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Buying trains gets noticed in Britain

Written By: - Date published: 1:44 pm, July 4th, 2008 - 16 comments
Categories: assets, International - Tags:

The buy back of rail has been put in a British context in this article from the Guardian. Here are some excerpts:

“New Zealand has long had a record of being ahead of the political game. It was the first country in the world to accept women’s right to vote, in 1893. In the 1930s, it emerged as a pioneer of the modern welfare state. Fifty years later, in the 1980s, it was the first state to declare itself nuclear-free. Less creditably, during the same decade, New Zealand became host to the first social democratic government to embrace a free-market programme of wholesale privatisation, liberalisation and deregulation….

On Tuesday, Clark’s government renationalised the country’s railways and ferry services, privatised in the early 90s and subsequently run down and asset-stripped by the Australian owners. Launching the new, publicly owned KiwiRail, finance minister Michael Cullen declared that privatisation had “been a painful lesson for New Zealand”. Nor is this the first renationalisation by the Clark government, which took over Air New Zealand after it nearly collapsed in 2001 and has also built up a successful state-owned retail bank – named Kiwibank, needless to say….

…By making a stand for progressive common sense, New Zealand has at least helped break the spell that privatisation is somehow the natural order of things in the modern world.”

16 comments on “Buying trains gets noticed in Britain ”

  1. another positive story… mike et al .. you’ve been asking for them all week… now’s your chance to comment.

  2. Tane W 2

    Thanks for the link, a good piece on why basic infrastructure should be publicly owned. I can’t think of any large infrastructure, across NZ or even the world where the bulk of the investment wasn’t public money. Private operators are too risk averse to build comprehensive systems, or so it seems to me.

    Can anyone think of any infrastructure systems (not projects, but complete systems) that were built largely with private funds?

  3. Tane W – wait for the fans of Rand to say ‘the American railways’, but try not to laugh, they’re just uninformed.

  4. higherstandard 4


    Will you allow me a ….. The guardian damned pinkos !!



  5. good emoticon. The Guardian is owned by a trust that was set-up by a wealthy leftwinger specifically to provide high quality journalism ahead of profit and to be a leftwing counterbalance to the rightwing corporate-owned media (these two things go hand in hand).

    We could do with something like that in NZ.

  6. vto 6

    SP, maybe you’ve got a head start on anyone contemplating just that. Turn this site into that…

    Re monopolistic infrastructure falling into private hands I agree it is something to be very wary of. Also infrastructure that is required for human survival. I always doubted electricity – too important.

    But having said that – people run the same argument for keepinjg health and education in public hands because it is too important. So why are the two most important findamentals of life, food and shelter, not in public hands????? So the argument does not always apply. Private works best in food and shleter, with public provision as a safety net. Imagine if the govt owned all the farms and supermarkets? How much would we pay for a loaf of bread? I hate to think.

    Difficult to apply one rule to all sectors methinks. Specific requirements for each is probably more appropriate. And that is where idealism and politics can interfere and muck things up.

  7. Rex Widerstrom 7

    Steve Pierson suggests:

    The Guardian.. was set-up.. to provide high quality journalism… and to be a leftwing counterbalance to the rightwing corporate-owned media… We could do with something like that in NZ.

    Keep up, Steve, we already do. It’s called National Radio 😀

    Ahhhh the Grauniad. Indeed we should have openly left- and right- leaning media outlets in NZ. Britain has. The US has. Yet in NZ our media keep pretending their editorial stances (which inevitably seep into their news pages, even if just in story selection) are objective.

    I suspect one of the reasons for the rapid uptake of the Internet as a news source is that blogs like the Standard figure their readership is mature enough to take the perspective of its authors into account when reading its content. People like those who are delivering their news to both have a brain of their own and to assume that their readers / viwers / listeners do too. Bad news for Paul Henry et al, but good news for you guys, Public Address, Kiwiblog & co.

  8. Swampy 8

    Now for some facts. The railway network in the United States of America was practically all built with private money and continues to run as a series of successful mostly private operations today.

    The parts that are under state operation (Amtrak and such) are, of course, the parts that aren’t profitable.

    There is indeed a place for the private sector in rail operation, and it can work, as is seen in the USA, and for that matter in the United Kingdom where their privatisation of rail has been successful.

    The truth is that far more infrastructure in the US has been privately funded and there is no real difference in the willingness to build infrastructure provided it can pay its way.

    The difference being that politicians who do not have to worry about where the gravy train comes from are all too willing to spend other people’s money on things that might never be economically viable just to buy political patronage and power.

  9. Swampy 9


    Why are we paying higher electricity bills so that the government can spend it on roads and railway tracks?

    Isn’t this an example of inappropriate spending of electricity company funds by the government on unrelated causes instead of putting it into new power stations and the like?

    And then, isn’t the government’s behaviour a lot like the private sector businesses they lambast, and shouldn’t we, therefore, draw the conclusion that there is really no difference in the bahaviour regardless of who owns it?

  10. Swampy 10

    Steve Pierson,

    If you go north from Wellington to Palmerston North, there are two rail routes, one going up the west coast and one going inland through the Wairarapa. The route through the Wairarapa was built by the New Zealand government and the route up the West Coast was built and operated for the first 22 years by a private company, the Wellington and Manawatu Railway Company.

    By all accounts this company successfully operated that business for all that time in direct competition with the Government’s line via the Wairarapa which charged the same rates even though it cost more to rail freight on the inland route. The directors only reluctantly sold out in 1908 because the government wanted to link the Wellington-Longburn route up to become part of the North Island Main Trunk, which most of it still is today.

    The experience in New Zealand and in numerous other countries where private railways run is that they are able to operate successfully and provide a good service to the public. Most of what we have been told in the past few days about the reasons why rail has to be renationalised is pure spin that ignores these basic facts.

  11. vto 11

    Swampy I have recently discovered that there were also many private, albeit small, rail operations on the west coast for timber and of course other spots in NZ for mining.

    Its not that expensive – just bung down some tracks and you’re away.

    You make a good point.

  12. pinetree 12

    “The Guardian is owned by a trust….”

    ….bang on the mark Steve, and having worked for them in a previous life I can assure you it bleeds financially, so to that extent they put their money where their mouth is…..

    …fascinating group to work for….not wildly left, but def always “labour leaning”….

    …contrast was marked when I then moved to The Telegraph…

    On the matter of the buy-back – I’m no closet “righty” (well and truly out there), but I see merit in the purchase, particularly if they pitch me ideas for electrification, port-to-port/hub-to-hub type linking etc etc…throw in the environmental, economic, road infrastructure etc etc issues and I’m sure some smart stuff can be done…

    …on it’s cost – it’s expensive, granted, I’m not sure what anyone else expects, if you’re going to take a position oi it then that’s the price…

    Can a Govt run it well? I’d hope 20 odd years of trying, failing and succeeding would mean we’ve got a pretty good idea of what works/doesn’t…

    …to be honest – I see some form of PPP mix coming into play downstream, I think it’d be sensible to explore, but it’s obviously not going to be talked in the short term…

    Captcha – “breakdown miles”….oh dear…

  13. ghostwhowalks 13

    So much for the myth of the private Wellington & Manuwatu Railroad.
    A quick check of wikipedia gives this…

    By May 1881, 43,000 shares had been sold, including a substantial package to Maori land owners in the Manawatu, who exchanged land along the proposed route for shares in the company.[1] In May 1881 the company signed a contract with the government to purchase the land, formation and materials used for building the line so far. The government made certain undertakings for the company’s profitability, and made substantial grants of Crown land to prevent land speculation and make the railway a viable entity. The contract also included a clause for the government to purchase the company in the future at a “fair value”, something that was later to prove contentious.

    ‘certian undertakins for the railways profitability’

    ‘substantial grants of crown land’

    The USA was much the same for most of its private railways, usually done by corrupt politicians in league with railroad barons. In spite of that most of the early railroads were speculative and lost money and or went bankrupt

  14. Tane W 14


    “Now for some facts. The railway network in the United States of America was practically all built with private money and continues to run as a series of successful mostly private operations today.”

    The railroads in North America were built by private companies true, but only with the support of massive public subsidies. These took the forms of direct payments as well as dirt-cheap or free land rights. No subsidy, then no railroad. Same for projects such as the Hoover Dam, the Tennesse Valley Authority and the interstate system. Private operators might then own them and/or operate them, but without public money they wouldn’t have been built, at least not in that timeframe.

    As for food and shelter, these are key infrastructures in private hands, and (obviously) they do work. I think this is because they can be carried out on the small scale, with a (relatively) small-scale investment. Building a house or running a farm is a lot for a family, but not compared to building the Main Trunk Line. So lots of small, individual businesses can, do and should operate those infrastructures.

    But the big, natural monopolies? I think they’re better in public hands.


    Tane W

  15. Swampy 15

    Now to the statement “In May 1881 the company signed a contract with the government to purchase the land, formation and materials used for building the line so far.”

    The WMR company, in other words, bought from the government the short part of the line from Wellington to Wadestown, that the government had built and decided to abandon construction on. Thus, the first part of this route was privatised and proved to be quite successful in so doing. The company then built the rest of the line and operated it as a private company from the time of opening, 1886, until 1908.

    The land grants were worth almost nothing at the time they were given because, as everyone knows, the lands were bought extremely cheaply off the Maoris. It was when the line had succeeded and opened up the country that the land became worth something but it didn’t contribute much to the company right at the beginning.

  16. Lipper 16

    Just a pity that this story never appeared in the other daily newspapers.

    The Guardian is well known for being very left field, and benefits hugely by capturing all public sector Job advertising.

    ‘Nuf said?

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