Rail bailout 'threatens shipping jobs'

By STUART DYE

The Government's plan to buy back the national rail network and bail out Tranz Rail threatens the future of the coastal shipping industry, according to one shipowner.

The deal would, in the long term, give Tranz Rail the strength to price freight-carrying competitors out of the market, said Rod Grout, chief executive of Pacifica Transport.

"If the Government bails rail out, it tilts the playing field towards rail and away from us.

"There is already enough pressure from foreign shipping companies since the removal of cabotage [the reservation of domestic shipping for locally controlled and crewed vessels] in 1994.

"This could leave us completely out in the cold. About 500 jobs would be at risk."

The Government is considering proposals submitted in the Shipping Industry Review which include the possible re-introduction of cabotage. A response is expected within six weeks.

The Government's Tranz Rail scheme - if approved by shareholders - will cost taxpayers $126 million immediately and a further $100 million over five years to improve the network.

A Government spokeswoman said the Government would have no influence over freight charges.