KEY POINTS:
National won't sell Toll's rail and ferry business if it wins the election but says the buy-back decision is reckless given pressures households are facing.
National Party leader John Key said the purchase did not make sense when householders were struggling to pay higher food, power and fuel
prices.
"Labour is providing a profitable Australian corporate with a big dividend from growth that struggling families and households were due years ago. The light at the end of the tax cut tunnel now looks a lot like it's a train."
Mr Key said Labour had paid "way over the odds" and was looking at hundreds of millions more for rolling stock upgrades.
But he said National would be "stuck with" the railways because it could not recoup the purchase cost and its policy was not to sell any State assets.
Finance Minister Dr Michael Cullen has admitted the Government paid more than it would like for the rail stock, but said that when Toll bought the business 4-1/2 years ago, the Government had not been seriously looking at buying it.
Toll's bid for the operation at the time was $394 million.
However, one of the country's biggest rail customers MainFreight has welcomed the announcement and pledged to up its own investment if services improve.
Dr Cullen this morning said the Government had bought back the rail and ferry business for $665 million.
The Crown has been in negotiations with Toll over a buyback for several months.
It comes against a backdrop of wrangling over Toll's access agreement to the rail tracks, which are already owned by the Crown, with the Government saying it has been failing to pay its fair share.
MainFreight chief executive Don Braid said the sale would give some certainty.
"There has been a problem with the debate and aggravation between Ontrack and Toll over access fees and I guess the seas were somewhat clouded as to how much infrastructure was being invested in by Toll," he told NZPA.
"Certainly we've seen a deterioration in services over the last couple of years as there's a lack of investment in infrastructure in New Zealand and this announcement may well see that infrastructure being improved which would be good for all of us."
Mr Braid said the company had a "substantial spend" with rail in the country and would boost its investment if services improved.
He would not say by how much; "You'll see it's a substantial amount".
Initial reaction to the Government's decision to buy back the rail and ferry business from Toll NZ for $665m had been generally positive.
The Green Party said they welcome any initiative to reduce our future dependence on oil.
"Rail is an essential public asset in a sustainable transport system", party co-leader Jeanette Fitzsimons said.
Campaign for Better Transport convenor Cameron Pitches said the Government's purchase is a positive step in the direction of recognising rail as a "strategic asset".
Mr Pitches said the sale of the network could also see more freight moved off the roads and on to trains.
And New Zealand First said the move was in the country's best interests and would benefit both freight and passenger users.
"The return of this business to the rightful owners - the taxpayers - will result in improved service, innovation and strong investment in a vital part of the country's infrastructure", said the party's transport spokesperson Peter Brown.
Private industry gave the move the thumbs-up, with Mainfreight chief executive Don Braid saying some effort spent on sagging rail infrastructure will be welcomed by transport and freight operators.
The National Party has provided the only dissenting voice today. The opposition claim the purchase will inevitably see further costs passed on to all New Zealanders once rolling stock costs are factored in.
The Crown has been in negotiations with Toll over a buyback for several months.
It comes against a backdrop of wrangling over Toll's access agreement to the rail tracks, which are already owned by the Crown, with the Government saying it has been failing to pay its fair share.
Prime Minister Helen Clark today said the deal would pave the way for the modernisation of the rail network, which formed a key part of the Government's sustainability agenda.
"Modernising our transport sector is central to transforming our economy and making it truly sustainable," the PM said.
"With rising fuel prices and growing awareness about the challenge of global climate change, many nations are looking to rail as a central part of 21st century economic infrastructure."
She said a modern rail system could reduce the emissions of the overall transport network, take pressure off our roads and allow trucking and shipping to operate more efficiently.
The Government will pay a purchase price of $665 million for the rail and ferry business with settlement on June 30.
Dr Cullen said buying the rail operating business was the best way to increase investment in the industry and make it more responsive to customers' needs.
Rail assets had been run down after the sale of the public rail system in the early 1990s and the Government would now look at upgrading rolling stock.
Dr Cullen said Toll had done a good job increasing freight volumes and streamlining the operation of terminals, but it had struggled to run a "commercially viable" business without government support.
"The Government will now avoid paying subsidies to third parties and we also avoid the on-going disputes over the implementation of the National Rail Access Agreement that had the potential to destroy value in the business and erode the morale of the people who work in it."
The negotiations reportedly took place against a backdrop of the Government manoeuvring to make Toll start paying the full price of access to the rail track network.
Toll has been paying about $48 million a year since an access deal was struck in 2004, with the Government picking up the shortfall of about $10 million needed to maintain and improve the tracks.
- NZPA
