The cost of the train set

The Press wonders how much the train set will cost:

When he announced the deal to great fanfare in April, the Minister of Finance, Michael Cullen, said the Government would pay $665 million in the deal. That has now become $690m and covers only the rolling stock and a passenger rail ferry, plus leases on two other ferries.

The Government has also taken on $140m of debt. In addition, it has announced that hundreds of millions of dollars more is to be poured into the company and into the associated rail network company, Ontrack, which the Government bought four years ago. At the moment, Cullen’s trainset looks like costing at least $1.3 billion in the near future, and goodness knows how much after that. The Government has already said the company will need large subsidies to survive. It is no wonder that Treasury was kept out of negotiations.

Cullen has boasted that the Government paid a premium to buy the company back, as though there were some virtue in spending more money.

Oh when you spend other people’s money there is great virtue in paying a premium. Funnily enough less so when spending your own.

Truly Toll looked like they won Sale of the Century.