Rail and Ferry Purchase—Financial Return

What is the Government’s best estimate of its ongoing financial return from the purchase of rail and ferry assets?

Barnett Tim Barnett Link to this

I do not have that figure available. The member should put it down on notice.

Which lines did Toll threaten to close if it did not get what it wanted in the rail access agreement?

I understand that the services that would have been closed under Toll’s plan B, in response to that situation, included the Overlander passenger service, the central North Island section of the main trunk line from Te Kūiti to Palmerston North, the Northland line, the Taranaki line, the Hawke’s Bay line, the Napier to Gisborne line, the Wairarapa line north of Masterton, Picton to Christchurch freight and passenger services, the Greymouth to Hokitika line, the Invercargill to Bluff line, and the Invercargill to Wairio line. I take it from the reaction of National members that they would love to see all of those lines closed. Labour would not.

What was the value of the premium that the Crown paid, as indicated by Dr Cullen yesterday, for the purchase of KiwiRail from Toll Holdings?

I do not have a figure for a value on the premium.

Has the Prime Minister received any reports, namely, for example, from Booz Allen and Hamilton, that say that New Zealand Rail was making $36 million in 1993 and was down to make $100 million in 1994; and does she therefore not believe that taxpayers are entitled to some compensation for the 1993 sale of New Zealand Rail by the then National Government to its corrupt mates in Fay Richwhite and a foreign-owned company, Wisconsin Central Transportation?

The member, like the Labour Party, opposed that sale. But there was one person who fully backed that sale and that was Mr Key, a director of Bankers Trust, which got the contract to advise the New Zealand Government on that sale. That sale was worth $400 million to the New Zealand Government—the National Government—in 1993. In that same year—the 1993 financial year—Bankers Trust, of which Mr Key was a director, pocketed $39 million in profit. Members should ask themselves who benefited from the sale of Tranz Rail. Mr Key and his friends.

What is the expected cost of the rolling stock the Crown will need to purchase if it wants to run the assets at the level that it is proposing to the New Zealand public, over the next 5 years?

Hon Jim Anderton Link to this

The Minister of Finance advised the House yesterday that to keep the rolling stock in its steady state—for example, no improvement—would require an investment of around $80 million a year. He further advises that to actually invest in an improved service—modern container wagons and customer-specific wagons—he estimates will cost around another $300 million over 5 years. That is a very good investment in a sustainable transport system.

Has the Prime Minister received any reports that those in this House who are critical of the purchase of KiwiRail would, if they were in a position to do so, sell KiwiRail if they had that opportunity?

I am sure National would like nothing better than to sell KiwiRail. Indeed, the National Party has opposed KiwiSaver. It has opposed Kiwibank. Now it opposes KiwiRail. What is it about Kiwis and the public interest that the National Party hates?

Does the Prime Minister have any reports that in October 1992 Fay Richwhite got itself made the financial adviser to New Zealand Rail, and that on 26 April the next year it jumped across the table and said: “Hello, Government; we’re the buyer.”; and can she confirm that Mr Key’s company at the time facilitated that arrangement, which did not go to the market and did not go to tender but was just made with that Government’s corrupt mates in Fay Richwhite?

My understanding of the facts is the same as the right honourable member’s—that Fay Richwhite did, indeed, jump across the transaction. We know that Mr Key was a director of Bankers Trust, which advised on that sale. We know, furthermore, that in 2002 Mr Key’s family trust bought 30,000 shares in Tranz Rail—

Hon Members

What?

—30,000 shares in Tranz Rail. We know, furthermore, that as associate transport spokesperson for the National Party in 2003, Mr Key commented on whether the Government should be buying back the track. We can find no record of Mr Key disclosing his financial interest as a shareholder.

Can the Prime Minister confirm her answer from a little earlier that she is saying that Dr Cullen indicated the cost would be $80 million a year and $300 million to bring the rolling stock up; so are we led to believe therefore that the total cost of the rolling stock over 5 years, according to the calculations the Prime Minister has provided to the House, will be $700 million?

Brown Peter Brown Link to this

That would be the simple addition of what I indicated the Minister of Finance’s advice was, but the gentleman who is asking the questions has never supported the Government’s buying back of rail. Indeed, Mr Key as associate transport spokesperson, while owning shares in Tranz Rail at the time—which he never disclosed, as far as we can see—said publicly that shareholders were telling him they supported Toll’s offer for Tranz Rail over the Government’s offer. Well, he would, would he not, because he was a shareholder, yet he purported to be speaking in the public interest as an Opposition associate transport spokesperson.

Noting the Prime Minister’s earlier answers to the former director of Bankers Trust, can she confirm that she shares the view of New Zealand First that taxpayer ownership of KiwiRail will enable the Government to take a more strategic overview of transport in this country and make decisions that are in the best interests of New Zealand, our people, and our social and economic well-being, whereas private owners need only to make decisions that increase profits and satisfy their shareholders, and in this case overseas shareholders?

I raise a point of order, Madam Speaker. The National Party members may be embarrassed, but they should be required to keep quiet while a question is being properly asked about a very key strategic asset—or it used to be, until they sold it. If they are embarrassed, that does not mean that 10 of them are allowed to shout across the House while a question is being asked, so that we cannot even hear, even though we sit next to our colleague.

Brown Peter Brown Link to this

I just ask members to keep the level of interjections down so that other members can, in fact, be heard. Would the member please complete his question.

Well, I had got to the end of it, but I do not mind asking it again.

No, I think the right honourable Prime Minister understood it.

I absolutely agree with the import of Mr Brown’s question. The fact is that the Government has decided to make a strategic investment in rail rather than pay ever-increasing subsidies to a private company. Bringing this rail company back into public ownership enables investments to be made in the public interest in a sustainable transport system.

Why does the Prime Minister not have sufficient confidence in her policies to stand up in this House and defend them rather than throw the dirt across to the leader of the National Party; and could she explain to the people of New Zealand why rail is deemed to be so sustainable, when it cannot even cover its costs and she intends to use the taxpayer to put in hundreds of millions of dollars more funding—is that the Labour Party’s definition of sustainable?

The member misses the point. Taxpayers were up for hundreds of millions of dollars to subsidise Toll. The Government has made a decision that that does not make sense, when the opportunity for ownership is there. I would like to know what “Mr ACT”, Mr Hide, considers is dirt about telling the truth about Mr Key being a director of Bankers Trust when it advised on the privatisation in 1993, when it made a substantial profit of $39 million that year, when Mr Key’s family trust bought shares in Tranz Rail, and when no record can be found of him disclosing that interest when he was commenting on the sale in 1993 on behalf of his party.

Can I encourage the Prime Minister to give the right honourable Michael Cullen a call when she leaves the House, when he will probably inform her that he did not actually say it would be $80 million a year for the rolling stock but would be $80 million in total, so the Prime Minister has got that bit wrong; and can we conclude from the rest of the Prime Minister’s answers today that she is actually telling the House that she has no idea of what the return from rail will be, although she is pretty sure it will be negative and therefore will not talk to us about it, that she has no idea of the premium that the Crown paid to Toll Holdings, and that she actually has no idea how the rolling stock will be paid for or how much it will cost—that when it comes to this issue, she has no idea?

English Hon Bill English Link to this

Of course, Mr Key had the opportunity to ask all those questions of the Minister of Finance yesterday and absolutely fluffed his questions. I am interested to know what the National Party’s real policy on rail is, because I heard an interjection earlier from Gerry Brownlee, which said in respect of the Government’s purchase of rail that the shipyards are back. Mr Brownlee, if you think this policy is like buying Polish shipyards, why do you not state what you really believe and say that National supports rail privatisation, as it has always done and as Mr Key did when he advised on the privatisation in 1993?

I raise a point of order, Madam Speaker. The member is a senior member and knows that her use of the term “you” is out of order.

Yes, I am sure all members have been reminded of that and, of course, I am sure none have made that error before in this House. But I remind members to keep to the Standing Orders.

Has the Prime Minister any reports that suggest a certain political party is running around the country saying that the railways in 1993 were running at a loss despite what was said in the Booz Allen and Hamilton report, which was the most authoritative document at that time; and could it possibly be true that Mr Key and his company advised on privatisation and purchase to their client because the company was a loser and it was bound to cost them a fortune if they bought it?

I have no reason whatsoever to doubt what the member has just said. I know that the National Party is so ideologically wedded to privatisation that if a State company is making money, it says: “There you go; the State doesn’t need to own it.” If the company is losing money, it says: “You should sell it to get rid of that liability.” Whatever the state of a public company, the National Party has an excuse for selling it.

Point of order, Rodney Hide.

It is a supplementary question.

Gerry Brownlee Link to this

I would ask members, when they trade their supplementary questions, to give me notice of that fact before they rise to their feet.

I raise a point of order, Madam Speaker. Perhaps the Labour members may also like to do that. We see Mr Anderton and various other support parties take more than their allocation of supplementary questions on any given day. [ Interruption]

Please be quiet. As Mr Brownlee knows—and I have ruled on this before—if members notify me of a change in the allocation of supplementary questions, that is fine. If I am notified by parties of that before the member rises to his or her feet, there is no embarrassment—everybody knows. I had not been notified of Mr Hide’s supplementary question.

I apologise. Are New Zealanders to take it from the Prime Minister’s performance in the House today that although she has come here to answer questions about rail, she does not know what it will cost taxpayers, she does not know what the premium was that was paid by the Government, and she does not know what the ongoing fiscal cost of rail is, but that she has actually taken the trouble to research the various shareholdings of Mr John Key, his directorships, and pretends to know all about that when she does not know about the rail policy and the cost of it to New Zealanders; does that not prove that this purchase is all about politics and not the good of the country?

I know that the ACT party does not give a damn about sustainability or about having a sustainable transport system. I know that the ACT party is ideologically opposed to public ownership. That and nothing else explains Mr Hide’s hysteria.

I raise a point of order, Madam Speaker. It is very interesting to hear the hysteria of Helen Clark about me. I thought the issue was more about the hysterical response from the Labour Party to questions about rail. But, frankly, there is no way that personal remarks about me from the Prime Minister address the question that I asked—which proves the point.