More on Cullen’s new toy

Keeping Stock and The Hive have comments also on the Cullen spend up.

Both reference Fran O’Sullivan in the NZ Herald who writes on Cullen’s spending spree.

Worthy of mention is the Herald editorial which is sceptical to say the least, which started as follows:-

There was no shortage of brave words to accompany the Government buy-back of Toll Holdings’ rail and ferry business. Many countries, said the the Prime Minister, were looking to rail as a central part of 21st century economic infrastructure.

and:-

no one in Government went to any length to justify the spending of $665 million on a business whose one constant has been an often alarming absence of profitability.

In fact it is the breathtaking arrogance, Adam has referred to in another post, of thinking there is no need to justify this in monetary terms, but instead that we will accept the social necessity Kyoto etc etc

The editorial continued:-

Finance Minister Michael Cullen did observe that Toll had struggled to run a “commercially viable” operation without Government support. But he did not explain just how the renationalised business would be made profitable.

and:-

The Government was more intent on dwelling on relatively peripheral issues, such as transport network emissions.

Yeah, that really does it for me!

Then later:-

Passenger services would not have ended if people had viewed trains as a preferred means of transport.

Clearly they are only viable in Auckland and Wellington -potentially

and on the Cullen purchase and spending commitment:

.Major freight customers, keen to see a taxpayer-funded upgrade of the rail service, had been only too happy to reinforce that sentiment. As were those who adhere to a romantic notion of rail, particularly its environmental benefits, while paying no heed to its competitiveness with road.

Well of course the freight companies will be happy if government spends other peoples money on assisting their businesses.

Then near the conclusion:-

Circumstances today are, however, much different from those when NZ Rail was a byword for losses, capital write-offs, overemployment and “social dividends”. The public will be loath to see a return to such practices. People will also take some convincing that modernisation, in itself, will make rail attractive to customers.

Finally:-

Regrettably, the National Party says it will not sell the rail and ferry business if it is elected later this year. It describes the renationalisation as “reckless”, but remains committed to a policy of not selling state assets in a first term. An exception was clearly warranted in this instance. The service should be placed in the hands of another foreign rail company which, disciplined by the risk to its own money, would run a commercial enterprise. There might well be no rush to buy. But better that approach than a buy-back which ignores the lessons of 15 years of privatisation. And which will be a major drain on the taxpayer for as long as rail remains in state hands.

Clearly it is not just Adam and others in the blogosphere who are of the mind that this purchase is not a good idea.

I mean, I like trains, but that does not mean that as a taxpayer I want to spend money on them, if in the 21st century they are not viable, given the topography and demographics of New Zealand. If Fonterra, the biggest freight customer apparently wants to use rail, let it buy the train set.