Kiwirail Gets Lifeline, Capital Works Off Agenda
June 3rd, 2009
Finance Minister Bill English has put KiwiRail on life support but National has closed the door on any capital investment in the network indefinitely. The national rail freight and passenger company will be kept ticking over with a $90m Govt operating subsidy. The subsidy will be used to help fund “non-commercial” freight services in recognition of rail’s strategic role in the economy. The amount is what KiwiRail has been calling for from the Govt and follows years of being unable to push up access charges it collected from Toll Holdings to maintain the network in its current state. However, there is no indication whether the subsidy will be made available next financial year, or at what level it may be set. KiwiRail had earlier indicated it needs $90m a year for at least five years to help maintain financial stability.
In addition to the subsidy, the Govt has also confirmed a previously announced loan facility of $140m for the organisation, of which $75m has been allocated to buy 20 new Chinese built freight locomotives. These are expected to start arriving in the country next year. However, the Govt’s apathy towards rail has been confirmed by its refusal to make any funding available for capital works projects to follow on from the $200m provided by the previous Labour led Govt to help pay for overdue capital works and track renewal projects. This holding pattern on investment is likely to see KiwiRail struggle to keep up with predicted rises in traffic volumes over coming decades.
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