Hard News by Russell Brown

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Hard News: Track to the Future

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  • Steve Barnes,

    Apparently they knew all along it wasn't going to work ...

    I had suspected this all along. The first thing I noticed when Toll bought the network was a large number of toll trucks on the road and thought "why are they competing with themselves?" The answer is obvious with hindsight. The problem now will be Toll's influence over the shift of freight back to rail, they ain't gonna let that happen without a fight. I wonder what is in the small print on the deal. If Toll has sold out any bargaining power the first we will see is them selling the road freight business.
    I could be wrong. I was once, I said I'd made a mistake when I hadn't.
    ;-)

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • Russell Brown,

    I see a tee shirt coming on...

    "Amnesia: Making it easier for the right since I forget when"

    Quite.

    I particularly enjoyed the way that Wisconsin Central went from "lacklustre post-privatisation management" to "experienced rail operator" between the two editorials.

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • Gareth Ward,

    We have to somewhat put aside the "efficient means of travel", "plenty of demand for services", and "carbon-efficient means of transport" stuff though, because if they all held true the investment would have been a popular one for many commercial businesses and the Govt wouldn't have needed to step in.
    If Dr Cullen or Treasury or whomever would put up a paper showing that all those things held but NZ simply didn't have the investment base to deliver on them, then I'd be happy that the Govt stepped in as that player to fulfill all this demand.
    Alternatively, if they put a paper that said commercially it doesn't stack up but there are these significant public benefits (being beyond the users of the rail itself) that makes public subsidy valid, and we therefore would rather operate it as an SOE than subsidise a private organisation, then I would also be happy with the investment.

    But if they have pulled the trigger WITHOUT that clear picture of benefit to the country that lets them say "this is why we've spent $665 million as a starting point" then it's a little disappointing. I still like to think that those benefits are there, but if they're so obvious, why haven't they been put up?

    Auckland, NZ • Since Mar 2007 • 1727 posts Report Reply

  • Russell Brown,

    We have to somewhat put aside the "efficient means of travel", "plenty of demand for services", and "carbon-efficient means of transport" stuff though, because if they all held true the investment would have been a popular one for many commercial businesses and the Govt wouldn't have needed to step in.

    What is comes down to is that if we wanted rail at all, there were two options:

    1. Give Toll its sweetheart deal and be prepared for it to continue to game the New Zealand taxpayer indefinitely.

    2. Take the hit and get Toll out of the way.

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • Kyle Matthews,

    Me too. Does anyone else think Richard Prebble made a fool of himself on Morning Report today?

    Well c'mon. It's Richard Prebble. I think he often makes a fool of himself when he opens his mouth.

    But in an age of a looming liquid fuels crisis to leave such a key piece of strategic infratstructure to a private company happy to let the competition to its trucking arm slowly rust into oblivion would be an act of short sighted and blinkered stupidity by any government charged with assuring and insuring the nation's future.

    That competition element is a good point that I hadn't thought of previously Tom. Rail should be competing with road, and presumably if it's set up as an SOE whose long distance capacity is all rail (I presume it'll retain some short distance trucking capacity to get stuff around town) then it'll be directly in competition with the trucking companies. With some capital investment from the government to bring it into the... well 20th century at least... that sounds like a good thing.

    Since Nov 2006 • 6243 posts Report Reply

  • Russell Brown,

    With some capital investment from the government to bring it into the... well 20th century at least...

    One of the locomotives currently in service was commissioned in ... 1951.

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • Matthew Poole,

    It's not at all unusual for SOEs to run quite well, thank you. Look at Telecom, which went from utterly dire as NZ Post Office Telephone Services to providing quite good service in its post-corporatisation-but-pre-privatisation guise. That's based on a goodly number of comments from people who remember the time, rather than personal experience given that I was all of 10 when the last Labour gummint got the flick. All we gained from flogging them off was an unresponsive monopoly that happily screwed the country and its existing assets for the benefit of its shareholders.

    Also look at Airways, and NZ Post. Both SOEs, both returning nice dividends, both doing their core business (well, NZ Post's latest choices on parcel post are arguable) so well that they get lucrative consulting jobs for foreign entities. Obviously the rightist dogma that the state cannot run a proper business isn't any kind of absolute.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Gareth Ward,

    What is comes down to is that if we wanted rail at all, there were two options:

    1. Give Toll its sweetheart deal and be prepared for it to continue to game the New Zealand taxpayer indefinitely.

    2. Take the hit and get Toll out of the way.

    Which I'm happy enough with - if the Govt said:
    - We need rail for these reasons (public benefits, costs to having an underinvested rail network etc)
    - The state of the current industry in NZ is such that no alternative companies are willing to put up the cash the incumbent wants for the purchase, and that incumbent is unwilling to invest to deliver the benefits above.
    - We therefore believe a purchase of this network at XXX dollars delivers appropriate benefit to the NZ taxpayer.


    I'm not against the move, but do agree with Craig that the case should be clearly laid out - I think it's there.

    Auckland, NZ • Since Mar 2007 • 1727 posts Report Reply

  • James Green,

    One of the locomotives currently in service was commissioned in ... 1951.

    Apparently Toll owned Tranz Metro in Wellington. The DM (J-ville) units were c.1949. So apparently it would be good to get the rolling stock into the latter half of the 20th C.

    Limerick, Ireland • Since Nov 2006 • 703 posts Report Reply

  • Russell Brown,

    It's not at all unusual for SOEs to run quite well, thank you. Look at Telecom, which went from utterly dire as NZ Post Office Telephone Services to providing quite good service in its post-corporatisation-but-pre-privatisation guise.

    And more to the point, it did so while investing heavily in its own infrastructure. Capital investment collapsed after privatisation, while huge dividends were delivered.

    I'd still have privatised it, because there is so much potential for differentiation and competition in that industry. But, at the least, I'd have separated wholesale and retail first ...

    We return to the conclusion that New Zealand's problem wasn't privatisation per se, but some really bad privatisations.

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • Craig Ranapia,

    Me too. Does anyone else think Richard Prebble made a fool of himself on Morning Report today?

    No -- I think the Too-Much-Coffee Sean Plunket wannabe conducting the interview was the one who made a fool of himself. If I wanted to listen to piss and vinegar posturing disguised as hard news in the morning, don't we already have Paul Henry and Paul Holmes for that?

    North Shore, Auckland • Since Nov 2006 • 12370 posts Report Reply

  • Craig Ranapia,

    I'm not against the move, but do agree with Craig that the case should be clearly laid out - I think it's there.

    May well be, but I'm still not hearing it. Apart from "well we fucked the dirty foreigners good and proper" - which I've been reliably informed is far from the case. Rod Oram -- who's hardly a dirty right-wing tool -- raised some carefully qualified caveats that are worth thinking about on Nat Radio today. (Audio not on-line yet, but worth a listen when it is.)

    Look, brilliant politics -- nobody is arguing that, and if Labour doesn't get a pretty substantial poll bounce off this, I'll put some wasabi on my best bobble hat and eat it. But you've just got to be a little queasy at the fog surrounding the expenditure of a pretty serious chunk of public money.

    North Shore, Auckland • Since Nov 2006 • 12370 posts Report Reply

  • Bob Munro,

    One of the locomotives currently in service was commissioned in ... 1951.

    As was Graham Reid I believe. He seems to be still ticking over pretty well.

    Christchurch • Since Aug 2007 • 418 posts Report Reply

  • Craig Ranapia,

    From what I hear (admittedly from ACToid's with insider mates in the Nats admin) the National caucus is now thoroughly split, with only the high poll ratings papering over the cracks. Also you keep hearing from different places these stories swirling about that John Key only has the job until the election, with Bill English poised to take the job. All This scuttlebutt is just that, because I would imagine such a story if provable would be known to someone like Fran O'Sullivan and would thus be splashed all over the front page of the Herald... Wouldn't it?

    Well, Tom, I'll take your insider knowledge of the National Party caucus with... well, a toxic amount of salt.

    North Shore, Auckland • Since Nov 2006 • 12370 posts Report Reply

  • Russell Brown,

    __Does anyone else think Richard Prebble made a fool of himself on Morning Report today?__

    No -- I think the Too-Much-Coffee Sean Plunket wannabe conducting the interview was the one who made a fool of himself. If I wanted to listen to piss and vinegar posturing disguised as hard news in the morning, don't we already have Paul Henry and Paul Holmes for that?

    Were we listening to the same interview? I thought Julian Robbins stayed remarkably calm while Prebble ranted and raved about being "abused", ignored questions and generally got in a tizzy.

    It's here, anyway:

    http://www.radionz.co.nz/audio/national/mnr/rail_and_ferry_buy_back_part_4

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • Don Christie,

    According to Prebs the Government should have said to Toll "you fix it".

    There we go, that's the economic genius of the guy. Same man I once heard on National radio describing Wayne Idor as a credible source.

    Wellington • Since Nov 2006 • 1645 posts Report Reply

  • Shep Cheyenne,

    I was waiting for a train to cross while listening to Prebble go off topic, do anything but address the issue.

    Since Oct 2007 • 927 posts Report Reply

  • Shep Cheyenne,

    Nice T-shirt Tom :)

    Since Oct 2007 • 927 posts Report Reply

  • Mark Thomas,

    What is comes down to is that if we wanted rail at all...

    Well, i wonder. has that been established, in some sort of economical/environmental analysis?

    Rod Oram -- who's hardly a dirty right-wing tool -- raised some carefully qualified caveats that are worth thinking about on Nat Radio today. (Audio not on-line yet, but worth a listen when it is.)

    audio's up now... shame i tripped over my headphones cable and ripped it apart. sigh.. better do some real work then

    Auckland • Since Nov 2006 • 317 posts Report Reply

  • simon g,

    It's funny how the 21st century gripe with Bad Socialists is that they hand over too much money to the capitalists.

    When I were a lad, the commanding heights were supposed to be confiscated. Truly, Thatcher has won.

    Auckland • Since Nov 2006 • 1333 posts Report Reply

  • rodgerd,

    According to Prebs the Government should have said to Toll "you fix it".

    Is this the same Richard Prebble who headed up the ACT party, the party of private property rights?

    Just so I can be clear, the government should have forced a private property owner to do what the government wants via legislative fiat, rather than negotiating a price the owner considers fair, buying the asset from the owner, and going from there? Is that the idea?

    I wasn't aware Prebs had lurched back so far to the left. Perhaps we'll hear him championing the RMA!

    Wellington • Since Nov 2006 • 512 posts Report Reply

  • Craig Ranapia,

    Were we listening to the same interview? I thought Julian Robbins stayed remarkably calm while Prebble ranted and raved about being "abused", ignored questions and generally got in a tizzy.

    I think we were, and I don't think snapping 'ideological' at someone is a slam dunk outside a first year politics tutorial. And I don't give Plunket credit for keeping his shit together when faced with a politician in full fizz, or being evasive. It's called doing your job, and I wonder if you'd be quite so sympathetic if Robbins was giving Cullen -- who in my opinion was getting some pretty softball airtime today -- the same treatment.

    Still, I did learn something interesting while listening to that dog's breakfast of an interview. There's a rather nice stereo effect when you're cleaning the oven.

    North Shore, Auckland • Since Nov 2006 • 12370 posts Report Reply

  • Matthew Poole,

    T3h Russel said:

    We return to the conclusion that New Zealand's problem wasn't privatisation per se, but some really bad privatisations.

    I was always struck by how little we actually got for the "privilege" of being raped with a splintery broomstick by Fay, Ritchwhite et al. NZ got less than $30b for all the assets that were hocked off in that period of fire sales, including the corporatised-and-efficient Telecom, the BNZ, NZ Rail, etc. We've now paid a lot of that back directly through repurchases and bail-outs, and indirectly we've repaid many, many times over in monopoly rents to Telecom and the various other under-investing entities that once existed solely for the benefit of the country at large.

    For the most part, privatisation hasn't delivered us very much good at all from what I can see. Can anyone point to an example of a privatised entity that isn't gouging, under-investing, and generally screwing their customers over? I'm too young to remember everything that was hocked off, I just know about the very worst bits because they've continued to bite us on the arse.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Kyle Matthews,

    Can anyone point to an example of a privatised entity that isn't gouging, under-investing, and generally screwing their customers over? I'm too young to remember everything that was hocked off, I just know about the very worst bits because they've continued to bite us on the arse.

    I posted a list of some of the ones you don't hear about because they're not seen as corporate a-holes a few weeks back in another thread. Er, Terralink, Kordia (sp?) were a couple. There were about half a dozen, none were big however.

    Since Nov 2006 • 6243 posts Report Reply

  • Matthew Poole,

    Kordia's an SOE, not actually privatised. At least, that's my understanding of their description of themselves and also what's been presented in the media. Orcon's been described as a state-owned ISP, subsequent Kordia's purchase.

    Terralink certainly was privatised. I think I'd heard of them, but not entirely sure. As you say, you don't hear the wheel that doesn't squeak.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

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