KEY POINTS:
The Sydney Morning Herald 's Matt O'Sullivan joked "you only get one Helen Clark in your life" as he told the story of how Toll's Paul Little stitched up the Kiwi Government for a whopping $665 million to buy back the nation's trains and rail ferries.
O'Sullivan (no relation) borrowed the line from the late Australian media mogul Kerry Packer who famously sold the Nine television network to Alan Bond for A$1 billion then bought it back for a quarter of the price when Bond's financial empire collapsed.
The reality is that Little's $665 million Government-backed cheque is three times the valuation that Toll put on the trains and rail ferries when it launched its takeover for the financially stressed Tranz Rail in 2003.
Toll also gets to keep Tranzlink, the company's NZ-based rail and road forwarding business, together with warehousing and contract logistics operations and gets a six-year rent-free period on its existing premises.
Little argues that Toll didn't get a steal as it had invested some $200 million in capex on what was a "basket-case".
But it's a very nifty deal for Toll nevertheless.
It gets the profit-turning part of the business and despite the fact it was required to pump $100 million into new rolling stock under the agreement it reached with the Government in July 2003, much of what the Government has now bought on the taxpayers' behalf is a mere hotch-potch of assets masquerading as a business.
It includes plenty of outdated rolling stock, one owned and two leased ferries which will now be added to the national track the Government bought in 2003 - a rail track that is still in dire need of major investment.
Finance Minister Michael Cullen - who continues to centralise the Government's control of the economy - will have a different perspective.
Cullen was mighty piqued when Little out-manoeuvred him in 2003 and blocked his attempt to partially re-nationalise Tranz Rail by buying a 35 per cent stake in the company. Cullen will believe it is he who has now out-manoeuvred Little through the failure of the Government (through Ontrack) and Toll to reach agreement on the access fees the Australian company would face after its first five years of ownership expired.
Under Heads of Agreement signed by both sides in 2003, TrackCo was to charge Toll for the use of the track. At first the charge was to reflect TrackCo's outgoings which resulted in some $48 million annually to the Government - although Ontrack believed it was well short and the parties were in constant dispute.
After the first five years, the charges were to reflect not just TrackCo's operating costs but also any capital costs.
Neither side is saying so out loud.
But with a Government wanting to wrest control back from Little to make the rail business the centrepiece of its sustainable transport strategy, it was in Cullen's interest for negotiations to remain stalemated.
Otherwise the Government should have simply sacked the Ontrack board and put some better negotiators in place to reach agreement with its only customer.
The problem with the renationalisation is its "trust us" nature.
Asked why taxpayers needed to own trains, Cullen was quoted: "I suppose it's almost Robert F. Kennedy - some people ask why, I ask why not?
"We were efficient operators of a rail system by the early 1990s under corporatisation.
"It is a business which inherently has difficulties around being a purely commercial operation. Therefore there is no reason why the Government cannot be an effective operator of a rail system."
Prime Minister Helen Clark has gone so far as to say the Government is not going into rail "to make money".
Air New Zealand had become a commercial success after its Government bailout.
But rail was of a different order - it was needed for a sustainable, integrated network and "we had the opportunity to buy".
But there's an opportunity cost to the $665 million the Government is investing and the hundreds of millions that Cullen says will later need to be invested in capex.
Surely the Government - as owner - would want the national railway to at the very least break even? The proposed state-owned enterprise may not have to post a dividend and commercial returns to shareholders (like Toll has to) but the reality is that unless some strong financial disciplines are instituted it will simply be another sump-hole for taxpayer funds for years to come.
There are some worrying signs here.
Getting the country's national rail business back in Government ownership has been talked about at Beehive level since early 2001. Seven years have gone by but there are still no published documents showing where a renationalised rail can add value to the development of the economy.
It did not figure in the Government's 2007 sustainable transport strategy which aims to get greenhouse gas emissions from that sector halved by 2040. That strategy also expected coastal shipping to double its share of the intra-regional freight market which would have boosted the country's ports businesses. There will be considerable angst if the Government uses its rail assets as a loss leader to attract business away from existing road transport operators.
It's only now after the deal has been done that consultant Beca has been invited to examine where rail sits.
Contrast this with the situation when the Government stepped back into the ownership role at the 2001 Air NZ bailout. It had truckloads of analysis backing up its economic rationale for investing $885 million in the ailing national flag carrier. It had also mapped out how the airline would be governed.
But Cullen cannot even tell us whether the rail business will sit in a standalone state-owned enterprise, whether it will be run at arm's length by Ontrack or whether a proven rail operator will be contracted in to run the business.
In reality there is no need to preserve the politically connected Ontrack board unless the Government plans to allow competition on the rail track from other operators. That will simply result in duplication of resources and more jobs for Labour's business cronies.
The problem is that this is really an election year move by the Labour-led Government to try and make ownership of state assets a campaign issue.
If the Government was truly serious about strengthening the role sustainable transport will play in a carbon-constrained future it would not have stymied plans for regional councils to apply local fuels taxes to fund projects like the $500 million proposal to electrify the Auckland suburban rail network.
As it is it has mopped up an out-of-date railway with taxpayers' cash - but effectively put a blocker in the way of proposals that would get more people out of cars.
Not a very bright outcome really.
