Shake-up looming for KiwiRail as Govt confirms review to find long-term, sustainable model

KiwiRail will be reviewed. Northern Advocate Photograph by John Stone.

A shake-up is looming for KiwiRail - with the Government soon to release terms of reference for a wide-ranging review of the state-owned enterprise.

A likely focus is the current requirement to maintain a large rail network.

Transport Minister Simon Bridges said the review would cover KiwiRail's operating structure and longer-term capital requirements.

This year's Budget will invest $450 million of new capital funding in KiwiRail over two years. It comes after Bridges warned after last year's Budget that current Government handouts could not continue.

Bridges said KiwiRail had done a good job at becoming more productive, but had suffered bad luck with setbacks such as the Kaikoura earthquake.

"We want to provide a long-term, sustainable model for KiwiRail."

Prime Minister Bill English said the Government wanted to know if any changes would help KiwiRail stand on its own. He ruled out privatisation.

"Essentially the operating business as I understand it does make money. But the capital requirements to maintain a large rail network are very substantial."

New Zealand First leader and Northland MP Winston Peters said the review showed the Government had "woken up" to the fact rail was needed because of road congestion.

"Remarkably, this dollars-obsessed Government has even hinted at removing the requirement for KiwiRail to be commercially viable and to make a profit, which it is currently required to do by law."

Earlier this month KiwiRail said it could spend up to $50m on new carriages for its tourist trains as it rides the tourist boom. The company is also rebranding its Cook Strait ferry and scenic train services under one brand, The Great Journeys of New Zealand.