ended, it was carrying an average of 72 passengers a day between Dunedin and Christchurch, which was not enough to sustain the service, Mr Bond said.

However, Taieri Gorge had been investigating the use of light rail cars between Dunedin, Palmerston and Oamaru. The Government could use similar rail cars for the extended service. Luxury rail-car sets were available overseas, were not overly expensive and could be reintroduced on main routes, he said.

‘‘Every day we are asked by people wanting to travel to Christchurch by train and I tell them government policy encourages road transport. That philosophy must change now the Government will be the owner. If the Government looks after the capital cost, someone can make a profit from a rail service.’’

Owning the rail network, as well as the rail and ferry business, would let the Government decide how best to ‘‘grow’’ the rail business, Mr Bond said.

Otago Chamber of Commerce chief executive John Christie said an integrated road, rail, air and port network was critical to a well-functioning economy. Since the demise of the Southerner, the economy had changed. Air fares and fuel prices had risen and the attitude of people towards using public transport had become more positive.

‘‘Delays in shifting people and freight cost time and money. You only have to look at the cost to Auckland of vehicles sitting in traffic gridlocks. There are lots of opportunities now the Government has the rail and ferry network again.’’

Green Party co-leader Jeanette Fitzsimons said strengthening the freight network should come first to help build a viable rail network.

‘‘Once the Government has invested in the infrastructure and freight can be moved off the road, then we can develop new passenger services.’’

The passenger rolling stock had been run down and ‘‘cannibalised’’, so new stock would be needed. That was not cheap to buy, she said.

People cared about how long it took to travel from point to point. Having a top-class system would allow faster rail travel. As air fares kept increasing, along with fuel costs, travelling by rail would become cost-effective for many, Ms Fitzsimons said.

A statement by Prime Minister Helen Clark and Finance Minister Michael Cullen focused only on the freight aspect of the deal. Miss Clark said modernising the transport sector was central to transforming the economy and making it sustainable.

‘‘A modern rail system can lessen the carbon footprint of our wider transportation network, taking pressure off our roads and allowing our trucking and shipping businesses to operate more efficiently.

‘‘Combined with an increase of almost 1100% in public transport investment since 1999, today’s announcement marks a major step forward in building a truly sustainable transport network.’’

Dr Cullen said the selling of the public rail system in the early 1990s, and the running down of the asset afterwards had been a painful lesson for New Zealand.

‘‘In the months ahead, I will explore options for significant investments in new, modern rolling stock. These will be presented to Cabinet and full details will be made available as soon as possible,’’ he said.

[sensible]

national has always been in danger of leaning too far towards ideological policies, in this case transport, and has often put little common sense towards formulating policy in specific areas.This has really let them down recently, if they are gonna nail labour they need to be trusted and not let people think they will take us back to the 'bad old days' of the 1990's. They need to fix this which i believe they will, already they are keeping very tight lipped on the renationalisation of the railways. I believe they will 'wait and see' and then come up with an attitude that largely reflects what the public wants... and hopefully makes sense

[sensible]

uglybob the only reason that revitalisation of passenger services is 'pie in the sky' right now is because they were alowed to be run into the ground in the 70's and 80's. TGR chief executive Murray Bond is right in that if the Government creates the right conditions then someone will def. look at investing. However it really isn't a priority right now. this is a fantastic opportunity to put things right again and make them even better and freight and inestment in the network are the clear priority. however things like improved intercity passenger rail may well be a spin off of all this some time further.... down the 'track'

[UglyBob]

Originally Posted by sensible

uglybob the only reason that revitalisation of passenger services is 'pie in the sky' right now is because they were alowed to be run into the ground in the 70's and 80's. TGR chief executive Murray Bond is right in that if the Government creates the right conditions then someone will def. look at investing.

I can't see passenger trains on the South Island main trunk in the foreseeable future unless air travel becomes really prohibitive. The purchase is possibly a big boon for Hillside Railway Workshops in Dunedin with potential new rolling stock production but that's all I'd expect at that end of the country in terms of change other than rail freight.

[KaneD]

From memory NZ Railways Corporation was sold to Wisconsin Rail (US) and Fay and Co for $175 million in 1993.

Also, from a discussion I had a few years ago with an ex railway worker was that general line speed for the NIMT and SIMT lines is 80km/h for freight trains and up to 100km/hr for passenger services. Asked if trains could run faster than this and was advised that the problems with increasing line speeds were:

1) Rail Construction standards - Higher speed tracks are VASTLY different in construction standards than our current low speed tracks. Spacing and strength of sleepers, tie down components, rail joint methods, track foundations etc are all built to much higher standards.

2) Route geometry - Self explanatory really. Going around that short radius curve at 160km/hr just isn't going to happen... let alone 80km/hr. Much of NZ's rail network is on original alignments dating from the late 1800's. Curves aplenty!

3) Track Gauge - Yes, there are higher speed narrow guage rail services in other countries, but the narrower the guage, the greater the consideration towards route geometry and rail construction standards - In short, the tolerances are a lot finer with narrower gauges. This is kind of like comparing walking on a builders plank on some scaffolding with say a gymnast's beam.

4) Locomotive limitations - You've heard this on the radio in the last few days no doubt. Our newest locomotives are 30 years old and some are over 50 years old. In short we need some more modern and more powerful locomotive power. Electric engines are much better but only two parts of our network are electrified - and using two different systems (DC and AC). Dual power locomotives are more expensive.

5) Track capacity - Running faster passenger trains is one thing, but to run them on the same physical line as freight trains that are always slower is a recipe for trouble. This issue is more pronounced when you're running on a single track line.

Despite this - hopefully the govt will at the very least invest plenty of money to restore the network to where it was before privatisation - And then add plenty more cash to upgrade it to a more modern system. I'd love to see long distance rail services restored to key urban and tourist locations... along with commuter services in Chch.

First... Restore the Southerner service Chch-Invercargill.
Second... Chch Commuter (Rangiora/Rolleston) service
Third... Auckland to Hamiltom/Tauranga/Rotorua services
Fourth... Wellington to Napier/New Plymouth.