Tuesday, 31 July 2012

Privatise rail

I see complaints from the chattering classes that plans to sell TranzScenic or to partner with another company “would be privatisation by stealth.”

Who are they kidding?

The true value of KiwiFail has already been found on the open market: zero.  Even the Finance Minister knows this. It is a company that absorbs more value than it produces, generating insufficient business even to pay for its capital; a “business” only able to survive by sucking off the state tit.

That said, there are around seven lines in the KiwiRail portfolio that could turn a profit, according to Liberty Scott, lines with real value that could be sold off.

Let’s hope they will be.  Soon.


  1. No no no. Any part of the train set that is left is just an invitation to re-nationalise again and again and again.

    It's not worth anything, there won't be any value in a trade sale as a going concern, and the risks of further intervention are huge.

    Do the right thing: close it down, rip up the rails, send everything for scrap, sell the right of way to a private trucking corporation.

  2. The logical buyer is a firm comprising its primary customers - Fonterra, Solid Energy, CHH and Freightways. They are the ones with the greatest economic vested interest in it, run it as a private concern for them and it will be an unnoticed as US freight railroads are - profitable, efficient, doing a great job as a factor of production.

    TranzScenic can happily make money on its three services, and the lines that the new owner doesn't want can be gifted to whatever groups want them for nostalgia, heritage reasons (let's do away with the massive panoply of legislation making it expensive to set up volunteer railways and abolish ACC so they insure themselves against PIBA). They might run trains, they might become cycle trails or walkways.

  3. There aren't any "logical buyers". NZ isn't the US, we barely have an economy, and a glorified 3'6" bush tramway is nothing like US Railroads.

    There's nothing TranzSenic can do on rail that they couldn't do cheaper & better with busses. Wellington isn't viable as a city - let alone with rail; neither is Auckland so commuter rail is also good money after bad.

    In fact every single cent spent on rail since about 1930 has been good money after bad. The only fiscally responsible thing to do is to scrap the lot.

  4. Anonymous: Nonsense, South Africa and Japan have extensive 3'6" railways, so there is a viable core. The fact there persisted in being a few buyers only a decade ago indicates that.

    Nobody would undertake the Tranz Scenic trip on 9 coaches, but it wouldn't exist without the coal exports. When they finish so will the rail. Commuter rail is now a big sunk cost, so the marginal costs of operation are comparatively low.

  5. SAR & JRG are real railway networks not glorified fucking bush tramways. SA is basically still a third world country; Nippon has real population density.

    NZ is a pissant socialist hellhole with an economy somewhere between Greece & Benin who thinks it is still a first world country - read the accounts, read Don's speech last week: we're not

    Wellington Commuter rail isn't a sunk cost, that's why the socialist & nominally capitals govts have spent something like 100Million on track "upgrades" & new trains in the last 5 years. Money NZ hasn't got and can never repay. Auckland commuter rail is a complete fucking joke. Neither will ever be viable without massive ongoing govt subsidies - like commuter rail & public transport everywhere in the world!

    Like Cullen & communists everywhere, you're letting your emotional attachment to train sets get to you - you probably had Hornby or Maerlkin as a kid.

    Purely because it is a huge temptation for socialists to pour money in to, rail in NZ and all other forms of
    subsidized public transport should be terminated forthwith - up to and including stupid commie "bus lanes".

  6. I realise that state owned and operated services (not really assets) are against your religion, but in the case of Kiwirail its the economy of scale that dominates its profitability.

    NZ Railways was built at a time when we had around 1.5 million population and it was a 'public work' at a time when the only organisation willing to do such a thing in a tiny little outpost in the corner of the world was its government, on behalf of its people. Throughout its life it has been a service to industry and the public and even though it provides a valuable service, there's probably no way that it can make a profit.... the market is just too small.

    The same goes for NZ Post. Much as I broadly share your views on private enterprise, I think that some modification is needed in a country of only 4.4 million people because without government input our market is just too small for some of these organisations to exist.

    Many years ago I lived in Argentina, whkch had an extensive rail network. They even had a train crossing the bloody Andes to Chile. Then some asshole dictator sold all the state assets (services) and the buyers of the railways actually, unbelivably, sold the rolling stock and ripped up the fucking tracks and sold the metal for scrap. I was back for a visit recently and it was amazing to see the devastation done to the country by these and similar actions. The relatively temporary depression of their economy resulted in the permanent loss of a whole rail network which had taken 100 years to build and was gone in 10.

    Is this what you want?

    Dave Mann

  7. sold the rolling stock and ripped up the fucking tracks and sold the metal for scrap.


    Is this what you want?

    Yep and not just for rail. Schools, Hospitals, Roads, Telecom, the works

  8. Anonymous: Work done a few years indicated that Wellington's commuter rail system, sans J'ville line, could operate at a profit, but not enough to recover the cost of capital to replace the equipment. Given the equipment has been replaced and has little market value, it may as well be run into the ground. Auckland will struggle though.

    However, you appear to be a troll, since frankly once you sell it who cares what happens. Yet you need to sell the roads as well.

    Dave Mann: NZ Post has been a successful business but it needed to be sold years ago to get some new capital to sustain itself. Now it is undercapitalised and facing ever declining revenues as its core business is becoming ever more archaic.

    Whether or not Argentina's network should have been sold is a moot point, since the corruption and irrational economic decisions made in that country for the last 60 years are legendary - and continuing. The rail network sale is relatively minor in the context of a country that is the poster-child for postwar hyperinflation.


1. Commenters are welcome and invited.
2. All comments are moderated. Off-topic grandstanding, spam, and gibberish will be ignored. Tu quoque will be moderated.
3. Read the post before you comment. Challenge facts, but don't simply ignore them.
4. Use a name. If it's important enough to say, it's important enough to put a name to.
5. Above all: Act with honour. Say what you mean, and mean what you say.