Baldock Larry: Urgent Debates — Tranz Rail 
Text is incorporated into the Bound Volume 
Baldock Larry: Urgent Debates — Tranz Rail 
[Sitting date: 10 June 2003. Volume:609;Page:6075. Text is incorporated into the Bound Volume.] 
LARRY BALDOCK (United Future) 
: 
 The Government’s announcement last Friday that it would buy a 35 percent stake in Tranz Rail for $76 million after 10 years of that company operating as a private enterprise should not have come as too great a surprise to many New Zealanders. The deal struck by National in 1993 has for a long time been the subject of much concern. If one was inclined to be kind one could suggest that the Minister who negotiated that sale thought he was doing the right thing at the time and was getting a good return for the taxpayer. However hindsight over the past 10 years inclines me along with the vast majority of New Zealanders to reach a rather different conclusion. The sale of New Zealand Rail which can only be described as one based on mate’s rates has seen one of New Zealand’s important strategic assets privatised pillaged and brought to the brink of receivership. 
Why the original deal did not include a Kiwi share arrangement similar to the one included in the sale of Telecom and Air New Zealand in order to protect assets that are vital to New Zealand being able to compete economically in the world is a little hard to fathom. The leasing of the rail corridor for $1 a year had to be called the deal of the century upstaged only by the Government’s announcement last week that it will buy the rail network and associated infrastructure for $1. United Future has long campaigned for the buying back of the rail corridor network in New Zealand. It should never have been given away in the first place especially at such mate’s rates. In 1993 as a speaker said before Tranz Rail Holdings bought New Zealand Rail for $328.3 million. The main shareholder stripped out $220.9 million of equity in 1993 and a further $100 million in 1995 according to analysts’ estimates. 
 As I said while United Future has always seen the importance of maintaining the strategic asset of our rail network it has never made sense for the Government to buy it back at a cleverly contrived market value that involves millions of dollars of taxpayers’ money going into Tranz Rail’s bank and therefore potentially into shareholders’ pockets instead of being invested in the infrastructure that has been left to run down over the past 10 years. When the Auckland rail corridor was purchased in December 2001 for $81 million I think the New Zealand taxpayer would have seen a better return if that $81 million had instead been spent on upgrading the rail network in Auckland City. 
While it is possible to share some sympathy for the New Zealand shareholders who bought into Tranz Rail at approximately $3.60 a share in February 2002 the best deal for New Zealand taxpayers and shareholders is one that will make sure that the long-term viability of our rail network is sustained. The Government’s plan to buy into Tranz Rail offers the opportunity for the taxpayer to benefit from an increase in the share value of the company in the future rather than the taxpayer helping a company to improve its balance sheet so that only others can benefit from speculative investment. I am not sure whether I heard the Leader of the Opposition correctly when he spoke earlier but I thought I heard him say that the National Party would support subsidies for a private company. That has to be a turn round for the books. The party whose mantra was that the Government should stay out of business is now suggesting taxpayer subsidies to businesses. 
Rail has to be retained and maximised in this country in order to play its part in the overall transport strategy for both passenger and freight movement. Certain freight is best transported by rail and its potential needs to be further expanded but only after careful investigation and critical economic analysis. Some concerns have been reported with regard to the monopoly that Tranz Rail will have over freight services and the desire by some to see more than one operator delivering freight services on the network. While competition can be of value it is important that it is not allowed at the risk of compromising any safety standards. Most of the New Zealand rail network is a single track and unfortunately like our State highway system there are far too few passing lanes. It may take a number of years of investment in the network before multiple users can be practically envisaged. 
It is important at this time in Tranz Rail’s rather difficult history that the current freight services are maintained and improved and that community passenger services are improved in terms of efficiency and services. With regard to Tranz Rail’s exclusive use of the network for freight we trust that in the “use it or lose it” clauses that there will be sufficient teeth to give a clear signal that Tranz Rail must provide an efficient and a cost-effective service for its freight customers. 
United Future gives its support for the proposed deal for the reasons that I have outlined but we want to make it clear that our support should not in any way be interpreted to indicate that we believe as I think the Green Party does that rail can be seen to solve our transport infrastructure problems on its own and therefore replaces our need for an efficient and safe national highway system. We must be realistic. In today’s environment of cheap air travel and with the limitations of our population size the idea that New Zealanders will patronise passenger rail services between cities in droves or at least in sufficient numbers to guarantee the commercial viability of those services is overly optimistic at best and downright stupid at worst. There may be some opportunities where tourism routes are viable but those will need close analysis. I believe most New Zealanders would prefer a safe dual highway that they can drive upon and thus enjoy the individual freedom they have come to expect. 
After the Government has stepped in to retain this important strategic asset United Future now calls on the Government to give priority both in legislation and in Budget allocations to upgrading and developing our national highway infrastructure. It is now clear that the Government can find millions of dollars when it needs to address an emergency or a crisis of some sort. We urge that the Government acknowledge that our current road transport infrastructure is already in crisis and it desperately needs not only attention to be given to legislation providing for alternative funding methods as offered in the Land Transport Management Bill that is currently before the Transport and Industrial Relations Committee but also the urgent investment of the revenue raised from petrol excise tax and road-user charges on the State highway system of this country. We need our rail system to play its part. The Government’s announcement and action will help to ensure that outcome. New Zealanders now await a similar response towards the congested and unsafe sections of our highways so that the Government no longer wastes business revenue and taxpayers’ money by failing to show the same courage and determination to fix that problem as well.