Bolger's KiwiRail chairmanship up in the air

Monday 22nd March 2010

Former Prime Minister Jim Bolger’s role heading up state-owned rail company KiwiRail, is up in the air after Transport Minister Steven Joyce said the board faced possible “refreshing.”

Joyce said the government is “looking at refreshing the governance,” of the rail company, in an interview on TV3’s The Nation programme on Saturday. When asked if Bolger would be rolled over in June when his term as chairman comes up for renewal, no clear answer was given. Joyce said the announcement is in the hands of State-Owned Enterprises Minister Simon Power.

Prime Minister John Key declined to confirm or deny Bolger’s position to the KiwiRail job, in an interview on TV One’s Breakfast today.

"Jim's done a tremendous job for New Zealand, when he served us as ambassador, as I think an outstanding Prime Minister of New Zealand and on SOEs, but whether he continues with KiwiRail is a different issue," he said.

Key confirmed there are no plans to sell the rail assets in the immediate future, despite Joyce saying KiwiRail was a sunken economic asset for the country.

The National-led government promised to make no asset sales in the first term and Key said the capital investment that’s required makes it a difficult business for someone to take over.

“Who would buy it in its current form? There's a price at which anything can be sold but that's not on the table at the moment," he said.

On purchase, Prime Minister Helen Clark told The Dominion Post newspaper that government ownership would allow strategic decision making and investments to help rail make New Zealand more sustainable.

Joyce said the $690 million price that was paid in 2008 by the previous government for KiwiRail from Toll NZ, a subsidiary of the Australian-owned Toll Holdings, was “nuts” and “over the top”.

Key agreed with this, saying the previous government bought something completely over-valued and without a credible business plan, with billions of dollars of shortfall that the government will now have to fund.

Joyce said the two options are either ignoring KiwiRail and letting it fall to pieces, or investing more into it with expected freight growth over the next 20 years.

Key said almost $700 million has been invested in the enterprise so far, but even more is needed to bring the standard up to where it should be, which is a “big ask.”

"With a large amount of investment, both the company taking debt and the Crown putting in investment over a period of time, you could see it returning to profitability," he said.

Businesswire.co.nz

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