KEY POINTS:
The appointment of former National Prime Minister Jim Bolger to chair the new state-owned enterprise (SOE) - speculated to be named Railcorp - is a typically adroit political manoeuvre by Finance Minister Michael Cullen.
Not only does Cullen get onboard (excuse the pun) the experienced SOE chairman who
oversaw the emergence of Kiwibank into a fully fledged, Government-owned retail bank, but he also defuses (again) National's ability to undermine the Government's renationalisation of New Zealand's railways.
Under Bolger's leadership, National privatised the railways in the first place to a consortium led by Sir Michael Fay and David Richwhite's investment bank and Wisconsin Railway in 1993.
But it was hardly an unmitigated success. By 2002, a lobby group of users, including Solid Energy, Fonterra, Carter Holt Harvey and BHP Steel, was pushing the Government to examine the failure of then Tranz Rail owners to maintain national rail track to a sufficient level and its fees for rail freight business.
Not long after, it became an obvious financial basket case.
Bolger's appointment will be confirmed at a special meeting on platform nine at Wellington station on Tuesday.
One of the key questions for journalists will no doubt be: "Why did you privatise the former Railways Corporation in the first place?" Bolger's political acumen will enable him to defray any sallies with ease, but National will be hard-pressed to make any subsequent political capital as MPs would, in effect, be criticising one of their own.
Other directors tipped to be among the new SOE appointees include Ross Wilson and Brian Corban. Wilson, a former boss of the Council of Trade Unions, now chairs the Accident Compensation Corporation and Corban chairs Government-owned power generator Genesis Energy and Radio New Zealand.
It's understood the Government hoped to persuade former Meridian Energy CEO Keith Turner to be CEO when Toll Holdings' four senior management secondees depart in February. But sources suggest Turner seems determined to focus on governance roles.
Cabinet ministers, officials and businesspeople led by Helen Clark are expected to turn up at 9.30am on Tuesday as the membership of the new SOE board is unveiled, with the new livery for trains and ferries (they were repainted when Tranz Rail and Toll NZ took respective ownership of the assets).
Cullen has been shepherding the re-nationalisation of the former state-owned railway business back into Government ownership over a five-year period starting in July 2003 when he signed a heads of agreement with Toll Holdings to acquire the national rail track.
Earlier this year, he said the Government was buying the railways and ferries from Toll Holdings in a $665 million deal after talks between the Australian-owned company and Ontrack over rail access fees failed to reach a conclusion.
Some elements of the deal were to be concluded when Cullen made his announcement.
But sources suggest negotiations with Toll Holdings are complete and the final aspects of the deal will be announced when the handover goes into effect on July 1.
The Government has been keeping details of the new structure under wraps. SOE Minister Trevor Mallard did not specify to Parliament's finance and expenditure committee on Wednesday whether the new SOE would run the trains and ferries, with state-owned Ontrack continuing to own and operate the national rail track.
Or whether Ontrack will be tucked under Railcorp in the same way Kiwibank is a 100 per cent subsidiary of New Zealand Post, which Bolger also chairs.
Some sources suggest Ontrack could be tucked into the new SOE by October, and there are good arguments for keeping Railcorp and Ontrack as separate SOEs to ensure full transparency.
Toll Holdings has said little. But one bone of contention in the talks it had with Ontrack was a concern the SOE was pumping funds into maintaining lines for social rather than commercial reasons, and a failure to maintain transparency would lead the way to pork-barrel politics where provincial lines were kept open to serve the interests of the Government of the day.
Major players in the talks are PricewaterhouseCoopers' partner Brian Roche and Chris McKenzie from Cullen's office, backed by Cameron and partners.
On Tuesday, it ought to be clear how good a deal has been struck between Roche and McKenzie and Toll Holdings' hard-nosed boss Paul Little.
As part of the Toll deal, the Australian company acquired road operator Tranzlink and a six-year preferential lease on freight-forwarding facilities at rail heads. Toll's freight industry competitors have argued the deal needs to be transparent to remove fears the renationalised railways business will continue to favour its previous owner.
The parties had until June 30 to conclude their outstanding negotiations.
