Key John: General Debates 
Key John: General Debates 
[Volume:609;Page:6357] 
JOHN KEY (NZ National—Helensville) 
: 
 Twelve days ago the Government once again waded into New Zealand’s corporate arena; this time it was to bail out Tranz Rail a company that for months has teetered on the edge of insolvency. The Government was so sure that Tranz Rail would go broke that it did not even wait for the liquidators to be called in. Instead it relied on the directors of Tranz Rail which is something the investors after multiple downgrades and the obliteration of shareholder value have learnt not to do. 
Dr Cullen was so confident that his deal would be approved by battered shareholders that he spent most of the press conference giving Toll Holdings a lecture about how unwelcome it was in New Zealand. As he put it Toll Holdings was on a collision course with the Government. What the Minister failed to consider was what the shareholders want to see happen to the company. He was so confident that the deal would be approved by the shareholders that he refused further meetings with Toll Holdings. He refused to talk to it about what might happen and he refused to see its managing director Paul Little when he came to New Zealand; instead the Minister dispatched one of the minions from his office as he was a little bit too busy that day. All the while the Minister was locked in secret negotiations with the directors of Tranz Rail over a deal that will see a failed board and failed management locked in a monopoly for 64 years. 
Well I have some good news for the Minister and for New Zealand. The New Zealand financial services industry has more confidence more brains and far more business acumen than the Minister. It will accept Toll Holdings' offer and what is more it will do it within the next 6 weeks prior to the Government having an opportunity even to put its deal on the table. And why would the industry not do that? The Government’s deal is so vague that the institutions have not got a clue as to what they can expect from Tranz Rail in the future. All that the institutions do know is that they will be stuck for decades with a failed management team and with a cap on their return that will inevitably lead Tranz Rail back on to the track of wastage and inefficiency—the very hallmark of New Zealand Rail prior to deregulation. The institutions will sell and they are so angry that they have written to the directors of Tranz Rail with a very strong message. They have said: “Do anything that wilfully breaches the conditions laid out by Toll Holdings do anything to scupper this deal sell Tranz Link before this transaction can take place and we will see you in court.” 
The Government had better work out fast that if it wants any ownership rights to New Zealand’s rail it is negotiating with the wrong party. It is high time that Dr Cullen dismounted from the high horse that he is well and truly perched on rolled up his sleeves and started to nut out a deal before the New Zealand taxpayers have to pay a whole lot more for the privilege. Mark my words: sticking two fingers up to Toll Holdings is not endearing the Minister to that company a well-capitalised company that will be able to negotiate from a much stronger position than an under-capitalised desperate company can. 
The New Zealand taxpayers up and down the land will pay for the arrogance of the Minister. They will pay for the way that he has treated with them and the Minister will learn that dealing with that company is very different. Maybe the Minister should learn just one thing and that is to stay well away from this deal and to allow Toll Holdings to run an efficient and effective railway in New Zealand like it does in many other parts of the world. The Minister should let the corporate sector do what it does best which is to run an effective rail network for the people of New Zealand.