From one standpoint, it is easy to see why the Treasury recommended shutting down KiwiRail or downsizing it to a freight operation between Auckland, Hamilton and Tauranga. In the past few years, it has been a severe drain on the public purse. Since 2010, when a "turnaround" project to get the company back in the black began, the Government has invested more than $1 billion, all to little avail. KiwiRail's revenue in 2014-15 was similar to that in 2010.
• Richard Prebble: Rail is the only corridor left
Turnarounds are no longer talked about, and the commitment of a further $400 million in this year's Budget was accompanied by a statement from the Finance Minister that the rail system's costs were "unsustainable". KiwiRail can feel a trifle unlucky. Its prospects have not been helped by the impact on freight of the Canterbury earthquakes, the Pike River mining tragedy and falling commodity prices. Nonetheless, the frustrations of the Treasury are understandable. So, too, those of Bill English, even if he was not about to adopt its radical prescription.
KiwiRail, then, has every right to feel beleaguered. And it surely can have expected no support from former Railways Minister Richard Prebble. It was he, after all, who was so dismayed at the waste at the then NZ Railways Corporation in the mid-1980s that he slashed the 24,000-strong workforce by 80 per cent and converted it to a state-owned enterprise. Yet in an article we published online this week, Mr Prebble went into bat for KiwiRail, arguing that the Treasury took far too narrow a view.
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His argument, a compelling one, is that rail should be viewed as part of the nation's transport infrastructure, not as an entity required to turn a profit. In particular, he sees it as the answer to an increasingly congested motorway system. What, he asked, would happen to our roads if the freight now carried by rail had to be transported by road? To the Treasury, this would be no problem because the added freight would attract more road-user charges, providing the funding for new roads.
Mr Prebble suggests, however, that these roads could not be built, largely because the public is opposed to new inner-city motorways. The outcome of KiwiRail's demise, therefore, would be more road congestion. Yet rail, he notes, has both spare capacity and available corridors into all the country's ports, while also connecting with all major cities and most towns. In recognition of the part that rail can play in freeing up our roads, he says the NZ Transport Agency should provide it with $100 million a year from road-user charges. No one else, he concludes, can offer a realistic means of reducing road congestion.
The national rail network is an asset that should survive and be put to its best-possible use. In particular, it stands to be a major component of any rationalisation of the country's ports. It should be expected to be as efficient and competitive as possible, but some other countries have accepted that profitability is a step too far. Mr Prebble's analysis will be criticised for also conceding on this point. But there will be major repercussions if a transport corridor painstakingly built up and maintained over the years is abandoned.