I posted a few months ago about the fact that the NZ Government had purchased the national rail service (that they sold a few years previously but that’s another story).
At the time I said that;
Bear in mind that this is the same rail network we sold years ago, it’s fallen into disrepair and is under-utilised. It appears that the selling party played a bluffing game, feigning reluctance to sell in order to ratchet up the price.
Now it appears that the rumours back then were correct – it seems a paper from late 2006 valued the asset at some $570 million LESS than the NZ Government pad for it in July of this year – that’s a fair increase in value in only 18 months (like five times the value!)
Yet again another case of people in office with no real-world commercial experience being swayed by smooth talking snake-oil merchants. My vote…. a benign dictatorship!
Finance Minister Michael Cullen said yesterday that a huge range of valuations for Toll’s rail asset existed;
As the government had to take national interest factors into account and as the existing owners of the track itself, we were always going to have to pay more than commercial rail operators who did not have an interest in keeping services open. We paid a reasonable and fair price