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.
“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,
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".