Hard News by Russell Brown

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Hard News: Track to the Future

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  • Craig Ranapia,

    I just know about the very worst bits because they've continued to bite us on the arse.

    Hope "they" don't get splinters or lose an eye on the arse-rape broom. BTW, I'll ask this again: Could someone remind me when Telecom and all those dirty foreign-owned banks got nationalised?

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

  • Kyle Matthews,

    Yes, Kordia is an SOE. Here's wikipedia's list:

    # Air New Zealand, privatized in 1989, subsequently rescued by the Crown in 2001
    # Auckland International Airport
    # Bank of New Zealand - semi-privatized in 1987; rescued by the Crown in 1990; sold off in 1992
    # Electricity Corporation of New Zealand (ECNZ) - part of which became privatized as Contact Energy in the period 1995 - 1998
    # Government Print
    # Ministry of Works and Development
    # Natural Gas Corporation (NGC), ultimately absorbed into Vector Limited
    # New Zealand Steel, privatized from 1987, now part of BlueScope Steel
    # The Post Office Savings Bank (POSB), bought by the ANZ bank in 1989
    # Telecom New Zealand, privatized in 1990
    # New Zealand Rail Limited, privatized in 1993, became Tranz Rail Limited in 1995 - Government subsequently repurchased the track lease

    Most of those aren't exactly the most popular corporates. Govt print is OK I guess - who's know? Auckland Airport certainly is a successful business based on recent news. New Zealand Steel? Ministry of Works?

    Since Nov 2006 • 6243 posts Report Reply

  • Paul Rowe,

    CCMAU will give you a good overview of Crown companies, SOEs etc, including a summary of their performance.

    www.ccmau.govt.nz

    Lake Roxburgh, Central Ot… • Since Nov 2006 • 574 posts Report Reply

  • Matthew Poole,

    Craig, does it matter? I know precisely where you're going with this, but remember that the architects of the plans that gave rise to those events spun off to form Act.
    Also, we've seen just how spectacularly "successful" it all was. Bottom half of the OECD on broadband along with some of the most expensive telephone services, rescues of Air NZ and BNZ, repurchase of the rail and the rolling stock when their private sector owners wouldn't put in the money to do things they promised, increasing electrickery prices after being promised that competition would make the damn stuff cheaper, the banks that we did own now making stunning profits for their Australian owners...

    Forgive me for being deeply cynical about anyone who thinks that privatisation has in any significant way benefited NZ. The successful privatisations, that haven't materially fucked various sectors of the country over, have been the very small ones - GP, NZ Steel. Works possibly, though I don't know enough about the costs of using Works Infrastructure for Crown projects vs what could've been achieved with Ministry of Works getting corporatised instead. The rest of them, well, we're either demonstrably worse-off (BNZ and Telecom) or the benefits are somewhat nebulous. Just what does AIAL being a private company get us that an SOE wouldn't? And AIAL isn't exactly popular with its key customers, namely the airlines, either, so it's not winning on the "niceness" stakes.

    For all of which we got something in the vicinity of $29 billion, if my memory serves me correctly.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Russell Brown,

    I think we were, and I don't think snapping 'ideological' at someone is a slam dunk outside a first year politics tutorial.

    He didn't "snap". He put it to Prebble that he was ideologically opposed to the buy-back, in that he disapproved of government ownership in general. It was a perfectly reasonable way of establishing where his subject was coming from.

    Prebble could have agreed or otherwise, but he immediately got hostile and jabbered "if you're going to abuse me we might as well finish the interview now!". Robbins just dropped it and carried on.

    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.

    I've listened to it twice now, and it wasn't any kind of "treatment"! Cullen would simply have responded and carried on.

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • Russell Brown,

    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.

    It just should never have happened. Fay, Richwhite ran a sale in which it was a buyer. Then, with Wisconsin Central, it loaded NZ rail with debt and ripped all the cash out of it -- this after the government had written off $1.3 billion in debt.

    That was a company given every chance to develop, and those bastards raped it. They even ripped off Fay, Richwhite's shareholders in doing it. And then, knowing what was happening to the business, they got out.

    If you believe in a market economy you should despise those men, because they undermined that concept like no dirty commie ever could.

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • Shep Cheyenne,

    <Thread Jack>

    Proposed New Zealand Coastal Policy Statement 2008

    Submissions end 5pm tomorrow 8 May.

    Policy 20 Surf Breaks of National Significance
    Policy 33 Appropriate location, density and design of subdivision...
    Policy 39 Walking access as a national priority

    To name but a few that I've made a submission in favour of.

    Democracy doesn't just come every 3 yrs, have your say now!

    Since Oct 2007 • 927 posts Report Reply

  • Shep Cheyenne,

    Since Oct 2007 • 927 posts Report Reply

  • Rich of Observationz,

    Personally Shep, I would go a lot further and actually introduce a statutory Queens Chain, with public access to a 5m strip along the coast with very few exceptions (container wharfs, main family homes, railways and the like). Having thus ensured public access to beaches, the Foreshore and Seabed laws would have no real purpose and could be repealed.

    I guess it would piss off Michael Fay if people could go play on his beaches. Utu, I say.

    Back in Wellington • Since Nov 2006 • 5550 posts Report Reply

  • Peter Ashby,

    My Dad used to work for the old NZR as an Engineer. He had a friend who was heavily involved in the Hungarian built EM units for Wellington. Wikipedia tells me it cost a whopping $33m. Done under a govt dept no less.

    NZR had chronic under investment. The old Northerner overnight train between Auck and Wgtn was postwar stock kept running on a wing and a prayer and a lick of paint. I remember travelling with the family on it (we got free travel) and at Auck station there was holdup (a hot box) so off Dad went to sort it.

    What rail needed was a system to get money into it. Here in the UK Virgin who run the West Coast franchise between London and Glasgow are touting trains with universal WiFi. You have been able to plug your laptop in for some time now.

    The tracks here are govt owned (now) and maintenance has now been brought back into public ownership after penny pinching and bad practices by the corporates tendered to run it.

    The operating companies rent the right to run on the tracks and must pay fines for running late if it is their fault. Virgin doesn't own their trains, they are leased since it could lose the franchise next time it's up. At which point the trains will be repainted in the new company's livery. This has not prevented massive investment.

    BUT it has been very messy; the tracks etc have had to be renationalised; it STILL requires huge govt subsidies and the French do it all SO much better and faster, and cheaper, and cleaner, and more efficient. And state owned.

    Dundee, Scotland • Since May 2007 • 425 posts Report Reply

  • Jeremy Baker,

    Wellington • Since Nov 2006 • 10 posts Report Reply

  • Trevor Nicholls,

    Perhaps the new owner of the rail network can tilt the competitive balance against road freight to the same extent as Toll biassed it the other way.
    Maybe it can extract a few years' road charges out of them (the Toll Road Toll?) to make up for the promised investment that never happened. And if Toll don't like it they know where the off-ramp is.

    Wellington, NZ • Since Nov 2006 • 325 posts Report Reply

  • Don Christie,

    Craig, you may find this "interview" with Prebble more palatable.

    Wellington • Since Nov 2006 • 1645 posts Report Reply

  • Russell Brown,

    iPhone coming to NZ ...

    http://www.vodafone.com/start/media_relations/news/group_press_releases/2007/vodafone_to_offer0.html

    Interesting...

    Very interesting, given Telecom's confident hints that it would get the Jesus Phone.

    It looks to have happened at a higher level. And it's something of a reversal for Vodafone, which has hitherto been unwilling to meet Apple's terms.

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • Matthew Poole,

    Very interesting, given Telecom's confident hints that it would get the Jesus Phone.

    I said to a friend yesterday, Telecom was probably unwilling to be out-bastarded by the iJobs on the revenue-shafting^Wsharing scheme. I wonder what he had to offer Vodafone to get them to shift, because as you say they've been rather uninterested in his overtures until now.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Mark Thomas,

    Auckland • Since Nov 2006 • 317 posts Report Reply

  • Mark Thomas,

    oh, make that $500 (stuff) to $700 (herald)

    doh

    Auckland • Since Nov 2006 • 317 posts Report Reply

  • Kyle Matthews,

    NZ$500 for the iphone too. that's relatively cheap

    The stuff story isn't an indication of what it will cost in NZ, just an indication of how much it costs in the states, in NZ dollars.

    Since Nov 2006 • 6243 posts Report Reply

  • Fran O'Sullivan,

    Russell -

    Russell

    You are right hindsight is marvellous.

    But check your facts. In mid-2003 when Tranz Rail finally hit the wall I was not in NZ but off doing a study tour in Europe.

    So - I did not advocate buying the rolling stock at that time - as I was not reporting and commenting at this time.

    What I did do was break the story in March 2001 that the Govt would face a request from Air NZ for a $500m capital injection and that the Government was considering ploughing money into a partial buyback of Tranzrail to ensure the maintenance of nationally important lines.

    I don't believe you commented on this at the time but the Herald lead resulted in an outrageous front-page attack from the Independent which bought a bum steer from the airline after it was leaned on to squash the story.

    So let's keep the record rolling here:-

    I campaigned strongly through early 2002 over Tranz Rail's shonky accounts and again was first to raise the prospect of a Securities Commission inquiry into the accounts - which did indeed eventuate despite the heavy handed tactics from the company's lawyers to stop it.

    In July 2002 I broke the story - again front-page Herald - that the Government and Tranz Rail were holding talks that may lead to the taxpayer buying the national rail track. I wrote commentaries on the renationalisation prospect which at that time was predicated on the notion that competing companies including some of the Tranz Rail's customers would get access to a state-owned track (This may yet eventuate over time if Ontrack is kept).

    Post-election - August 2002 I wrote the option was now on the table among others to ensure NZ retained rail services. I also wrote a major Herald series on the mounting financial problems and whether there was a role for the Crown in rail's future.

    Along the way Pam Graham took over the running story as the Herald's transport business reporter.

    But by April 2003 I was writing that Tranz Rail was in crisis - the earnings forecasts were a mirage - how shareholders had not been told the truth - how Tranz Rail's advisers had suggested the valuations of some company key assets were overstated and said receivership was looming. I suggested an option was statutory management and potentially selling the rail track to the Crown.

    Next story this issue not till July 2003 when the deal had been done.

    So - yes hindsight is marvellous.

    But so is dogged reporting and I certainly stand on my record of breaking many of the significant yarns in this saga and the subsequent insider trading investigation imbroglio.

    Where were you on this???

    Wellington • Since Sep 2007 • 14 posts Report Reply

  • Russell Brown,

    But so is dogged reporting and I certainly stand on my record of breaking many of the significant yarns in this saga and the subsequent insider trading investigation imbroglio.

    Hi Fran. Oddly enough, I was refreshing my memory of your writings this very morning. You were indeed a champ on the rail story.

    But I think I was referring to revisionism in the editorial column. The former TranzRail management seemed to be recast this week as having a competence that just wasn't the case.

    I do think your column today contrasting the government's move on rail with the Air NZ buyout is a wee bit disingenuous. Labour was caned by the Herald for prevaricating while it got is ducks in line, and now it is being bashed for announcing early.

    And after the bailout the Herald's editorial voice did seem to question the wisdom of privatisation of companies that can't be allowed to fail -- including, possibly, rail.

    That was three weeks after it said: "The one form of assistance the Government must not give, even now, is a financial bail-out. State shareholding in Air New Zealand and the likelihood of Government-appointed directors are not what the airline needs."

    Essentially, the Air NZ buy-back faced as much hostility as the rail one has.

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • Fran O'Sullivan,

    Russell you wrote this


    Fran O'Sullivan is displaying lots of wisdom after the fact today, but I don't recall her urging the government to buy the rolling stock in 2003.

    That's what I was responding to - not your later commentary on the Herald editorial view which clearly is not something influenced by independent columnists like myself.

    I think you're being disingenous here and should just concede the point gracefully.

    Fran

    Wellington • Since Sep 2007 • 14 posts Report Reply

  • John,

    Re the Air NZ buy back (rescue) thanks for the reference to the Herald editorial which has refreshed my memory of the stupidity of the Directors decision to buy Ansett and take on the might of the entrenched Aussie staff with all their perks that they had gained over the years.
    In relation to the NZ Rail buyback there seems to be a lot of emphasis on passenger traffic and hi-speed rail.
    Yes, TGV is a magic way to travel but needs a huge population to be viable.
    OTH we could certainly do a lot better than we do currently with modern tracks well maintained.
    The Timaru-Christchurch section used to be renowned for high speeds in the
    40's & 50's using steam for instance.

    Freight is the answer to profitablity and efficiency for rail and if the Auckland/ Hamilton and Palm Nth./ were electrified then Tony Friedlander and his trucking buddies would face a serious challenge to their long distance journeys.

    In the late 1950's early 1960' I used to send about 600kgs of baked goods to Auckland every Tuesday on the perishable goods express. They never ever missed a beat.

    Finally. did no one ever travel on the Silver Star? just brilliant overnight travel between Ak& Wgtn. At one period over 3 weeks I travelled each week Auckland to Carterton each week by S/Star and connecting Railcar
    leaving Sunday evening returning Saturday morning.Cheaper , more comfortable.
    On other occasions I chose to return to Auckland from Wellington by S/Star rather than Air either because of bad weather or wait list problems.

    I wonder if Keith Turner might like to take on the challenge of running the New Rail, he did a pretty spectacular job at Meridian ?

    Auckland • Since Dec 2007 • 21 posts Report Reply

  • Russell Brown,

    I think you're being disingenous here and should just concede the point gracefully.

    My apologies -- I'd forgotten saying that.

    To address it, my point was that you were depicting Cullen's failure to go the whole way and acquire all of Tranz Rail in 2003 as a costly blunder. I just don't think anyone was saying that at the time.

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • Fran O'Sullivan,

    Russell - thanks for conceding my point.

    Now to yours: The Crown was after 35 per cent of the company and outright ownership of the track in mid-2003 believing that would enable it to exert control. Little spoiled that scenario by his lightning share raid.

    My point is that the Crown has already expended the thick end of a billion is buying the old Tranz Rail in three stages: Auckland Rail; the track and now the Toll NZ assets (trains and ferries) minus the profitable road business.

    I think it could have played a more aggressive hand earlier and got the lot for much less than the roughly billion now spent given that it was in talks with Tranz Rail for months prior.

    There would clearly have been management issues as the Michael Beard leadership had been a disaster for the company - and clearly the major shareholders behaviour - but others had circulated offering to manage the asset on behalf of the Crown in the event of a full buyout in late 2002 early 2003.

    The Crown could have enabled that to take place - Tranz Rail had not honoured track maintenance assurances given at the 1993 privatisation. Pressure could have been applied.

    It ended up in an effective PPP with Toll but with the access arrangements far too loose.

    Cullen has said he didn't want to subsidise a foreign company to develop the rail asset - but the free premises the Government's given Toll under the deal for Tranz Link is also a subsidy.

    It's the failure to execute a clean deal that worries me here.

    I checked Cullen's full statements on the deal on the Beehive website just now - the rent-free deal is not mentioned. Toll made it explicit in their own press statement to the ASX.

    I think Cullen can do a lot better here when it comes to transparency.

    Cheers Fran

    Wellington • Since Sep 2007 • 14 posts Report Reply

  • Russell Brown,

    Russell - thanks for conceding my point.

    You're welcome ;-)

    It ended up in an effective PPP with Toll but with the access arrangements far too loose.

    But Cullen says even the access agreement they had was never adhered to, and that if it had been enforced, Toll made it clear would simply have started closing down services.

    I'll concede that Toll has arguably done us taxpayers like a dinner here. But I think it was going to keep on doing that no matter what sweetheart deal it got.

    I checked Cullen's full statements on the deal on the Beehive website just now - the rent-free deal is not mentioned. Toll made it explicit in their own press statement to the ASX.

    I think Cullen can do a lot better here when it comes to transparency.

    You're right. That's poor.

    Auckland • Since Nov 2006 • 22850 posts Report Reply

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