Government won't be making changes to KiwiRail after review

The Government has decided to keep KiwiRail as a commercial state-owned enterprise (SOE), after a review into whether another form of government entity might better suit ministers' objectives.

Switching to another form might have given ministers the ability to more directly control KiwiRail as well as removing the need for it to find money to deliver a commercial return.

KiwiRail will remain a state-owned enterprise. Photo / Bevan Conley

Minister for State-Owned Enterprises David Clark said, "As a state-owned enterprise, KiwiRail will be best placed to participate in several competitive markets, including freight both on land and across Cook Strait."

KiwiRail owns the Interislander Cook Strait ferries.

He said the Government had "invested heavily in KiwiRail over several budgets to ensure it is better placed to deliver on the Government's objectives".

Clark added the current Government had "invested $8.6 billion to build a resilient and reliable network after decades of neglect and decline".

"Much of this is the bread and butter of our network; replacing track, new culverts and bridges, upgraded turnouts, all of which are needed for a safe and effective network."

KiwiRail's future as an SOE was put under review in 2020 after questions were raised about its commercial viability as well as the fact that the Government's transport and climate goals meant it had a "public benefit" expectation that was broader than a strictly commercial remit.

The review was led by the Ministry of Transport and Treasury, in consultation with the Public Service Commission and KiwiRail.

It found that changes to the form of KiwiRail might be "disruptive to the work programme already underway", and that public benefits can be "delivered effectively" by KiwiRail in its current form, "alongside continued improvements in reporting transparency and integrated oversight arrangements".

Transport Minister Michael Wood said KiwiRail would still be required to deliver on the Government's strategy for rail, which was to help shift some freight off roads.

"Getting more people to use the rail network and more freight off the roads is a key part of the Government's emissions reduction plan.

"Ministers are also considering the role of rail as part of the New Zealand freight and supply chain strategy, and how we can improve inter-regional passenger rail," Wood said.

New Zealand Railways Corporation, which owns the land beneath KiwiRail's network, will remain a state-owned enterprise.

Clark said, "Given the links between New Zealand Railways Corporation and KiwiRail's activities, there are clear benefits in aligning their entity form and public reporting obligations."