Cullen raises prospect of legislating over rail track deal

4.00pm

Finance Minister Michael Cullen has raised the prospect of legislating to enforce a deal that would see the Government buy New Zealand's rail tracks.

Dr Cullen told a finance select committee today that talks were difficult and he would not allow Toll Holdings to gain a tax advantage from causing delays.

"Negotiations with Toll are proving quite difficult," Dr Cullen said.

"A range of other issues which in our view weren't in the heads of agreement have been placed on the table," he said.

'I have written to Toll and pointed out to them the Government has at its disposal sovereign powers to ensure the Government's ambitions and aims are implemented. Time is running out for that."

Toll, an Australian company, bought 84 per cent of Tranz Rail Holdings New Zealand's rail operator, last year.

The Government is forming a company to buy Tranz Rail's track network, and plans to spend at least $200 million in the coming years upgrading and repairing the track.

A deal was set to be finalised by June 30 and Dr Cullen said he would not allow delays play to Toll Holdings advantage.

"I am very confident we can get the deal done by July 1," Dr Cullen said.

NZPA understands that Toll stands to make significant tax gains if the deal is not finalised by the originally envisaged date.

Dr Cullen refused to expand on his comments after the meeting and would not say what matters Toll Holdings had now placed on the table.

Green co-leader Rod Donald told NZPA that the Greens would support legislation or any other strategy that was necessary to enforce the heads of agreement.

The Government, with the assistance of the Greens, could pass the necessary legislation enforcing nationalisation as envisaged by the heads of agreement.

In April, delays about the talks came to a head with an exchange of letters between Dr Cullen and Paul Little of Toll Holdings in which the Government called on the company to get on with it.

Toll has maintained that talks were continuing in keeping with a June 30 deadline before Track Co takes over on July 1 and today said they had no comment to make on Dr Cullen's statements on the talks.

In April it was reported that outstanding issues included access fees and the land lease.

The major users of rail wanted Government ownership of the track with open access and are watching for details on performance and on Track Co.

Toll initially wanted to keep the track but did a deal with a Government eager to get more control over the network privatised together with the operator in 1993.

It has been reported that Toll has been playing hardball on key performance indicators and is seeking to keep areas near tracks being bought by the Government with other assets for $50 million.

Some of these areas are subject to Treaty of Waitangi claims, or were purchased compulsorily by the Ministry of Works. If the compulsorily purchased land is used for anything other than rail, the original owner has to be consulted.

- NZPA