Posts by Russell Brown
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__Does anyone else think Richard Prebble made a fool of himself on Morning Report today?__
No -- I think the Too-Much-Coffee Sean Plunket wannabe conducting the interview was the one who made a fool of himself. If I wanted to listen to piss and vinegar posturing disguised as hard news in the morning, don't we already have Paul Henry and Paul Holmes for that?
Were we listening to the same interview? I thought Julian Robbins stayed remarkably calm while Prebble ranted and raved about being "abused", ignored questions and generally got in a tizzy.
It's here, anyway:
http://www.radionz.co.nz/audio/national/mnr/rail_and_ferry_buy_back_part_4
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It's not at all unusual for SOEs to run quite well, thank you. Look at Telecom, which went from utterly dire as NZ Post Office Telephone Services to providing quite good service in its post-corporatisation-but-pre-privatisation guise.
And more to the point, it did so while investing heavily in its own infrastructure. Capital investment collapsed after privatisation, while huge dividends were delivered.
I'd still have privatised it, because there is so much potential for differentiation and competition in that industry. But, at the least, I'd have separated wholesale and retail first ...
We return to the conclusion that New Zealand's problem wasn't privatisation per se, but some really bad privatisations.
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David Slack talks to Tessa Duder about her first foray into fiction for adults: a new collection of short stories called Is She Still Alive? and proposes that the key to her success is "a lifetime of observation".
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With some capital investment from the government to bring it into the... well 20th century at least...
One of the locomotives currently in service was commissioned in ... 1951.
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We have to somewhat put aside the "efficient means of travel", "plenty of demand for services", and "carbon-efficient means of transport" stuff though, because if they all held true the investment would have been a popular one for many commercial businesses and the Govt wouldn't have needed to step in.
What is comes down to is that if we wanted rail at all, there were two options:
1. Give Toll its sweetheart deal and be prepared for it to continue to game the New Zealand taxpayer indefinitely.
2. Take the hit and get Toll out of the way.
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I see a tee shirt coming on...
"Amnesia: Making it easier for the right since I forget when"
Quite.
I particularly enjoyed the way that Wisconsin Central went from "lacklustre post-privatisation management" to "experienced rail operator" between the two editorials.
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From a Herald editorial, Sept, 2003:
Toll Holdings' increased offer for Tranz Rail has virtually ensured that New Zealand will soon have a new railway operator. Once the takeover is completed, another attempt can be made to find rail's most efficient role in the national transport network. It follows a decade of lacklustre post-privatisation management. A want of committed ownership during that time has starved Tranz Rail of upkeep and alienated many of its main customers. The question for New Zealand is whether Toll will deliver in the national interest, as well as its own, by promoting a more rational land transport arrangement ...
For all this risk, there is the potential for considerable gain. Toll will bring capital, an efficient IT system and a reputation for good service. It also appears confident that it can repeat events in Australia by doubling the freight carried by rail. At the moment, there is a gross imbalance between road and rail. In part, this reflects the troubled history of an asset that has come close to insolvency. It also indicates a failure to press home what appear to be obvious advantages, including rail's protected right-of-way and freedom from bottlenecks.
The key point here is why the system is run down. If those private owners who put their money into the assets did not maintain their investment, there must have been a reason. They would surely have not let those assets deteriorate if rail was truly competitive with road transport and capable of realising a good profit. Passenger services would not have ended if people had viewed trains as a preferred means of transport. Most recently, Toll had been unable to make the business afford the rent that the Treasury wanted for use of the Crown-owned track network. Clearly, there was a significant distance between the profitability of the rail service and the cost of infrastructure maintenance.
This set the scene for yesterday's announcement. Dr Cullen, unable to recover the costs of maintaining the network from Toll, determined that, rather than subsidise a private operator, he should own the business outright. Major freight customers, keen to see a taxpayer-funded upgrade of the rail service, had been only too happy to reinforce that sentiment. As were those who adhere to a romantic notion of rail, particularly its environmental benefits, while paying no heed to its competitiveness with road.
Apparently they knew all along it wasn't going to work ...
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I would sit this one out before reaching for the invective bucket.
Me too. Does anyone else think Richard Prebble made a fool of himself on Morning Report today?
Fran O'Sullivan is displaying lots of wisdom after the fact today, but I don't recall her urging the government to buy the rolling stock in 2003.
Interestingly, major companies that use rail are taking a rather different view:
http://www.radionz.co.nz/audio/national/ckpt/rail_purchase_part_2
And the Checkpoint interview with Wayne Butson is worth listening to too. He points out that Toll has promised to buy new locomotives from the day it arrived. It has never done so, and machines have literally been hauled out of museums to keep services running:
http://www.radionz.co.nz/audio/national/ckpt/rail_purchase_part_3
He also says that rail engineers have been increasingly leaving for Australia ...
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It's clearly not the case that government ownership has forced Air NZ from profit-maximizing to pricing at marginal cost - obviously profits have gone up not down.
No. But having a patient dominant shareholder may have made a difference. Remember that Air NZ's problem under its previous board was a failure to stick to its knitting.
However, the long history of both the government and the private sector losing money on rail should make people suspicious that the rail network in NZ will never be economic. Instead we just seem to have a "pie-in-the-sky" hope that this time will be different, thanks to more investment/carbon taxes/peak oil.
The SOE version of TranzRail was actually profitable. Its major problem was the inherited debt that the national government wrote off with the sale.
I'd reiterate Libertyscott's point that this is not, by and large, a subsidy for an Australian company - it is a subsidy for New Zealand companies that use the railway for freight.
But it's a subsidy that would have been paid anyway. I just don't think anything was ever going to happen with Toll -- it has been promising to buy new rolling stock since the 2003 deal with the government, and has never done so. That's five years. The argument for Toll is a "just wait and it will happen" one. But I'm really not sure it was going to.
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I miss English Chinese Food (which is different from Chinese Chinese food, which I think is what we get here).
The places in Soho where they'd order you to your table? I can't remember the food at all, but I don't recall being unhappy with it.
But what I really, really miss is poppadoms and chutneys before chicken dhansak at the Golden Curry in Clapham North. They used to send us Christmas cards, which was a jolly thoughtful thing for Muslims to do ...
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