Kiwirail is just wrong
Politically this is about as cynical as things get.
They have carefully added it to their brand stable by calling it Kiwirail. Calling it Kiwirail is inspired, it will make it so much more difficult to sell later (as it will be sold again) and it blatantly appeals to national sentiment.
While Labour ‘only’ had to spend $700 million, they have committed the next incoming government to billions of dollars in spending.
Cullen has been so philosophically opposed to tax cuts that the buy back of rail (regardless of cost) served two purposes. It got rid of some of the pesky surplus, and it appealed to nationalistic voters. There is clearly no coincidence that this has occurred months out from an election and is yet another example of the government and it’s coalition supporters using our hard earned cash as election bribes.
Buying back rail is another chapter in the history of bad management of rail, that started at it’s inception when we adopted a narrow gauge system apparently to save money on tunnel building – thus limiting for ever the speed and types of trains that could be operated on the system. Rail has never worked in NZ because it always required huge subsidies. Even in the UK with substantially more population density then NZ, but with the same landmass rail is costly to run and profit thin. It’s no coincidence that the most avid proponents of national rail have English accents and are refugees from the UK with the same illogically sentimental attachment to rail. If we struggle to manage to pay for a decent roading network (and that hasn’t even been finished) then thinking that we can do this for rail is just naive.
Governments shouldn’t be running business, full stop. Yes, there are examples of successful government run business, and there are examples of poorly run private businesses, but on balance, historically, governments do a very bad job of business. Some immediate reasons why the taxpayer should not be running rail:
- Kiwirail will compete with private enterprise now it will be on taxpayer life-support, any competitive situation is encounters will be met with tax payer subsidies – this could even put people out of work in competing businesses. This is just totally wrong and immoral.
- Kiwirail will be a monopoly, it was before, but now will almost unlimited access to cash and no shareholders directly focusing on results, it will behave in a lazy monopolistic way, tax payers cash will be wasted on yet more bureaucracy and poor service.
- If businesses wanted to use rail to move freight they’d be doing it already. The only reason to switch is for the cost to become cheaper. Given the difficulties of making money out of it, there’s no way you could make the service cheaper without subsides from tax payers.
- We already have ways of moving freight nationally, it isn’t like industry is screaming for rail services. Why spend taxes on this when there are things like health and education that have immediate benefits to all tax payers? A billion dollars on education would be of huge Longterm benefit for NZ, a billion dollars on freight will do nothing.
As soon as people start talking about making things world class you know it’s going to be a dud. Will this latest enterprise fail? Of course not in the narrow definition of going bust – it can’t because you and I will pay, and pay, and pay. Labour is pointing to Kiwibank as showing how successful they are at running businesses. Well so what? It’s a tiny bank, and it won’t fail. The success or failure of either is irrelevant. You really need to ask why, why bother?
We already had a rail system, we already had banks, so why is the tax payer funding them when we have other tax payer provided services that need cash.
The whole mentality of voters thinking in terms of a ‘public’ (taxpayer) funded business as being different or better than public (owned by private shareholders) funded businesses is weird. There was nothing stopping any New Zealander buying shares in rail if it made them feel warm and fuzzy. They just shouldn’t try and foist this on everyone else.
The sooner long term tax cuts are put in place that prevent future governments of wasting our taxes on pointless enterprises to pander to voters, the better.