KEY POINTS:
My grandfather had one of the greatest jobs a kid could imagine. For many years he would appear dressed for work wearing a black suit with a fob-watch chain and a peaked hat with a silver badge on the band that said, "Guard".
Then he'd disappear for the night to go somewhere on a train. What could be better? When he accepted promotion to yard-master I was mystified. It meant I could spend time with him high in a little control tower over the shunting yards, but who would prefer shuffling forms to travelling on the trains?
He didn't live to see New Zealand Railways shrivel to little more than a main trunk line, though he would have noticed the portents: the spread of sealed roads, the car in every household, the bus services that even Railways had started to run, jet aircraft.
He was a railwayman to his core but also a realist.
He'd have taken no pride in NZR's survival on a law that barred long-distance freight haulage by road.
Rail survived as protected industries do, with thousands of underemployed staff, vast underused tracts of expensive urban land, a level of organisational incompetence that became legendary, and periodic injections of taxpayer's capital that disappeared without trace of improvement.
The long-haul freight monopoly went the way of most anti-competitive practices in the 1980s, and soon thereafter so did the underemployed staff, the urban wastelands and the Soviet style of service.
Today the economy has had full employment without using railways as a sump for surplus labour, Wellington's "cake tin" and Auckland's Vector Arena stand where weeds used to grow on marshalling yards.
The cavernous Auckland Station, largely deserted in its last decades, has been converted to student flats.
The railway has been a stark metaphor of our economic condition and will continue to be now that a government has bought it back.
The Prime Minister said on Monday: "We are not going into this to make money."
Just as well. An American railway, Wisconsin Central, went in to make money. Australia's Toll Holdings went in to make money. Neither could make our slow, narrow-gauge lines pay enough to maintain the tracks and trains.
When Toll bought TranzRail the present Government insisted on buying back the tracks and wanted to charge the train company a fee for use that would cover the cost of maintaining them.
Toll in turn could have recovered that charge from its heavy-freight customers if they had been willing to pay it. Clearly they were not willing. Toll could not meet the full maintenance charge.
Faced with having to carry some of the cost - an effective subsidy of the railway - Michael Cullen said the Government might as well own it and run it as the Government wants.
Quite right too. A subsidised business loses the element of risk that makes the private sector run public services most economically.
If a privately run service isn't as profitable as alternatives it fails, and it is better for the economy that it fails. If taxpayers want to keep an uneconomic asset for social or sentimental reasons they can, but it should be done in a way that enables them to see the costs and, even more important, the beneficiaries of their sentiment.
Privatisation has made the railway's true costs stark. It is vital that the renationalised service now keeps the tracks and trains in separate companies so that the costs remain transparent, and the tracks can be open to the possibility of competing train operators.
The real beneficiaries of the buy-back were not apparent this week. Those bulk cargo producers who were pressing most strongly for rail's renationalisation were lying very low, quietly blessing the gods of green economics.
I don't know how much global warming will be reduced by subsidising rail freight in this country but I suspect it is less than might have been reduced if the prices of coal, cement, steel and other cargoes reflected the full cost of their carriage.
A transport spine unhinged from the demands of profitability will change the behaviour of every sector it touches.
Trucking firms know it would be foolish to try to compete with a service that can call on the compulsory support of taxpayers.
They heard Michael Cullen talk of investing hundreds of millions more in the railway beyond the $665 million he has agreed to pay Toll for the rolling stock and a Cook Strait rail ferry.
The instinct of people in business is not to cry over spilt milk but to lap up a little of it if they can.
Trucking companies welcomed the deal on Monday.
How far, I wonder, will our unprofitable railway go on green accounting? And how much of the economy might come to depend on a public liability again?
