- - - - - - - - - - - - -

Monday, May 05, 2008

Labour's hand-picked male academics... never let them shop alone

Dr Cullen: "But them's magic beans!"

So the genius Finance Minister who personally intervened in the Auckland metropolitan rail track purchase (the total of which had a value in Tranz Rail's own books of less than the $95 million he paid - for the entire national network!) and from which Fay, Richwhite etc. took the cash and then quickly dumped the asset-stripped shell and fucked off to Switzerland leaving this genius to buy the other 99% of the rail network back for $1 - is now paying Toll Holdings $665 million for the rail and ferry business with settlement on June 30.

So the sage of Dunedin paid out $95 million for 1% and within about a year the other 99% was worth a dollar. That's an expensive impulse buy isn't it. That's what... a 95,000,000% decrease in value, or to look at it another way Dr Cullen payed a 9,500,000,000% inflated price for it. It must be one of the worst financial decisions in the history of the modern world, let alone NZ. Even the Russians selling Alaska (only for the incoming Americans to discover gold and oil there) isn't comparable in terms of proportionate financial stupidity. (This sordid saga is curiosly absent from the NZ Herald's otherwise good chronology of rail history)

Now our guru is going to pay almost seven times that much for the delapidated rolling stock. The guy's a history and economics scholar isn't he? Has he forgotten the financial history or rail in this country? Here it is from what I recall:
1. In the early colonial period many different railways, many privately owned, were started. At the time there was no competition from formed roads.
2. Government bought the railway companies and had a policy of extensive provincial lines and a national network - all heavily politically manipulated and prone to pork-barrel issues. Julius Vogel starts heavy government borrowing - much of it for rail. Rail line was narrow gauge and expensive as it went through rough country. Serviced small centres.
3. In the 1940s and 50s as the final parts of the modern system were being completed smaller lines were already being shut down as uneconomical and a national roads board was improving the state highway system introducing competition for freight - which was itself curtailed by the govt. in an attempt to prop up rail.
4. Expensive electrification works begin but don't reach Auckland. Most small branch lines torn up.
5. Rail corporatised and then sold off.

Haven't we paid enough already? I remember a Wisconsin Central executive telling a reporter that "the steel wheel on the steel rail" will always have superior efficiency. Yeah, but he left out over long distances and on easily maintained lines and moving a lot of bulk goods between big centres - and we simply do not have these other key attributes to make his axiom work - which is why they pulled out of Tranz rail once they cashed Cullen's cheque - because it just is not economical.

This isn't Aussie: we don't have a string of million plus cities to connect, we don't have massive mineral stockpiles to get to massive ports, our land area isn't flat. We have a road system improving every year that can offer a door-to-door delivery of anything you can put on rail without delay or access issues or even tolling. How the hell can rail compete with that? It can't.

So, what cost a nostalgia trip? $665m up front plus maintenance of lines, upgrading rolling stock etc. That plus will be a massive and ongoing minus. And then some future National government will sell it off again. Then the Labour Government after that will buy it back etc, etc. What is the opportunity cost of this? How much of an improved motorway system could we have if the Crown had washed its hands permanently of rail in the 90s?

I'm sure the coal hop over the Alps and the Tranz Alpine are commercial. I'm sure passenger services between Auckland, Hamilton and Rotorua or Auckland-Wellington could be commercial. I'm sure the environment would benefit from taking goods off the roads and on to rail; but if commercial operators can't make it work then the Government certainly cannot. Look at our history on rail: a creaking narrow-gauge infrastructure, superceded by road, heavily subsidised by the State is subject to political decisions that have little to do with improving the prospects of viability. It is Cullen's albatross that his successor's will have to wear. And wear it they must - National has said no asset sales in its first term.

PM's announcement:
“Modernising our transport sector is central to transforming our economy and making it truly sustainable,” Helen Clark 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.
“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.
[...]
Following today’s purchase, the Government will own

180 mainline locomotives,
4,200 wagons,
one rail ferry and
leases on two other ferries.
Toll employs approximately 2,300 people in its rail and ferry operations.


Climate change means the govt. has to buy the rail system... of course. The fathomless hole down which the Crown will drain its money is, of course, "sustainable".

22 Comments:

At 5/5/08 8:24 pm, Anonymous sagenz said...

Excellent post Tim. The only thing you could add is the fact that Toll have kept the "last mile". They own all the trucks. Expect the private sector to go head to head on freight. Expect the private sector to take all the margin from the trip as they take freight to the railhead and from the railhead to the destination.
Expect the rail to be loss making in 3 years. That is how long I give them before the generous provisions they will build into the opening balance sheet will run out.

 
At 5/5/08 8:27 pm, Anonymous Legio X said...

Damm good post Tim.

 
At 6/5/08 7:40 am, Blogger Bomber said...

...
I'll remind you of this next time you catch the train Tim - all you prove here was why it shouldn't have been sold off in the first place, with petrol at $120 a barrel and only going up, I'd think that buying back the trains was a smart move, I agree with many of your points, and the aweful pork barrel politics from the past but I don't recall how well the corporate right wing did in running the Trains, how well did they do Tim? Maybe somethings are supposed to be run for the public and not for profit, in a global warming world such unfathomable shifts away from the free market that has done such a great job in getting us into this mess may need to be contemplated.

 
At 6/5/08 8:02 am, Anonymous John Tertullian said...

Hey, Bomber--since the actual scientific data (as opposed to specious futuristic speculations) are showing that the globe is not warming, trotting out that canard to justify huge taxpayer subsidies to a failing business is chicken littlish--(with all due respect to the former owner of the rail company, who is today is much much more wealthy at the expense of the poorer taxpayer, courtesy of the galactic stupidity of Michael Cullen).
As the Sage of Omaha once said, if a person with an excellent business reputation takes over a poor business, it is usually the reputation of the business which stays intact. That was the point of Tumeke's analysis. The private sector may have many failings, but in the end it faces up to the actual commercial reality and takes the hit (which in this case, the taxpayer protected them from).
The advocates argue that this will enable the government to plan a national transport strategy. Cullen is already talking freight subsidies to enable rail to compete with road. Get used to more wasted tax money, more think big follies, more economic migrant flight to Australia. The economic risks to New Zealand just went up considerably. Would the last person please turn out the lights--oh, sorry, there's no need. The lights went off by themselves. some time ago. Must have been a naturally occurring global warming corrective.

 
At 6/5/08 8:05 am, Blogger Bomber said...

...
John Tertullian said...
Hey, Bomber--since the actual scientific data (as opposed to specious futuristic speculations) are showing that the globe is not warming, trotting out that canard to justify huge taxpayer subsidies to a failing business is chicken littlish--

That's not true, the cooling period we will enter for the next decade will mask the temperature increase. Next please....

 
At 6/5/08 11:52 am, Anonymous Legio X said...

Its just a mask. Right.

So Bo ber - Is there much ice on the Arctic circle at the moment?

How about Antarctica?

Shall I answer for you?

OK

Both have more than there has ever been since records began. Thats how much.

Any sign of sunspot cycle 24 yet?

How about that Pacific PDO changing into its new cold cycle?

Happens around every 30 years.

Funnily enough that coincides with fanatics such as yourself declaring the new Ice age/Global warming event is upon us and if we just listen to you we will all be saved.

'warmist apologist' are the new buzz words to describe people like yourself.

Also, funnily enough is the fact that the computer models that your entire ecaremongering is based on DID NOT predict this "mask".

Why is that Bo ber? Flawed?

Recant NOW.

Heh.

 
At 6/5/08 1:15 pm, Blogger Tim Selwyn said...

Mr Bradbury knows I like to use the massively subsidised Auckland commuter trains because it's a much better journey than the buses. My patronage is not an ideological statement. The issues of commercial viability of urban commuter rail systems is a different matter to a national system based mainly on freight.

I believe the track/operations split between private and public could be managed successfully, ie. the government owns the lines and private operators can run services - a la Transit NZ. I also believe that a future Auckland mass transit rail system can be commercially viable if it were invested in adequately because the economies of scale exist, but given the history of the national network I'm far from confident extra investment will yield anything more than what Toll had whittled the services down to. And for every dollar spent on rail the govt. will have to defend not spending that dollar on roads - or coastal shipping for that matter. I can't see them winning that argument.

 
At 6/5/08 2:02 pm, Blogger Bomber said...

...
Lego, I try not to argue with someone with as many chips on their shoulder as you do, and based on some of your other posts here at times your sanity would also be up for question (the whole posting while on holiday was very creepy, and let's not forget some of your less tasteful comments which I've removed). None of your points stand up to scrutiny at all, check out the hot topic blogsite where many of your futile attempts to sound like you have something to say have all been answered - global warming is happening, only those with a vested interest in the status quo and those intellectually unable to accept that they have been wrong all this time and those awful tree huggers were right continue the fiction that Global Warming isn't happening.

 
At 6/5/08 3:53 pm, Anonymous Legio X said...

So Bo ber -

How big is the Arctic ice sheet at the moment?

How big is the Antarctic ice sheet?

Are you saying the Pacific Decadal Oscillation doesn't exist?

Are you saying sunspot activity is normal at the moment?

Are you saying that the computer models you base your fanaticism on saw your "mask" in their projections?

And your fall back position is that anyone who doesn't buy the snakeoil you're selling has a suspect sanity and that only people who can see what you see are "intellectually able".

Right.

Put these words together to make a sentence -

Wheels
Off
Falling

 
At 6/5/08 4:17 pm, Blogger Big_Trev said...

This comment has been removed by a blog administrator.

 
At 6/5/08 4:19 pm, Blogger Big_Trev said...

This comment has been removed by a blog administrator.

 
At 6/5/08 6:58 pm, Blogger Barnsley Bill said...

Just when i thought Tumeke had left the building you write a post as good as this one.
And Bomber, try ranting at tax payers that have no access to "our" India circa 1890 era rail system. You are a chump. if you are ever in a position to pay tax in any volume comment then. Until that time shut the fuck up and say thanks for the free ride many of us provide so you can be the oldest teenage radical in NZ.

 
At 6/5/08 7:40 pm, Blogger Nepenthe said...

Tim you seem to insinuate in your post that narrow gauge tracks are some sort of inferior technology, they're not. As you point out in your post our land isn't flat, we're in a rough mountainous country, to which narrow gauge tracks are better suited, hence the reason we have narrow gauge. As for Australia a lot of their tracks are also narrow gauge. I am surprised at this right wing spiel of yours, surely you must see that it is intrinsically better for rail to be owned by the public.

 
At 7/5/08 7:26 am, Blogger Bomber said...

...
Barnsley Bill said...
Just when i thought Tumeke had left the building you write a post as good as this one.
And Bomber, try ranting at tax payers that have no access to "our" India circa 1890 era rail system. You are a chump. if you are ever in a position to pay tax in any volume comment then. Until that time shut the fuck up and say thanks for the free ride many of us provide so you can be the oldest teenage radical in NZ.

I love being the oldest teenage radical in NZ - it's a lot of fun, you get a lot of invites, but I suppose someone paying the volume of tax like yourself has a large lonely mansion circa citzen cane to hang in, with petrol at $122 per barrel and predicted to spike at $200 I'll be seeing you on the train real soon. Oh and can I say for someone who wears that wonderful mask how disappointed I am in what you have to say, perhaps you should get a new mask, like a Ronald Reagan one perhaps, that mask carries more responsibility than what you are writing.

Great post Nepenthe, Lego - give it up your cut and paste climate denier questions are all answered on the hot topic blogspot

 
At 7/5/08 7:44 am, Blogger Barnsley Bill said...

Bomber, we have no rail network. Most of the country cannot use the train simply because there are no tracks where most of us live. Instead we are committing hundreds of millions for Michael Cullen to ensure the coffers are empty when labour get sacked. Exactly the same thing they did in 1990.
The eat the rich attitude that you and others live by is all good and well until there are no rich left to eat. What then?

 
At 7/5/08 7:46 am, Blogger Barnsley Bill said...

The mask is a rail against the extreme left wing regime we live in, similar to the movie.

 
At 7/5/08 7:56 am, Anonymous Legio X said...

Lego - give it up your cut and paste climate denier questions are all answered on the hot topic blogspot

Can't answer a single one of those questions can you Bo ber?

Well you could, but you don't want to because they are the beginning of the end for all the GW theories you and you scaremonger friends have been touting for the last few years.

How much money has been wasted on this bullshit?

How many lives have you and your friends cost by insisting that this crap is happening?

100k? 600k? 1million?

The consequences of your actions will live with you forever Bo ber and I hope you at least have the moral fibre to admit that you where wrong. Then go to Haiti or similar and spend the rest of your life making up for it.

Recant NOW.

 
At 7/5/08 10:02 am, Blogger Bomber said...

...
Lego all those cut and paste questions have already been answered, now run along, the adults are talking

Bomber, we have no rail network. Most of the country cannot use the train simply because there are no tracks where most of us live. Instead we are committing hundreds of millions for Michael Cullen to ensure the coffers are empty when labour get sacked. Exactly the same thing they did in 1990.
But with petrol at $122 a barrel and predictions it will spike to over $200 before the end of the year isn't this proof we need to put more money into rail for the future?

And as for...
The mask is a rail against the extreme left wing regime we live in, similar to the movie.
What? Bill it was a right wing fascist regime that was in power - not a left wing regime that was in power.

 
At 7/5/08 11:06 am, Anonymous Legio X said...

now run along, the adults are talking

That sentence sums you up in a nutshell Bo ber.

I hope you, at least, have the intelligence to contemplate it.

RECANT NOW

 
At 7/5/08 12:53 pm, Blogger Barnsley Bill said...

Bomber, clearly we look at the same problem from different angles.
I picked the regime in V as a left wing dictatorship, you didn't.
Either way, when they get that bad they are the same anyway.
It had to be a left wing regime anyway. The people in charge were all fugly and therefore are Lefties. The freedom fighters were all attractive and therefore righties.
Don't you know anything?

 
At 7/5/08 11:20 pm, Anonymous Anonymous said...

Did Barnsley Bill even watch the movie? The ruling party in the book is Norsefire, a fascist right wing party.

V for Vendetta was written in the 80s by a hippy anarchist as a reaction to Thatcher and the conservative party, as well as the political victories that the BNP party were achieving at the time.

Many a Green Party activist has Vendetta on their bookshelf....

 
At 8/5/08 7:25 am, Blogger Bomber said...

...
Ummm, Barnsley, how did you pick the party as lefty, it clearly is a right wing fascist party - stop taking lefty culture, go get a ronald reagon mask or something, leave our culture alone! Although I agree with you, the extreme left and extreme right always end up lookiing the same - evil.

 

Post a Comment

<< Home