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Government ownership of rail no recipe for success

Media statement Tuesday May 6th, 2008

Government ownership of rail no recipe for increased use


Finance Minister Dr Cullen has said there will be no profit in a properly integrated rail system without subsidization, says the Employers & Manufacturers Association (Northern) chief executive, Alasdair Thompson.

"But Dr Cullen says Government ownership will prevent profits from flowing out of the country. This is confused and contradictory.

"The taxpayer's forking out $665 million to buy Toll's trains and ferries alone will not change the amount of freight carried on them one bit.

"It's the service and competitiveness of the trains and ferries that will determine how much they will carry.

"But the Government says its purchase of the trains and ferries will increase patronage and freight, and reduce carbon dioxide emissions.

"One feels bound to congratulate Toll Holdings Ltd for buying the trains, ferries and road freight business in 2001 and selling just the trains and ferries to the taxpayer for $235m profit in 2008.

"This purchase begs the question: if Government's buying just the trains and the ferries for $665m in 2008 makes sense, why didn't it buy the lot (along with the profit-making trucks) for $430m in 2001?

"So how competent is the Government's business decision-making?

"EMA's other concern is that to increase patronage, increasing taxpayer subsidies for the new Government owned railways will hurt competent and viable, privately owned trucking operations," Mr Thompson said.

ends


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