KiwiRail employs about 4500 people. Photo / KiwiRail
KiwiRail employs about 4500 people. Photo / KiwiRail
KiwiRail has found $20 million in savings and revenue generation.
Eighty voluntary redundancies were accepted last year, with applications oversubscribed.
Government ministers have previously raised serious questions about KiwiRail’s financial outlook.
KiwiRail has reduced its headcount by 227 people and signalled further job cuts this year as part of a bid to “get match fit”.
The performance and financial outlook of the state-owned enterprise have been put under the microscope recently.
A briefing to incoming Minister forRail Winston Peters from December last year has been proactively released and provides a glimpse into what KiwiRail is doing to improve.
KiwiRail reported it had offered voluntary redundancy to the whole company and that 80 applications were accepted. Treasury said voluntary redundancy was oversubscribed.
KiwiRail also outlined how it started hiring freezes earlier in 2024 and restructured the corporate parts of its business.
It also restructured Interislander and some of its rail operations.
KiwiRail chief executive Peter Reidy has said that despite the tough economic climate, KiwiRail’s self-sustainable target remains the objective of the board and management. Photo / Mark Mitchell
KiwiRail said it had a lot to deliver in the next few months to June 2025.
“Targets will require significant union consultation, and this is in progress,” the briefing said.
Chief executive Peter Reidy told the Herald KiwiRail reduced its headcount by 227 employees in the half-year to December 2024.
This included the 80 voluntary redundancies, 107 disestablished roles and the remaining reductions occurred through attrition and fixed-term end dates, he said.
Reidy noted not all disestablished roles were reflected in the half-year figure as exit dates for some employees were after this period.
“Approximately half of the roles disestablished were frontline positions related to operational changes, including the move to three ships for Interislander, the rest being corporate roles,” Reidy said.
Over the same period, there was $20 million in revenue generation and savings, Reidy said.
“This came from a raft of projects across the business from large and small initiatives – everything from improving fuel efficiency, reducing travel costs by tightening up our travel policies and using remote meeting options as a first resort, through to upgrading the customer booking system for Interislander which is making it easier for people to go from looking to booking (which has seen an 8% improvement in conversion), and increasing seating capacity on the Kaiārahi, with an additional 120 seats now available to be booked on each sailing.”
More seats are now available on Interislander's Kaiārahi ferry. Photo / Mark Mitchell
Reidy said the workforce would continue to be reviewed this year to match resources with demand, better align with customer needs and ensure KiwiRail delivered required services.
“KiwiRail remains committed to communicating any changes with our people, unions, and stakeholders before discussing them publicly.”
Reducing the company’s headcount and lifting reliability of services is part of the plan to “get match fit” in 2025, the briefing to Peters said.
“Reducing direct costs enables better price competition in domestic markets, and lifting reliability underpins volume growth across all freight markets.”
The plan for the following two years is to grow and invest, including a refreshed product strategy to “attract volumes, lift market share, and improve customer experience, with a right-sized asset base”.
By the end of the decade, KiwiRail plans to upscale new growth.
Winston Peters was appointed as the Minister for Rail in December 2024. Photo / Mark Mitchell
In a letter to the newly appointed Minister for Rail, KiwiRail acting chairman Rob Jager welcomed him.
“On behalf of the KiwiRail board, I would like to congratulate you and welcome you back as the Minister for Rail... While most of us weren’t around at the time, KiwiRail and its board previously worked with you during your time as shareholding minister between 2017 and 2020, and we recognise a great many initiatives have been delivered based on the strategic direction provided during this period.”
When Prime Minister Christopher Luxon announced Peters as the new Minister for Rail in December, he said: “Rail is a key part of New Zealand’s infrastructure and plays an important role in moving freight and people around the country.
“However, it is clear that KiwiRail is underperforming.”
Last year KiwiRail’s shareholding ministers raised concerns about its financial outlook.
“We have serious questions about whether KiwiRail, operating under its current business model, will be able to operate without ongoing dependence on government subsidies and support”, then Minister for State-Owned Enterprise Paul Goldsmith wrote in a letter.
KiwiRail has a target to achieve commercial self-sustainability for its above-rail assets which include its rail freight and Interislander ferry businesses.
This means generating sufficient operating surplus to self-fund the capital expenditure required to maintain and renew these above-rail assets, Goldsmith said.
The ongoing annual operating surplus KiwiRail estimated it would require to achieve this was redacted in the letter.
“This had earlier been expected to be achieved by FY25 (the 2025 financial year) and this no longer appears likely based on KiwiRail’s commercial performance to date”, Goldsmith said.
She didn’t think an organisation with highly paid executives, like KiwiRail, should have to spend a sum as big as it did on external consultants for advice on how to run its core business.
“Frankly, if I were on the board, I would have been asking why couldn’t my executive come up with this themselves.”
Georgina Campbell is a Wellington-based reporter who has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working as a broadcast journalist.
