KEY POINTS:
The value of loans the Government will owe to Australia's Toll Holdings as part of its deal to buy the national rail service remains unclear, but Finance Minister Michael Cullen is arguing they will be far less than $200 million.
Dr Cullen faced a barrage of questions about the real price of the Toll rail buyback yesterday when Parliament resumed after a three-week recess.
Since the Government revealed last week it had agreed to buy the rail and Cook Strait ferry businesses from Toll New Zealand for $665 million, it has emerged that there is more to the deal than first thought.
The business the Beehive is buying had loans on its balance sheet owed to its Australian parent of $200 million at the end of its last financial year.
The Government will take on the assets and liabilities of the business, but it appears there is some disagreement between Toll and Dr Cullen over how much of the $200 million is attributable to the rail and ferry operations he is buying.
Toll's New Zealand business also includes other arms, such as its trucking firm.
Negotiations are still going on behind closed doors over the finer details of the rail deal, and after originally refusing to comment because of confidentiality requirements, Dr Cullen said yesterday the loans the Government would take on would be "way below" $200 million.
"What is being said in the public arena is greatly exaggerated," he said. "The public will get the full details when we've completed the agreement - it's not something being covered up."
The debt would be managed by the Government's Debt Management Office at first, and at some point the rail company would become some form of state-owned enterprise.
It would then be able to carry debt as part of its ongoing business.
He defended not discussing the loans in the original announcement last week by saying it was normal to also buy the debt in a deal of this kind.
But National is trying to make political mileage out of the rail purchase, which is shaping up to be worth well over $1 billion by the time the Government makes the necessary investment to improve the service.
National argued yesterday that Dr Cullen had recklessly spent too much taxpayer money on a business he didn't know how to run, in order to win votes.
"You might be able to trust Labour if they were actually willing to tell us how much it cost," National leader John Key said in a fiery urgent debate in Parliament.
The deal was a "moment of madness" and it didn't require Government ownership to get the rail service operating well.
