Sharechat Logo

A railway line to nowhere

Editorial

Friday 13th June 2003

Text too small?
Free-market purists will be upset by the government's bailout plan for the embattled Tranz Rail but even businesspeople generally opposed to state intervention can see an upside.

Tranz Rail started life as a dog when New Zealand Rail was privatised. It was run down, inefficient and starved of capital. The new owners made some progress rationalising freight but failed to lift the company beyond also-ran status.

The challenge of the New Zealand market ­ a small critical mass and crippling maintenance costs over a far-flung country ­ proved too much for the American owners. Tranz Rail has been on borrowed time for the past two years.

The state bailout, when it came, was reluctantly accepted by users as, perhaps, the last chance for New Zealand to get an efficient, competitive rail network. It is not, as some on the political left claim, an opportunity for the government to get back into running business.

To his credit, Finance Minister Michael Cullen has been guarded about the contribution the state can make to the railway company. He termed the state investment "strategic" but there was no crowing about the failure of the private sector to make a go of Tranz Rail. The history of state-run rail in New Zealand is not especially glorious and Dr Cullen has been in politics long enough to avoid a Richard Prebble-like comment about "saving rail."

Parts of the ageing railway network might never be saved but the government at least has given Tranz Rail breathing space.

The smart thing now is for Dr Cullen to take on board the suggestions of the Rail Freight Action Group ­ some of the big users who want rail to be a partner in their business operations.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

GEN - Completion of Purchase of Premium Funding Business
Fletcher Building Announces Executive Appointment
WCO - Director independence determination
AIA - welcomes Ngahuia Leighton as 'Future Director'
Mercury announces Executive team changes
Fonterra launches Retail Bond Offer
October 29th Morning Report
BIF adds Zincovery to its investment portfolio
General Capital Resignation of Director
General Capital subsidiary General Finance update