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

Yeah right!

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

  • Corporate socialism at it’s finest, but at least we’re not giving out hundreds of millions to bail out the banks here…oh wait, we already did that in the 90’s…sigh

  • I wonder if the current government thinks it already is a benign dictatorship? Michael – puffin’ billy – Cullen has introduced the smokescreen of John Key’s share ownership to divert attention away from this matter and the Winston Peters scandal.
    New Zealand could probably be run with some Linux software. It probably would crash less often than the unreliable humans.

  • It’s a shame … but did they have a choice? Living in Europe at the moment and it is obvious that one of the pillars of civilisation is the ability to cleanly and easily get around.

    Public transport, pedestrian access and cycle ways are infrastructure that requires government backing in order for it to eventuate against ‘market’ pressures (it’s economic good tending to be wide and various, not easily localised in a few companies pockets) – and as public owned infrastructure can be profitable even (see Deutsche Bahn).

    New Zealand seems to still be stuck in some crazy world where communal values have been displaced by market fundamentalism…even now after the crash? Compare Kiwibanks balance sheet to Citicorp.

    I think the Labour government did a brave and necessary thing. If the next government supports the quality of leadership Kiwibank has enjoyed in Kiwirail then in a few years we’ll have some to be proud of.

  • Rail has a strategic value much larger than the price paid. Maybe the govt team got out maneuvered but they have restored public ownership and that is important.

    Once rial went private it was always going to be a struggle to “buy back the farm” as commercial interests are quite different from the community focus that a government has.

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