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The Standard

Kiwirail making big profits

Written By: - Date published: 12:24 pm, May 24th, 2010 - 82 comments
Categories: assets, Economy - Tags: ,

We don’t expect the state highway network to turn a profit but we know it contributes enormous value to our economy. Similarly, we know that our airports, seaports, and telecommunications network add more to the economy than just the profits of the companies.

The same goes for rail. But the funny thing, considering the Right’s bitter attacks on Kiwirail, is that it is actually turning large profits and will continue to do so. In fact, by 2020, Kiwirail will have made over $4 billion of profits under public ownership.

Last year, the operating profit was $246 million in the last financial year and $125 million in the first half of this year.

In the next decade, it will make nearly $4 billion more. The ‘turnaround plan‘ of capital investment in Kiwirail will be worth $4.6 billion. $750 million of that will be new Crown investment (about 7% of what will go into state highways over the same period). The remainder will be reinvestment of profits.

Wow. We invest $690 million in a vital piece of national transport infrastructure and, on top of all the value it gives to the economy as a network, it is set to make 6 times its purchase price by 2020 all of which will go into improving the network.

Pretty sweet.

82 comments on “Kiwirail making big profits”

  1. I don’t think anyone would argue that KiwiRail should seek to pay its way as much as possible, but there are multiple problems with seeking to rapidly turn KiwiRail into a profitable concern.

    1. There was significant underinvestment in Rail from the late 1980s until KiwiRail Holdings was established in 2008; in infrastructure, rolling stock, and carriage. In fact, during the private era it was asset stripped.

    2. Rail, as a transportation system, offers huge potential, and seeking to run the entire network as a profitable system in such a time-frame would be an unfair comparison to roading. Unlike roading, I believe in fact that rail can/will be profitable in the long term, but this will take a long time to build up.

    3. It seems that one of the Government’s plans to “rebuild” KiwiRail is oxymoronic in the extreme – mothballing tracks. It needs to repair the tracks, add to the electrification, and make higher speeds possible to better compete with roadfreight.

    4. Instantly demanding a profit from those who have been the most loyal, would surely turn away even the most loyal customers. They need to build up freight tonnage/passenger capacity with low prices that can attractively compete with road/air etc. so that eventually prices can be raised.

    • ianmac 1.1

      Well said Policy! Great summary.

    • Draco T Bastard 1.2

      And road freight needs to be properly taxed so that it’s not subsidised by all the other road users and taxpayers. They should pay their own way same as trains pay their own way.

  2. big bruv 2

    Where is the ‘satire’ tag Eddie?

  3. frustrated 3

    The EBITDA in half year to Dec 2009 is only 16 million and excludes capital and operating support grants – that’s hardly flash.

    The real figure you should be quoting is a 136 million dollar loss- which is bailed out by Crown/Regional Council funding.

    • StephenR 3.1

      I had the feeling something like this was the case, without knowing what the hell an EBITDA was!

      • ghostwhowalksnz 3.1.1

        The Regional/metro Rail is run at a loss, that is why there is payments from the Councils.
        All ways has been the case, name one metro rail system in the world that runs at a profit with out fare support.

      • Alwyn 3.1.2

        Don’t worry Stephen. Neither does Eddie.
        By his reasoning we should just raise their subsidy to a billion dollars a year.
        Then he could say they were making even larger profits.
        By the reasoning(?) in this post we can argue that the welfare budget is showing a profit.
        We just ignore all the taxpayers money going in.
        I am inclined to agree with BB. Where was the satire tag.
        Can we please have some accounting or economic knowledge going into these posts.
        I would like to see the left getting back into the debate, but with the ridiculous posts like this being proposed I despair for our side of the political spectrum.

    • Draco T Bastard 3.2

      EBITDA

      The Conclusion
      EBITDA doesn’t exist in a vacuum. The measure’s bad reputation is more a result of overexposure and improper use than anything else. Just as a shovel is effective for digging holes, but wouldn’t be the best tool for tightening screws or inflating tires, so EBITDA shouldn’t be used as a one-size-fits-all, stand-alone tool for evaluating corporate profitability. This is a particularly valid point when one considers that EBITDA calculations do not conform to generally accepted accounting principles (GAAPs).

      • frustrated 3.2.1

        Yes agreed …….. which is why I also quoted the losses before Crown/Regional Council funding as well as EBITDA.

  4. Bored 4

    So thats why the government want to sell it off to their cronies. It would be a story of multiple heists at the expense of you and me…first up “I’ve been thinking Prebbo aka mad Dog” hocks it off to those two great paragons of virtuous Kiwi enterprise, Fay and Richwhite for a derisory sum…..they then in turn hock it off in turn for a fat profit. Many share transactions later, near bankruptcy the government buys it back (another robbery, the reciever would have given it to them given time). In between times many minor heists of assett looting take place via the accountants books etc leaving the big dent in infrastructure which we are now financing our way out of.

    Whilst all these robberies are being committed some equally virtuous “transport” felons are ripping the shit out of the roads and sending the majority of the cost of road maintenance back to (you guessed it), you and I. Then there are the tax subsidies via depreciation etc, we again get the bill.

    Now we come to the next opportunity for trough feeding….lets say the price of fuel rockets up as peak oil grips the world supplies of fuel. Trucking becomes rapidly uncompetitve compared to rail. The $4 billion might just be the tip of the iceberg, its beginning to look like a very attractive target for foreward thinking corporate larcenists.

    • Draco T Bastard 4.1

      You mean what basically happened to all the privatisation last time and what NACT are promising to do again.

      NACT: Voted in for promising to steal from you.

    • Rex Widerstrom 4.2

      Well said, Bored. The right (Prebble, then National) were idiots (albeit cunning, greedy idiots) for selling it, and Labour were even bigger idiots (given that cunning and greed played no part in their decision) for buying it back because, as you point out, they’d have picked it up for nothing eventually.

      Just gives you a warm feeling all over, doesn’t it, to know our fate as a nation is in such intelligent hands. But hey, we get to choose between greed and stupidity every three years, so everything’s fine.

      • Bored 4.2.1

        Yes Rex, spot on, quite funny really. As Forrests ma done said “stupid is as stupid does” and we all vote.

      • Luxated 4.2.2

        …Labour were even bigger idiots (given that cunning and greed played no part in their decision) for buying it back because, as you point out, they’d have picked it up for nothing eventually.

        Rex, while it is true that the way Toll were running it would have devalued rail over time, there would have also substantial costs involved in renovating the network to even the standard it is now (fairly poor) this could have easily outweighed the savings on the purchase price. Added to this is the cost to the economy of having an under-performing substandard rail network. While I’m not saying that Labour necessarily bought it at the perfect time, waiting may not have saved any money in the long run at all.

  5. StephenR 5

    We don’t expect the state highway network to turn a profit but we know it contributes enormous value to our economy.

    We do expect users to pay pretty close to the full price for it though…

    • Doug 5.1

      But they don’t pay the full price. Ask the Ministry of Transport there have done a number of studies to determine the full cost. For one thing there is no requirement for return on the value of the road asset. We expect a return on other national and local government assets why not roads?

    • Bright Red 5.2

      every year roading gets hundreds of millions of dollars on top of the money raised from petrol excise and road user charges. And that’ justified because it has a wider benefit than just to road users. Same goes for rail

      • StephenR 5.2.1

        Thanks Bright Red. Without wanting to be one of those commenters who always demands more and more effort and research from others, any idea what proportion isn’t from fuel tax? Hence my ‘pretty close to full price’ comment.

    • Draco T Bastard 5.3

      IIRC, road freight pays about 1/3 to 1/2 of the damage it does to the roads so, not close to full price.

  6. ghostwhowalksnz 6

    Actually the roading is fully paid by users , the difference is the trucks offload their costs to the private motorists who are asier to fleec

    • ghostwhowalksnz 6.1

      Eg The roading fund pays the police for about $200 mill per year for traffic policing- and the results are measured from the police ie so many hours etc

      • George.com 6.1.1

        Local councils pay a significant amount for roading maintenance & constuction. This is not from road user charges, this is from rates.

  7. Irascible 7

    Wait till Key & NACT rediscover the accounting cons used by Greece and start mortgaging the roading system to PPPs who then toll the piece of road they’ve acquired for 35 years or so in return for a promise to maintain it on behalf of the government (taxpayer). It’s a great way to hide state debt and make the books look good until the hard questions begin to be asked by outside agencies.

    Ooops Hide already has that in mind as the rape of Auckland hurries towards its NACT conclusion.

  8. Hamish 8

    How much does KiwiRail make once you remove the subsidies it receives ?

    You do know that KiwiRail is required to class any grant (such as the 500mil for Auckland’s new rolling stock) as income, huh ?

    • Bright Red 8.1

      How much profit does NZTA make once all the crown funding is removed?

      • Doug 8.1.1

        BR technically the Crown does not fund the National Road Fund (or whatever they are calling it now). Funding comes from the petrol levy and RUC, which does not go into the Crown account.

        However, since the Government imposes these levies on road users you’re not wrong in practice. To answer your question the NZTA makes no profit on the multi-billion assets that is the state highway system. The largest single capital asset in New Zealand.

        • Bright Red 8.1.1.1

          the money does go to the consolidated fund, and is then sent to NZTA, and NZTA gets more money than is raised by petrol excise and road user charges.

          but we don’t expect roads to operate at a profit. we get far more value out of them by not limiting demand by price.

    • lprent 8.2

      I’d put the question another way.

      The trucking industry currently doesn’t pay more than a small fraction of their maintenance impact on the roads. They are subsidised by car and bus users. When we remove their subsidies – how much will the industry have in profits? Can the trucking industry move freight economically without having their current special hidden subsidy?

      Perhaps you’d like to answer that one. I’ll give you a hint – the subsidies for truckers are at least an order of magnitude greater than those for rail.

      • Armchair Critic 8.2.1

        I would ask the question this way – how much profit would New Zealand businesses make without efficient transportation systems? Yep, without efficient transport systems our society would, at best, look quite different.
        So shouldn’t we treat transport systems fairly and equally and not subsidise one mode more than any other? What was the old slogan – level playing field, or something like that? Not that we have one of those for transport, at present.

        • burt 8.2.1.1

          You are asking socialists if they think it is wrong to pick winners and losers… How can a guaranteed to fail ideology of redistribution ever get a chance at being elected if it can’t pretend that it is right via stealing from the losers (people who don’t vote for a doomed to fail ideology) to prop up the winers (dim-bulbs who failed to notice socialism always ends in recession) so they vote for it?

          Rember the days when it was illegal for trucks & busses to travel from A to B faster than the train to protect the rail business. They were the days eh, playing field tilted in the interest of the state so the state could pour massive amounts of tax payers money into making a monopoly look efficient by restricting competition.

          • Armchair Critic 8.2.1.1.1

            You are asking socialists if they think it is wrong to pick winners and losers
            I’m kind of over the whole left vs.right thing at present.
            The irony of a group of people advocating for a level playing field and then vehemently opposing the same level playing field for transport strikes me every time a politician does something rail-related.
            I don’t mind my taxes being used to subsidise transport, my objection is to the difference in the rate of subsidy between various transport modes. With the history behind transport and transport funding in NZ and all the vested interests there is little hope of the situation being properly addressed in my lifetime.
            And I don’t remember the days when rail was protected from roading competition, but I am aware it happened.

  9. Hamish 9

    So you can’t answer the question, I take it ?

    I can’t really be stuffed explaining people who think that grant is somehow a profit. What a wonderland you must live in.

    A turkey took the original post to TradeMe, he did not get far: http://www.trademe.co.nz/Community/MessageBoard/Messages.aspx?id=300044

    [ I generally don’t like cross-posting but can’t be stuffed explaining the obvious ]

  10. Hamish 10

    Without changing the subject, is ANYONE capable of answering the question:

    How much does KiwiRail make once you remove the subsidies it receives ?

    [Okay, I’ll answer it: It makes no profit. But a loss of $136million. Good thing the original post left that out, otherwise it could have been mistake for something truthful!]

    • Anita 10.1

      Out of interest, how’re you quantifying the subsidies? A friend tied herself in knots trying to do it by attempting accounting magic with the equity injections.

    • ghostwhowalksnz 10.2

      Would they be running the suburban train services at all if they werent given subsidies. The regional councils set the service levels etc. eg Auckland had no trains after 6:30 Pm and none at all on Sundays until the region stumped up the cash. The same goes for the rolling stock, unless the customer wants to pay for the upgrade to electric for Auckland, they aint getting it.
      How many times do you think trying the Goebbels approach, just repeating the nonsense you are spouting, will make it true

      Look at Telecom they receive subsidies, dont see you docking the $70 mill from their annual profit

    • Fisiani 10.3

      Hamish. This is The Standard. No one takes it seriously. You surely don’t expect truth from the posters. You have to apply the Keith Locke test. If either the Standard or Keith says it is bad then common sense means it is good and vice versa

      • Galeandra 10.3.1

        Hello Fisiani & Hamish, black suited and bicycled. Are you here to educate us or to convert us?
        ‘Hamish. This is The Standard. No one takes it seriously. You surely don’t expect truth from the posters.’ Can’t stay away, eh? Love your good manners and your blind faith. Do you always wear pinstripe when you ‘re delivering tracts?

  11. RobertM 11

    Operating profits for freight do not actually give the real picture. Despite the comments on my literacy, sobrierty on the Guyon -English blog I am actually the gentleman who did most of the paid media commentary in NBR, Press and occasionally the Southland Times, NZ Herald and Australian on the issue of rail privatisation in l993. At the time the media and most of the population clearly wanted the railways privatised, comment that was pro or neutral was publishable what was critical and raised questions was filed. The Treasury’s motivation was pretty much to get rail off the books and let it be run down quietly over 20 years. Heeln clark called a stop to the process. I have always been primarily interested in rail passenger services because I see modern railways as primarily passenger carriers and only really suited to specialised freight business such as coal, logs and dairy. In NZ I do not see rail freight as viable. The South Island system isnt economic. The possibility of a strong national rail system and a mining economy when constructio worked stopped on the Nelson Wesport line in l931 because the Murchison and Napier earthquakes had revealed the route was too geologically unstable. It was therefore decided to complete the picton christchurch railway, but that line remains a fragile third world link very steeply graded and uneconomical. Building Clifford Bay to eliminate some of the 1/33 grades and two new rail ferries will cost $1.4 billion within ten years. The line Rolleston is not really heavily trafficed enough to justify it as an alternative to good roads and the last years of the Southerner with numerous bad train road crashes at level crossings revealed any development of fast passenger services would need massive work to seal of the track. The cost of operating the trans alpine line and the steep grades and dangerous tunnel operation makes the value of the coal trade margineal. About 4 million tons of coal goes over the line but the Queensland narrow gauge coal lines are electrified and carry $120 milllion tons. They are being privatised and so should the alpine and northland lines.
    The possibility of a national rail passenger system was massively put back with the decision not to electrify in the mid l950s and the cancellation of the second batch of the Fiat railcars and the refusal of Budd to deliever narrow gauge cars in l957 that were planned to provide fast.frequent railcar services Auckland-Hamilton, Wellington -Palmeston North, Auckland- Wellington, Dunedin Invercargill and Christchurch. In l974 Labour did plan $22 million worth of new stainless steel trains on provincial routes but the Railways and Treasury were largely opposed because it would have used up too much freight and skilled staff resource and run at an enormous loss. The proposals had no hope of approval with Roger Douglas starting to dominate transport policymaking. My l981-82 Canterbury MA thesis argued that railcars would have been far more economical and faster than trains and 20 modern fiat railcars could have been ordered in l975 for $5 million. The report into rail passenger that Muldoon called from Booz Allen of Boston, USA in l983 confirmed my line that railcars and multiple units were far economically superior to the small train option labour argued for, but Prebble sat on the report and rails losses under him reached $332 million a year. That is why Richardson brought in Fay Richwhite to run the rail under her supervison in l991 and clean out the deadwood

    [lprent: I’d suggest using paragraphs with lines between them. It’d make your comments a lot more readable. ]

    • RedLogix 11.1

      Sighs…for all your familiarity with railways you keep missing the obvious.

      No sane person expects the rail system to be ‘economical’. Few rail systems anywhere in the world make an an operational profit, anymore than a trucking company would if it had to build and maintain it’s own roads.

      We don’t expect hospitals, schools, police, roads, pensioners, the armed service and the like to make a ‘profit’ …even though as a society we spend a great deal of public money on them. We do these things because we recognise they return a wider, over-arching benefit to all of our society, not because we expect a profit in the narrow and limited sense you have in mind.

      All other developed and civilised nations are currently investing heavily in new rail systems, while the head-up-ass right wing in this feeble little backwater are still justifying their ideological fixation with crippling the potential of NZ’s rail.

      • Nick C 11.1.1

        Redlogix you could make that argument for anything. The government could form a giant human chain passing boxes of freight from Wellington to Auckland. You could jump up and say; ‘Sure, it will cost billions, but it doesnt have to be economic, cos its a public service’

        The reality is that there does need to be some sort of degree of economisation- otherwise you justify any absurdly expensive public services. In this case Rail needs to be economic relative to other transport options (i.e. thats which we dont form the giant human chain, because it isnt economic relative to other options). I think you will find that the majority of people with anything more than armchair expertise on the subject will say that Rail isnt economic in NZ.

        • Galeandra 11.1.1.1

          A pathetic case of reductio ad absurdem. You give elephants a bad name. Leave the room.

  12. Hamish 12

    >>>Hamish. This is The Standard. No one takes it seriously. You surely don’t expect truth from the posters.

    heh heh.

    >>>You have to apply the Keith Locke test. If either the Standard or Keith says it is bad then common sense means it is good and vice versa

    I think most of us do already use that test when you see Comrade Keith on the news…

    >>>Would they be running the suburban train services at all if they werent given subsidies

    We know that the suburban trains require subsidies to work. So do suburban buses etc. However, what should not require that is the freight side of KiwiRail.

    The original post by ‘EDDIE’ is a total load of BS. Sure, it may fool your average pre-school child, but anyone that has half a brain cell can work out if KiwiRail (freight) is receiving subsidies, then it is NOT making profit!! Problem is, KiwiRail classes grants etc as income, thus how the fruit loops have come up with that “Kiwirail making big profits”.

    Even our stupid news media would not fool for this kind of logic…

    • RedLogix 12.1

      but anyone that has half a brain cell can work out if KiwiRail (freight) is receiving subsidies, then it is NOT making profit!!

      And by this criteria there are no trucking companies make a profit either, because they are all using taxpayer subsidised roads. But because they can privatise their gains on their books for personal benefit, and socialise their costs off their books to the cost of the rest of us…they’re in your ideological blind spot.

      • StephenR 12.1.1

        But because they can privatise their gains on their books for personal benefit, and socialise their costs off their books to the cost of the rest of us they’re in your ideological blind spot.

        Eh? Is the trucking companies ‘paying their costs’ a left/right issue somehow? How are these subsidies justified or why were they enacted in the first place?

    • lprent 12.2

      Hamish: obviously you have very few brain cells. The tracks are the part of Kiwirail receiving subsidies – not the freight operation. The reason why they have to receive subsidies is because Toll never put the required work or money into them to maintain them. The idiots who sold the rail (Prebble from memory) said that wouldn’t happen. It did.

      Now about these freight trucks with their subsidized roads? But I guess you were too moronic to understand that discussion either.

  13. Frank Macskasy 13

    Funny thing…

    When NZ Rail was in private ownership, the following occurred;

    * Taxpayers and ratepayers still paid subsidies to the private owners. Now why was that? I thought private ownership was more efficient?

    * The railway stations were badly run down; signage missing; and stinking of urine. So much for private owners maximising the value of their assets.

    * Except for the Kaitaki, not one new piece of new rolling stock was purchased by the private owners. What they DID do, however, was to asset strip the company. Faye & Richwhite sold all the spare parts to the Hungarian units as scrap metal. Result? When a Unit broke down – there were no spare parts!!

    * The private owners couldn’t make a profit, and kept bleating about the State “subsidising” the roads; unfair advantage; yada yada yada. Oh puh-lease. Since when the the State owe these corporates a living? They sound like farmers in the USA, holding their hands out for more and more subsidies…

    I think I got more sick of the whinging from the private owners, than when it was in State ownership…

  14. Hamish 14

    >>>The tracks are the part of Kiwirail receiving subsidies not the freight operation

    True. Which is turn is subsidizing the freight side on loss making lines.

    >>>The reason why they have to receive subsidies is because Toll never put the required work or money into them to maintain them.

    Toll never owned the tracks. It take’s less than 30 seconds to find that out.

    >>>The idiots who sold the rail (Prebble from memory) said that wouldn’t happen. It did.

    Has it ever entered your mind that our rail network is simply to large in size? Suggest your look up treasury papers on the matter…

    >>>Now about these freight trucks with their subsidized roads? But I guess you were too moronic to understand that discussion either.

    Why is it, when I question the original post’s lack of truth, that you throw this question up? Is it an automatic response to being caught-out, perhaps ?

    >>>Taxpayers and ratepayers still paid subsidies to the private owners. Now why was that? I thought private ownership was more efficient?

    Because under private ownership (like we still have now) there were loss making lines. They require either of two things to happen: 1) Shut the line down or 2) Get a handout to keep the line open. It’s good to see now, rather than National keep on handing KiwiRail money to keep these loss making lines open, they will close them. Should have happened years ago.

    >>>The railway stations were badly run down; signage missing; and stinking of urine. So much for private owners maximising the value of their assets.

    Nothing to do with Tranz Rail or Toll. The stations are now owned privately. Go and bitch to their respective owners about the condition.

    >>>Except for the Kaitaki, not one new piece of new rolling stock was purchased by the private owners.

    Sort of. They brought a bunch of diesel locomotives, as well as about 90 (I think) British Rail Mark 2 cars.

    • lprent 14.1

      Toll never owned the tracks. It take’s less than 30 seconds to find that out.

      Yes, and Toll basically didn’t pay the usage charges that they were required to that were meant to maintain the track. It’d take slightly more than 30 seconds to look that up. Instead they preferred to pay dividends to shareholders. That was the reason that KiwiRail was brought back – it will take you minutes to find that out as well.

      > Now about these freight trucks with their subsidized roads? But I guess you were too moronic to understand that discussion either.

      Why is it, when I question the original post’s lack of truth,

      Because that is the nub of the question. Like Toll, the truckies are not paying their full proportion of the maintenance cost of the roads. Presumably because the government considers the roads to be a social/economic cost that bring greater benefits to the economy as a whole and are willing to tax consumers to maintain the transport network.

      Exactly the same criteria about economic good should be applied to rail track for the same reasons. However you seem to want to use different criteria for the same type of economic operation. You appear to prefer heading towards a predefined conclusion rather than have a debate about freight transport.

      It does make you look like a fatuous fool.

    • ghostwhowalksnz 14.2

      Bought a bunch of diesel locos??
      They didnt buy a thing. the last locos bought were a bunch of second hand QR machines in 1995 , which were withdrawn in 2005.
      Toll bought into Tranz Rail in 2003. ( probably sold the old QR machines in Australia to make a quick profit)
      n 1998 Tranz Rail began to export locomotives to Tasmania for use on TasRail, then part-owned by Tranz Rail. In total, 12 DQ were exported, along with three unrebuilt QR class. – Wikipedia
      Kiwi Rail has an order for 20 chinese locos

  15. Adrian 15

    I drove from Wgtn to Ak last week with my teenagers and while talking about doing the same trip many times around 30- 40 years ago, it occured to me that the road surface was seriously inferior to those days. There are repairs and patches every few hundred metres, it is bumpy and rough and even recent resealing is breaking up making the whole experience tiring and trying, but the worst aspect is the coarse chip seal that even in a modern car produces an incredibly fatigueing “road roar”, the quietness and calmness when you get on the hotmix of the motorway after Huntly is dramatic. How much does this contribute to the fatigue and sleepiness that is the biggest cause of road fatalities. I’m convinced that the use of the cheap coarse chip , which breaks up a lot sooner than the best options, is because those responsible for maintenance are trying to stretch the budget further due to the huge amount of damage inflicted by heavy transport. The other cost not included in HT’s mix is that apparently about 26% of road deaths and accidents involve trucks, factor that in as another subsidy transferred to health and policing and HT is bloody expensive.

    • insider 15.1

      I drive half of it a couple of times a year and the road is way better than in the 70s. No more Caravan Corner on the Mangaweka switchback, no Vinegar Hill track, Taihape to Waiouru is far better than five years ago.

      Way wrong on accident rates. Trucks have a low rate based on kms travelled. Yep high fatalities but that is directly related to size. Injuries are on average similar to percentage of kms travelled http://www.transport.govt.nz/research/Documents/Trucks_2009.pdf

      spam word – holidays :-)

      • Adrian 15.1.1

        I said ‘road surface’ and the accident rates come from stats of about 2 years ago, confirmed by Gary Clift ( i’m pretty sure ) road policing chief of Canterbury in reply to questions about ‘ boy racers ” from memory deaths involved ( not nessecarily caused by ) HT 26.2%, ‘Boy racers” 2.4%.

  16. RobertM 16

    My reply to Red Logix is that at a certain point the balance sheet means something. Rail to Gisborne in 2010 which hauls less than the Roxburgh branch or Waimea Plains Branch in 1968 is hardly rational at all. Many of my Professors argued sea was the better freight option in NZ and that could certainly be argued in terms of future export of Gisborne logs. In terms of the viability of a National NZ wide rail passenger service with general container wagon traffic it is the economics of the Wellington-Christchurch link that is at the core of the issue and the economics.
    Many experts would argue modern Wellington-Lyttelton freight shipping roll on -roll off would be far more economical and sensible than new rail ferries and attempting to maintain and upgrade the Chrisitchurch-picton rail link. Without the 1200km rail freight journey between Auckland and Christchurch the economics of general freight within the North Island alone is less than marginal.
    The current debate essentially started in the l970s with the Treasury judging NZ Rail unneccessary and unviable and the Railways stuck in l930s national development thinking of a protected mass haul freight service and passenger services only for commutters and isolated areas.
    During the kirk-Rowling Government debate over the future of rail and passenger services was already being dealt with essentially by committees focusing on the future of Christchurch-Wellington rail links in part due to issues of Union steamships Rangatira and the extortion of the shipping unionists and seamen. Already by l974 Roger Douglas was starting to dominating transport and labour cabinet debate and conflict with his dynamic views and model essentaily stalemated any progress but also exposed the weakness of government and railways proposals which had not no economic merit and were based on social, labour and short term logistics considerations.
    Labours current enthusiasm for railways is something of a new development as the cabinet members in the Nash, Kirk, Rowling and Clark governments did not entertain great enthusiasm for rail development and rail and rail passenger has always been a bit of an orphan for the left in this nation because like Herbert Morrison in London they thought it better that the worker got a car for his wife and children and trains were really for the stockbrokers to ride in and play with.

    • insider 16.1

      Strait Shipping pulled its Wellington Lyttelton service a couple of months ago….

    • felix 16.2

      My reply to Red Logix is that …

      If you want Red Logix to know you’re replying to him, all you have to do is hit the “reply” button under his comment. Confusing, I know.

  17. Hamish 17

    >>>Yes, and Toll basically didn’t pay the usage charges that they were required to that were meant to maintain the track. It’d take slightly more than 30 seconds to look that up. Instead they preferred to pay dividends to shareholders. That was the reason that KiwiRail was brought back it will take you minutes to find that out as well.

    Toll could not come to an agreement with ONTRACK regarding the amount of track access charges they were to pay. Both sides were probably at fault; apparently Labour appointed some real winners to run ONTRACK, no surprises there.

    >>>They didn’t buy a thing. the last locos bought were a bunch of second hand QR machines in 1995 , which were withdrawn in 2005.

    Ohh my god! You’ve outdone yourself! Have a look at which year the DQ (QR in Aussie) class were purchased. [Hint: It was after the sale of New Zealand Rail Limited]. Tranz Rail were the ones that purchased the DQ’s! You have the fact’s from Wiki right in front of you and you still are unable to work it out!! Priceless!

    And of course Tranz Rail were the ones that purchased the 90 odd (?) British Rail Mark 2 passenger cars. They form a massive fleet of passenger cars in Auckland today.

    Now, put your blinkers back on…..

    • lprent 17.1

      I noticed that you ignored the question of rather excessive road freight subsidies yet again. It is clear that it is pretty pointless debating with you.

      You sound like a spinster for the Road Transport lobby…

      Personally I think that road charges per tonne of axle should at least quadruple over the next decade. Then they’ll be starting to get back in line with the subsidies for rail track.

    • Armchair Critic 17.2

      Simple question for you Hamish – why should taxpayers subsidise roading more than any other mode of transport?

  18. Hamish 18

    >>>I noticed that you ignored the question of rather excessive road freight subsidies yet again. It is clear that it is pretty pointless debating with you.

    Yes, I did ignore it. We are talking about rail, not roading. Seams to me that when I ask something about rail, you come back with some ramble regarding roading, ignoring the original question, like you are trying to turn the topic another way, perhaps…

    >>>Simple question for you Hamish why should taxpayers subsidise roading more than any other mode of transport?

    Which method of transport do people use more [directly] ? Road or Rail ?

    >>>Because they use roading more than any other form of transport ?

    I’d tend to agree with that, but in saying that I’m not basing my opinion on any stats…

    • felix 18.1

      “Yes, I did ignore it. We are talking about rail, not roading.”

      No, we’re talking about transport subsidies, both road and rail. Read the post.

      Also, can you try a couple of things, just for me? One is the reply button. The other is quotation marks.

      Both of these would help greatly with reading your comments in context (if that’s what you want).

      • Hamish 18.1.1

        The original post claimed KiwiRail made a profit. I suggested that this is because it receive some subsidies, without which it would make a 130million loss, then I get the typical “what about the trucks?” line thrown at me. Because people are unable to grasp the way KiwiRail classes grants as income, they resort to the trucking line…

        And yes, I used the reply button, I hope that saves you a couple of brain cells while reading….

        • Anita 18.1.1.1

          Hamish,

          You might need to explain this to me slowly; some balance sheet math makes me squint, and once I might have to factor in the PFA my head starts hurting.

          The govt gives money to a SOE for the purchase of assets, the assets go onto the balance sheet, the SOE is now worth more. Therefore the money looks like income because it increases the value of the SOE. Is that the situation?

          If it is, I see why it’s problematic to treat the increase in capital value as “profit”, but I also can’t see how else it should be accounted for, there is no offsetting debt so the net position is better. How should it be treated?

          • Hamish 18.1.1.1.1

            Okay: KiwiRail has been given 500mil for Auckland’s new electric train’s. This is to be used to purchase them. However, for whatever reason, KiwiRail class this as income, which in turn can be classed as a profit.

            Do you think you can see why this may be a problem ?

            • Anita 18.1.1.1.1.1

              Um… I said that I could see the situation I outlined as problematic. I explained how I think it is accounted for, and said I could see the problem but no way around it. I asked you whether my description of the situation was correct. I asked you how you thought it should be treated.

              You restarted your original description, without any additional detail, you didn’t answer either of my questions (whether my guess at how the accounting situation occurred is correct, and how you thought it should be handled).

              I am starting to think that

              * you don’t actually know or understand the detail,
              * you don’t understand accounting enough to address the actual situation,
              * you can’t come up with any way that it should be accounted for, and
              * that you’re simply parroting something you heard somewhere else without thinking about it or understanding it.

              Wanna try again?

            • lprent 18.1.1.1.1.2

              You mean the trains that Auckland transport planners have been trying to get for almost 70 years? The trains we’ve been paying taxes for? Along with the double tracking that would make them work.

              That is a large part of why Kiwirail was purchased by the government – so Auckland could finally get a transport system that works. To make a commuter system that works here requires commuter trains. We certainly don’t need more buses.

              The commuter train system is a social/economic service – not a freaking business. You seem to have the things screwed up in your head between freight and commuter services. The government is providing the money to start a service (at last).

              Of course we also do the same for the buses here. They are heavily subsidized by both local and central government. Without them, most industries would fall over because a high and rapidly increasing proportion of the workforce (including me) use them to get to and from work. Each person that uses them frees up the roads – thereby requiring less roads to be made.

        • felix 18.1.1.2

          It’s just polite to use the reply so you don’t end up plastering the thread with out-of-context repetition.

          Please check the first paragraph of the post. The questions you are openly ignoring are entirely germane to the post and the topic in general.

          It’s very clear that both road and rail are subsidised by the state but you are only taking issue with one and studiously avoiding discussion of the other.

          Why do expect everyone else to join you in ignoring half of the argument?

          • Hamish 18.1.1.2.1

            >>>It’s very clear that both road and rail are subsidised by the state but you are only taking issue with one and studiously avoiding discussion of the other.

            No, I’m not. It seams some posters bring up roading / trucking when I ask a question regarding rail..

            I’ll give an example:

            I said: “How much does KiwiRail make once you remove the subsidies it receives ?”

            Someone replied: “How much profit does NZTA make once all the crown funding is removed?”

            That is called avoiding a question. I’m not avoiding any trucking / roading question I’m simply wondering why some feel the need to change the subject to avoid answering a question. Because they don’t have a reply to the question, perhaps, so they feel they need to change the subject..

            • felix 18.1.1.2.1.1

              That’s not avoiding the subject, Hamish, that is the subject – read the first paragraph of the post.

              If you insist that your question re profits from the rail network is relevant then you must accept that the same question can be asked of the roading network – I’m presuming here that you want to present yourself as having some level of intellectual honesty.

              If you don’t accept this, please say why.

              Because so far it looks like you know full well that the two are comparable but are going to extraordinary lengths to avoid admitting it.

              Do you know my friend Tim?

    • Armchair Critic 18.2

      Which method of transport do people use more [directly] ? Road or Rail
      By distance travelled, yes, but that wasn’t the question. I’ll put it bluntly – those trucks you see driving down the road, you are paying them to do it through a subsidy. Those trains you see running along tracks next to the road, you are also paying them a subsidy. They are both doing the same thing – moving stuff from A to B. But, and here’s the kicker, the rate of subsidy for the truck is higher.
      Given that most transport companies are marginally profitable, it is reasonable to suggest that most of the trucking companies would not be profitable without these subsidies.
      So the answer to your question about how profitable Kiwirail is without subsidies is Kiwirail is about as profitable as trucking companies doing the same thing, i.e. not profitable at all. It is clear you don’t like that answer. I’m disappointed at the quality of your attempt at an answer to my question too.
      I’m surprised that the comparison between road and rail transport seems to upset you so much, it really is a quite pertinent comparison to make. The whole issue about how best to transport goods and people around the country needs serious examination and discussion of stuff like the costs, efficiency, profitability, environmental impacts, funding and sustainability. Taking a roading good, rail bad approach into the discussion shows a distinct lack of intellect.
      Finally – I am basing my comments on my analysis of data available on the internet. If you want to be taken seriously, you should consider doing the same. Your “…I’m not basing my opinion on any stats ” statement does you no favours.

      • insider 18.2.1

        Where are the stats saying that road transport is subsidised more than rail? I haven’t found any.

        • Armchair Critic 18.2.1.1

          Like I said – it requires a bit of analysis. If you are interested then you could have a look through the ltsa website (they have helpful stuff like traffic counts, RUC data and manuals for estimating costs), and also the websites of the statistics department and the various industry groups.

          • Armchair Critic 18.2.1.1.1

            Or you could try this, which I have just found and haven’t read completely yet. From what I have seen it mostly supports what I have found through my own research, but it does not support other parts. And it doesn’t go into so much detail as to state whether any particular mode of surface transport is more subsidised. Specifically, it says:
            There are no up to date studies which use a comparable evaluation framework for estimating costs and charges across the three transport modes. There is also no agreed evaluation framework between stakeholders in the three transport modes on which to collect comparable costs and charges information. Therefore, this is a major information gap which is of the highest priority.
            Which is only about the costs and not on subsidy rates.

          • insider 18.2.1.1.2

            Oh so it’s data you created in some way only you understand. Well I suppose I’ll just have to trust you that you have looked at the right numbers, compared them appropriately and reached a sensible if somewhat general conclusion that “Kiwirail is about as profitable as trucking companies doing the same thing, i.e. not profitable at all”.

            That said, it’s not a good start when you refer me to the LTSA when they haven’t existed for about 5 years…

            I’ll stick to something like the Main Report which packages all the info into a tidy bundle and actually says what they looked at and how. Depending on how you read it, road users more than pay their way or pay only 30% of the cost.

            • Armchair Critic 18.2.1.1.2.1

              Steady on, it’s data I found, not data I created.
              You don’t have to trust me, you have a choice; accept my assertions or dispute them. Go wild. Given that the best you have come up with so far is “I haven’t found any“, followed up with a “I’ll stick to something like the Main Report…” from a report I found for you, I’m not expecting much.
              Accessing the data through http://www.ltsa.govt.nz is easier than http://www.ltnz.govt.nz – I’m well aware that LTSA do not exist as a separate entity. And since you have chosen to be pedantic – I referred you to the website, not the organisation.
              As for what the report says, I haven’t read it completely and from your final paragraph it seems you haven’t either. I’m still trying to decide whether I agree with its methodologies and conclusions and I won’t be quoting from it further until I’ve made up my mind about how reliable it is.

              • insider

                our responses crossed so I didn’t see your link. I already knew about the Main report. I think the problem you may have is the word subsidy. There is no direct subsidy on roads unlike rail, even though you might argue some of the funding has a similar effect. And teh system smears costs so some roads get more and others less per user. Is that a subsidy or just a practical management tool?

                I’ve read a lot of the rport and much of it is too specialised for me but it looks at cost of operation and revenues, and value of the assets on both road and rail. One analysis says vehicles pay their way another says they don’t. Depends on what you want to capture. Whereas rail doesn’t pay its way and needs cash from somewhere to maintain itself.

              • Armchair Critic

                our responses crossed so I didn’t see your link
                Fair enough. Having read some of your other comments after submitting my last comment it does not surprise me that you had already found the report I found. My comment about not expecting much was uncalled for.
                Is that a subsidy or just a practical management tool?
                That’s pretty much it in a nutshell. I don’t have a problem with either, I just want to see them (whatever they are called) applied equally to land transport, and to get away from the whole road versus rail debate. Because that debate is not constructive.
                …[the report] looks at cost of operation and revenues…
                I recall a comment in the report that further detailed work is to be undertaken. I hope it addresses some of the issues raised here – efficient transport is so important for a NZ.

  19. Bored 19

    I think I might have started this point on the thread a few days ago. You are quite correct to point out it is not a road bad rail good argument.

    My original contention was that the road operators / privatising lobby might find rail to be much more attractive an investment if the price of fuel went through the roof (as I am certain it will). Rail has a massive advantage over road in terms of wieght moved to energy required, and a lot of the track is electrified which is even more advantageous given our hydro resources. Coastal shipping is even more efficient….I can see us going full circle but thats another story.

    My comments are based upon looking ahead at requirements that are of a national interest, and my fears that the same rentier parasitic classes might again try and take advantage and hold us to ransom.

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