Wednesday, May 7, 2008

New Zealand's great railways debacle

How the times have changed! Not so long ago, the buzzword was "privatization". The Government's job was to govern, not to run enterprises that could be run much more efficiently by private enterprise, we were told by those in thrall to the Chicago School of Economics.

So I read the opening sentences of today's editorial in The Dominion Post with a feeling of slight incredulity.

"The experiment of private ownership of the New Zealand railways has come to an end," the editorial begins. "It has been a costly one, and not only in the demands it has made on the public purse."

The editorial goes on to point out that "New Zealand has made a long-term commitment to environmental sustainability". This means that "rail has the potential to play a big part" by taking freight off the roads, "where it travels in cardon-emitting trucks".

The Government has bought the railways for $665 million from Toll Holdings, whose stewardship of the rundown network is described in the editorial as "relatively benign". In contrast, the previous owners, Sir Michael Fay and David Richwhite of Midavia Rail Investments, nearly finished it off.

"They destroyed our rail transport industry," Labour MP Shane Jones told Parliament at the time. "Having got [access to] it, they asset-stripped it...they left it as a hovel."

Letter-writer Bob Kay, in the same issue of the paper, estimates the entire privatisation and repurchase exercise has cost the taxpayer $2.3 billion.

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