KiwiRail’s business plan assumes continued funding
June 25th, 2009
The Govt earmarked $90m in the budget for KiwiRail’s operations though it left next’s year’s allocation to be decided on a case-by-case basis. This has left the state railway with an interesting task to plot its future course. KiwiRail provided the Govt with a draft plan in May, which assumed a business-as-usual scenario. However, the report was kicked back with a suggestion to “try again.” The final version is scheduled to be delivered by the end of this month, along with KiwiRail’s statement of corporate intent, and may identify a broadly similar level of spending as was approved this year.
A key theme of the business plan is progress in stitching together the elements which make up KiwiRail, including the mechanical services unit transferred back to the company from Australia-based United Group, with some 480 workers, and 10 workshops and depots around the country. The United Group contract expired on March 22. CEO, Jim Quinn, is also bedding down a new executive team, which has only been put in place recently.
Transport Minister, Steven Joyce, now has the economic and operations data sought on the railway network before a decision can be made on whether to break the track up into smaller, profitable lines and mothball the unprofitable or under-used parts. There may be some debate between the company and its owner on cost savings to be wrung out of cuts to the network and the decision won’t be rushed. Quinn has argued closing lines undermines the opportunity value they may have in future.
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