Bolger to head Govt's 'KiwiRail' service (+video)

Key Points:

Former Prime Minister Jim Bolger will head KiwiRail, the country's renationalised rail network.

The Government took ownership of the rail and ferry assets at midnight.

Jim Bolger was prime minister of the National Government which sold NZ Rail Limited to a consortium led by Sir Michael Fay and David Richwhite's investment bank and Wisconsin Railway in 1993.

Mr Bolger also chairs KiwiBank and New Zealand Post Finance Minister Michael Cullen said he had played a major role in success stories of State Owned Enterprises.

"Jim, we are lucky to have someone with your skills and your dedication to New Zealand on board with us," Dr Cullen said.

In May, the Government and Toll announced a heads of agreement for the Government to buy Toll's rail and ferry assets for $665 million. There was another $25m of associated costs.

"By bringing our rail system back into public ownership - following the buyback of the tracks four years ago - we will spare future generations from subsidising a private rail operator and will be able to create an integrated, sustainable transport system," Dr Cullen said.

The KiwiRail establishment board will manage the service until decisions about how it would be run are made. The Government already has a separate state owned enterprise, OnTrack, to look after the tracks.

Dr Cullen said a Rail Development Group would report to him and State Owned Enterprises Minister Trevor Mallard in early August with recommendations for the structure and management of the rail business. Cabinet would then make decisions.

Dr Cullen said options ranged from a single SOE including OnTrack and KiwiRail as separate divisions, to a separate crown entity and SOE.

"New Zealand's rail network is now back in New Zealand's hands," Dr Cullen said.

"We will now be able to make the investments necessary to develop a world-class 21st century rail system for New Zealanders."

He said potential reconfigurations in Auckland and Wellington would see changes to maintenance and storage to cope with more stock for metro areas.

Dr Cullen said Toll Holdings had worked to turn the company around in recent years.

"But in the end all have acknowledged that it is not possible to run an effective rail network in New Zealand without significant financial support from the New Zealand tax payer," he said.

Prime Minister Helen Clark said government ownership would allow it to make strategic decisions and investments to help rail make New Zealand more sustainable.

"One locomotive can pull the equivalent freight of 65 trucks," she said.

The Prime Minister said by 2040 the Government hoped that total freight transport movements would more than double.

"We are looking to rail - and to coastal shipping which is also fuel efficient - to carry a lot of that extra load," Helen Clark said.

In addition to Jim Bolger, the other members of the KiwiRail board are:

* Brian Corban,
* Mark Franklin,
* Ross Wilson,
* Brian Jackson,
* Linda Constable
* Ross Martin

- NZPA