It is looking more likely that the Government will buy back New Zealand’s rolling rail stock from Australian-based Toll.
Toll has been a classic asset-stripper: buy a key piece of infrastructure that should never have been sold, take as much profit as possible with minimal investment, and force the Government to buy the infrastructure back to prevent further economic damage. Lines have been closed and road freight (including Toll’s trucking line) is out-competing rail, increasing roading costs and greenhouse emissions.
The Government had to buy back the rail infrastructure from Toll in 2003 to prevent it falling apart. Toll gave up the infrastructure for a token sum, and promised to match an investment of $100 million from the government in upgrading the rails, and then pay the government for the right to use the rails. Toll has tried to wiggle out of the deal ever since, not fronting with its $100 million and now trying to avoid paying its full fee for using the rails. Now, Toll wants $700 million plus to sell the rolling stock and has rejected a government offer of $500 million. The rolling stock’s value depends on how much the Government demands for use of the rails: if they stick with the original agreed sum of $57 million this year, Toll will be willing to settle for a lower price, if Toll can reduce this cost, it will demand more to sell the rolling stock.
The Government should force this odious company to stick the original agreement and then offer it as little as possible to buy back our rolling stock. Toll has been nothing but bad news for this country; it’s time to buy back New Zealand’s railways.
[Update: The Greens have the same train of thought]