Prebble Richard: Urgent Debates — Tranz Rail 
Text is incorporated into the Bound Volume 
Prebble Richard: Urgent Debates — Tranz Rail 
[Sitting date: 10 June 2003. Volume:609;Page:6071. Text is incorporated into the Bound Volume.] 
Hon RICHARD PREBBLE (Leader—ACT NZ) 
: 
 I think it is appropriate that the House takes the unusual step of having a special debate because this is a very significant decision that the Government has taken—to take over the rail track and invest in Tranz Rail. It means the Government is getting back into the rail business. I have no doubt that when the Government says that most people in business welcome this decision that statement is probably correct. As members know I have some transport interests and I am sure that most transport interests actually welcome it. But speaking as leader of the ACT party I still think the decision is wrong. I say that because it involves a lot of money. It is at least $250 million and I think it will be a lot more. I will set out the reasons. Money cannot be spent twice. My priorities frankly are looking after people who want heart operations or improving children’s education rather than having the Government involved in the rail business. 
Peter Brown 
: Sometimes you have to invest to earn a bit more. 
Hon RICHARD PREBBLE 
: The member says that but I want to make this point too which maybe the Minister of Finance did not follow: if one reads the statements that have been made by Tranz Rail—unless he is saying that the company is misleading the New Zealand Stock Exchange—they say that its tonnages are holding up and that it is actually cash-positive. 
 So it is actually receiving enough money to keep going. Its problem is that it has a problem of capital and it has some leases coming due and I have no doubt that it might not be able to meet them. But the point I am making is this: if one is a director in that situation and puts the company into receivership what does the receiver do? If it is cash-positive he or she continues to operate. I have no doubt at all that any receiver would have continued to operate Tranz Rail and then looked around for another operator. The Minister of Finance actually admitted that he thought that because he asked the House whether we would be worried about it. The answer to that question is no I would not. 
Who would have lost in that circumstance? It would have been the shareholders. It might well be true that they would not have been the shareholders who took capital contributions out. When we look at it now that was a mistake but they bought those shares with their eyes open. It is not the duty of this House to bail out the shareholders of companies. I speak for the ACT party—and there is no one more pro-business than us—and say that that is not the role of the taxpayer. Yes the shareholders might well have lost their shirts. So what! The next question is: would someone bid? We already know the answer to that question because Toll Holdings has a bid in the market right at the moment and we have had Rail America. In the event of a receivership I have no doubt that other offers would have come forward. 
Members might ask why I am objecting to the State owning the track. I will come back and say that I think the Government has done better than it could have but it is for this reason: the demand for more money to be spent on that track will be very hard for the Government to resist. Why is that? The last thing one wants when one is a Minister is to have a rail crash be questioned about safety have some retired judge spend $1 million investigating it and then blaming the Minister. So the Minister finds it very hard especially if an official says that there is an issue of safety involved. 
The issue of continuous-welded railway tracks has been involved in arguments about buckling. I want to point out to the House that that was not done by Tranz Rail; it was done when the tracks were owned by the taxpayer. When I was the Minister of Railways did we worry about the fact that the track buckled? No we did not. To the best of my knowledge no one has ever been killed in this country by the buckling of rail tracks. Some trains have run off the rails but no one has been killed. 
Peter Brown 
: They slow the trains down. 
Hon RICHARD PREBBLE 
: If the member listens he will learn something. Yes Tranz Rail has now been required to slow down its trains. Why is that? A Government servant told it to do that. That civil servant did not have to bear any of the costs but Tranz Rail has had to and it is one of the reasons that it is in financial difficulties. Someone has probably been killed on the roads today because of the state of a road. Does a civil servant get up and say that every truck in New Zealand must now travel at 40 kilometres an hour because there are roads in New Zealand that in engineering terms are not safe? Of course not! But now that the Government owns the tracks the civil servants will say to Mr Swain that all of that track must be upgraded immediately. He and I know that the Government has a “bottomless” pocket and that the pressure on the Government to lift the standard of the track will be high. 
The member who spoke previously put forward the view that we should open the track up to competing operators. I do not support that because when I was the Minister of Railways it was explained to me—and I realised it immediately—that there is an association between the operating company and the track. It basically goes like this: every 15 kilometres of speed doubles the cost of the track. If there are different operators they will demand different sorts of services. For example there are people who now want to run passenger trains in the South Island. Passengers love to go fast but a container does not care whether it is going at 10 kilometres an hour or 60 kilometres an hour. One of the reasons that the track company in Britain— 
Peter Brown 
: The exporter does! 
Hon RICHARD PREBBLE 
: I did not interrupt the member and I hope he does not interrupt me. One of the reasons that the track company in Britain has been a failure is that Virgin wants to run at 300 kilometres an hour the track companies want to run at 60 kilometres an hour and no one can work out how to allocate the costs. At least the Government has realised that it has to have one operator. At that point one can at least agree on what sort of track costs there will be. 
When I am praising this Government I say to it: gee whiz it is starting to learn. Last year it thought—against my advice—that the Auckland passenger track was worth $82 million. The advantage of that was that the regional council was going to pay $130 million. This year it has discovered that it can buy the whole country for $1. If the Government had just learnt from that and held on for 6 months someone would probably have paid it to take the track. It shows that the payment last year cannot have been right and I think that we will look back and say that the payment this year is not right. We will see a Cabinet that wants to spend money on heart operations and schools but which has Government safety officers writing reports saying that the track is unsafe so that any Minister knows that if there is a crash he or she will be held personally accountable. That is why it is very difficult for the Crown when it owns the track. If we had allowed the private sector to own it it would have worked out these matters just as it would have worked out matters with regard to Air New Zealand. I am afraid that the Minister will find that it is a problem and it is not good enough to say: “We are committed to buy this and we don’t know how much it will cost.” I have no doubt in my mind that shareholders will accept this offer. 
Let me make the point that we probably understand now why New Zealanders do not work well in Aussie and why they do not work well here. If an Australian operator did not understand that in this country one cannot beat the Government what did that operator think it was going to do? Does that operator not realise that we do not have a constitution and that Parliament can do what it likes? No New Zealand company would even think of deciding to bid against the Government and in that respect Mr Little has probably learnt a little bit about New Zealand just as New Zealand operators do overseas. 
I am pleased to hear the Government saying that it does not want to stay there very long. My worry is that there is nothing more permanent than a temporary arrangement.