English Bill: Questions for Oral Answer — Questions to Ministers 
English Bill: Questions for Oral Answer — Questions to Ministers 
[Volume:648;Page:17178] 
1. Hon BILL ENGLISH (Deputy Leader—National) 
 to the  
Minister of Finance 
: What is the Government’s best estimate of its ongoing financial return from the purchase of rail and ferry assets? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 As the Prime Minister said we are not going into this to make money. Any assessment of financial returns needs to take account of the counterfactual which was continuing subsidies to Toll and indeed increasing subsidies to Toll or major line closures increased roading costs and increased greenhouse gas emissions. The exact negotiation of course around the rate of return sought from the company will be a matter of negotiation between the board and the Government. 
Rodney Hide 
: I raise a point of order Madam Speaker. I am sorry the House is quite quiet but sitting here I could not hear the answer. We have a problem. 
Madam SPEAKER 
: I thank the member. Perhaps those who are responsible for the sound system could enable us to hear; otherwise we might have to forgo question time which would be a great pity—joking! 
Rodney Hide 
: Given that that was a primary question and others were similarly affected could we have the answer again? 
Hon Dr MICHAEL CULLEN 
: I will try to project but members must realise I have a cold so I cannot project very much. As the Prime Minister said we are not going into this to make money. Any assessment of financial returns needs to take account of the counterfactual which was continuing—indeed increasing—subsidies to Toll or major line closures increased road costs and increased greenhouse emissions. The actual expected rate of return of course is a matter for negotiation between the shareholding Ministers and the new company. 
Hon Bill English 
: Can the Minister tell us whether in making a commitment of some $1.7 billion of investment according to the Prime Minister yesterday the Government has commissioned any analysis of the costs and benefits of purchasing rail and ferry assets; if so who carried out that analysis and when was it completed? 
Hon Dr MICHAEL CULLEN 
: The member’s attempt to distort the Prime Minister’s answer will not go down at all with me. The investment required at the moment is the money to go into the track system which the Government already owns—some $460 million over the next 5 years is planned—and the money to go into the operating business which is $80 million over 5 years for the steady-state case and probably approximately $300 million for the more aggressive investment programme or $392 million in total. That compares with something like $12 billion or $13 billion going into roading and public transport subsidies over that period of time. Toll is expecting a total subsidy in 2008-09 of approximately $90 million. 
Charles Chauvel 
: What reports has the Minister received on what could have happened if the Government had not bought back rail? 
Hon Dr MICHAEL CULLEN 
: For some considerable time we have been unable to enforce the National Rail Access Agreement and that was against the background that to enforce that agreement would have led in Toll’s view to the implementation of its plan B which implied closing obviously the Overlander passenger service the central North Island section of the main trunk line from Te Kuiti to Palmerston North the Northland line the Taranaki line the Hawke’s Bay line the Napier to Gisborne line the Wairarapa line north of Masterton the Picton to Christchurch line the Greymouth to Hokitika line the Invercargill to Bluff line and the Invercargill to Wairio line. That is actually the counterfactual case. 
Hon Bill English 
: Can we take it from those answers that if Toll was going to shut most of its lines then it was certainly not a viable business; if that is the case why did the Minister pay $900 million to buy them? 
Hon Dr MICHAEL CULLEN 
: First the member has the figure wrong and second he did not listen to the answer. In order to avoid that happening and for Toll to remain viable without it happening it was expecting $90 million a year in 2008-09 and probably increasing subsidies every year thereafter. 
Hon Bill English 
: Why is it that after committing to an investment of $1.7 billion the answers from the Minister—despite his having several hours’ notice of a question about the ongoing financial return for the purchase of rail and ferry assets—give us the impression that no calculation has been done of ongoing financial return and there has been no analysis of the costs and the benefits of purchasing rail just a public relations and political strategy? 
Hon Dr MICHAEL CULLEN 
: I do love the member getting himself on the wrong side of this issue day after day. The member again misquotes the investment. He does not understand that the track investment occurred irrespective of purchasing the rolling stock operation. He does not understand that if Toll had retained ownership of the rolling stock operation it was looking for large—very large—and ongoing subsidies. He does not understand that Toll never met any of the agreements it had with the Crown in terms of the basic elements. Those are the actual counterfactual cases. If National is arguing for private ownership with line closures— “Make my day!” 
Charles Chauvel 
: Has the Minister had any reports concerning the introduction of wide-gauge track or bullet trains in New Zealand? 
Hon Dr MICHAEL CULLEN 
: Yes I have. I understand that a National Party candidate in the Wellington region a Mr Paul Quinn has argued that we should introduce bullet trains between Auckland and Wellington and reconstruct the entire railway line on a wide-gauge basis. Wide gauge offers very little advantage and probably billions of dollars of investment and the notion for example that we would run a bullet train around the Raurimu Spiral really beggars the imagination. 
Hon Bill English 
: Can the Minister explain to the House and to the public why the board of trustees of Tiaho Primary School has to go through an exhaustive 3-year process with multiple plans to get a small amount of money from the Ministry of Education to fix its leaking roofs and sewage-soaked playgrounds but he has gone and committed $1.7 billion to rail with no analysis of the costs and benefits and no calculation of the ongoing financial return? 
Hon Dr MICHAEL CULLEN 
: The member can repeat the figure as long as he likes; that does not make it correct. But from the party that plucked a figure of $1.5 billion out of the air to subsidise largely Telecom—and now everybody is realising what a stupid promise that was—that is really rich indeed when telecommunication companies make large profits without a Government subsidy. Toll could not make a bean unless it had a Government subsidy. 
Rt Hon Winston Peters 
: What reports has the Minister received that suggest the following: “It is completely relevant because whether or not parliamentarians want to accept it in taking on this position we have a huge amount of influence in the change of public policy in this country. It might be a bit uncomfortable but if I am a shareholder of Tranz Rail and I want to get up in this House and start talking about that company then my shareholding is relevant.” and on the issue of Tranz Rail is this quote relevant? 
Hon Dr MICHAEL CULLEN 
: I understand that those comments were made in the House in 2003 by Mr John Key in a debate on the Members of Parliament (Pecuniary Interests) Bill. I agree entirely with those comments for this reason: I can only assume—although the information I have is not such—if that is the case that he sold his shares in Tranz Rail before seeking commercially relevant information through parliamentary questions in 2002. 
Rt Hon Winston Peters 
: Given that Mr Key has told this House that he sold his shares in 2003 but he asked seven questions on this issue in October 2002 where do the facts lie now? 
Hon Dr MICHAEL CULLEN 
: One can only assume the reference to Tranz Rail in that speech in 2003 was some kind of Freudian slip on the part of the member Mr John Key. 
Rodney Hide 
: Can we summarise the Government’s policy as this and contrast it with National’s policy that irrespective of who owns it Labour is prepared to commit $1.5 billion over the next 5 years to keep a loss-making business going which is a cost of $400 for every New Zealander and that the National Party’s position is that it would not do that but it would spend $1.5 billion to help a business that does make a profit? 
Hon Dr MICHAEL CULLEN 
: On the latter the member is patently correct but on the former of course what the member has to take account of is if there is not an effective and efficient rail system in New Zealand what are the costs and where do they lie? The principal costs are twofold to start with—that is more traffic on roads and more accidents on roads. The costs of those lie with the Government taxpayers and accident compensation levy payers. The other costs are increased greenhouse gas emissions and the responsibility for the cost of those lies entirely with the Government and therefore with taxpayers.