The Government has bought back the rail stock and ferries from Toll for $655 million.
The privatisation of these vital assets, which are also natural monopolies, by National was a disaster from Day 1. National flogged the railways and the ferries off dirt cheap to their mates who asset-stripped them by slashing maintenance and taking huge profits. As every asset-stripper knows, at some point the Government has to stop economically vital assets being degraded and that’s what happened when Labour bought back the railways and the rail stock and ferries went into the ownership of Australian-based Toll.
The situation stopped getting worse but hasn’t improved: Toll wanted to make big profits too, it didn’t want to pay for the use of the tracks, and it was tempting to direct freight away from rail to its trucking line. While the Government has poured money into improving the tracks, Toll hasn’t done its part. More and more freight is moving by road when it should be going by rail.
20 years of under-investment and greedy owners have left us with a dilapidated rail and ferry system. Now the Government owns the whole system again it doesn’t need to waste time and effort trying to get private wonders to invest; it can start to make the upgrades that are needed itself. Rail should be an integral part of our national infrastructure, especially as peak oil approaches and more energy efficient means of transport are needed (rail is at least three times more energy efficient than road).
National has said it will sell the railways now the Government owns them again (well English said that, then Key said no asset sales in a first term, so who knows where they stand). Labour will undoubtedly be planning a major investment programme. The ownership of rail and the broader issue of public assets is shaping up to be a central election issue.