New era in rail services right on track

By PAM GRAHAM

The country's rail tracks are back in state ownership after a Treasury official handed over a symbolic $2 coin at three minutes to midnight on Wednesday.

The deal between the Government and Australian company Toll Holdings was witnessed by a room full of lawyers presiding over a mountain of documents in Buddle Findlay's Wellington office.

The coin was what an official had in his pocket, but the price was $1.

A cheque follows for the outstanding amount of about $50 million of land and buildings also bought back by the Crown.

Neither Finance Minister Michael Cullen nor Toll Holdings chairman Mark Rowsthorn attended the function.

Toll held out for an agreement on all issues of concern to it before it sold the tracks.

The Government got control of signals and a deal by June 30 that stopped Toll getting an estimated $10 million tax advantage.

The Government would have had to resort to legislating a deal if it had not been agreed.

Yesterday Cullen said Toll were "hard operators".

His adviser Chris Mackenzie added, "I would not say that they were a pleasure to deal with." Negotiations were hard at all times, but "both sides were cordial".

Toll managing director Paul Little said: "I don't think anyone understood the complexity of the negotiations." There were a huge number of issues, including insurance, properties, and conduct of the board of the new track company.

"It has been a pretty good result for both parties," he said. "The relationship is fine. I think we regard Cullen as a pretty commercially tough person to negotiate with."

Cullen said the Government might have to put up more than the $200 million for the track, and Little expects Toll NZ to spend more than the agreed $100 million on rolling stock.

John Key, the National Party's deputy finance spokesman, said Cullen should reveal the cost to taxpayers and if spending decisions will be politicised.

Toll NZ will run the network until Track Co is ready to take over in about two months. Toll NZ signals and engineering staff will transfer to Track Co.

The intention is that access fees paid by Toll will provide much of the funding for network maintenance in the future.

Toll has exclusive access to the rail network but can lose it if its service or use of the network is not good enough.

Paul Harper, convener of the Rail Freight Action Group, said it was important that fees were disclosed so users could see them going to the network.

They argue that $300 million and $400 million of maintenance was not done in the past 10 years.

Track Co will decide where the maintenance money is spent, based on a list of suggestions agreed by the Crown and Toll.

That list includes the coal route from the West Coast to the Port of Lyttelton, due $70 million of maintenance work according to Solid Energy, the line's major customer.

The existing New Zealand Railways Corp is in effect the new track-owning company until legislation is passed to turn it into a state entity with public policy objectives, rather than a state-owned enterprise with a profit motive.

The Track Co board will have one Toll appointee and its chairman is Cameron Moore, a Christchurch businessman. A chief executive is expected to be appointed shortly.