Category: Financial Planning

Budget 2015: KiwiRail Should be Split Into Two

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Tracks to NZTA, KiwiRail a partial listed stand alone freight State Owned Enterprise

While I have been writing posts on rail and contemplating Budget 2015 in regards to transport (i.e not a lot apart from reaffirmation in accelerating the Southern Motorway upgrade (starts October)) I was pondering if there was a better way to handle KiwiRail.

KiwiRail is admittedly a money black hole thanks to neglect to our rail system by both sides since the late 80’s (made worse in 93). However, KiwiRail is not a lost cause as rail is the most efficient and economical form of moving people and freight over longer distances on land. But I wonder if improving our rail could be handled differently and give New Zealand better results.

What I am thinking is splitting KiwiRail into two:

  1. Tracks and associated infrastructure get flipped to NZTA who look after the State Highway network. This way a single agency is: planning, operation, maintaining and investing in both land transport modes under a single umbrella. It also means rail comes under the National Land Transport Fund envelope when it is listed alongside road projects. Given that the NLTF is meant to priorities the best valued investments at the top it would be most likely not uncommon for rail to take three of the top five NLTF spots.
  2. Freight operations including rolling stock and rolling stock maintenance facilities spun off into a stand alone State Owned Enterprise. While being an SOE though I would have 49% of it listed on the NZX to allow fresh capital and NZX oversight to this division.

With the freight side spun off though I would also allow others to run their own rolling stock (while paying access fees to NZTA) on the tracks if they are inclined to do so. Port of Tauranga might be such a contender with its growing Metro Port services. That said KiwiRail freight operations could also see another source of revenue by the private rail freight companies tendering their rolling stock maintenance to KiwiRail as well.

So what do you think? Something Bill English should actively investigate? Would it help our rail system as well as the Government books. Would it help our Economy most of all?

Let me know your thoughts in the comments below.