NZ Rail Strategy: KiwiRail’s Business Plan Probed By Experts
October 30th, 2009
The national railway is in discussions with officials from the Treasury, independent consultants and the Ministry of Transport as it prepares its long-term strategy plan. Minister Steven Joyce says the review is about “getting them onto the right footing, testing their business plan.” Joyce says KiwiRail’s annual report, revealing a loss of $187m once state subsidies are taken out, “really shows the challenge in terms of looking at the numbers.” (Refer KiwiRail annual report p3).
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KiwiRail CEO Jim Quinn has been forced to defend the railway from critics who want its uneconomic routes shut down and an end to Govt subsidies. And the Govt does want to see an end to its $90m annual support. Joyce says “They understand clearly they have to take a commercial approach. Jim Quinn and the board are very focused.” Two clear business supporters are Port of Tauranga and Ports of Auckland, who have told shareholders and customers they see an increasing role for rail, especially as more freight is moved to the two ports from other parts of the country. The complication is to achieve cost saving and efficiencies in a downturn. Joyce says “that’s their challenge – doing it on the back of lower volumes.” Port of Tauranga CEO Mark Cairns told shareholders last week trade was down 7.7% in its first quarter and container volumes down 25%.
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