A rail line for six trucks a day equivalent!

John Armstrong writes:

It was almost serendipity that one of the last acts of the summer silly season was to throw up the Business and Economic Research Ltd report questioning KiwiRail’s mothballing of the freight-only Napier to Gisborne line.

The line costs $8 million a year to run and requires $4 million to repair according to Kiwirail.

But I have a solution. If BERL is really convinced that Kiwirail (whose job is to run rail on a commercial basis) has their numbers wrong, they should ask Kiwirail to sub-let the lines to BERL for a $1 a year. I’m sure BERL has enough confidence in their numbers that they’ll jump at the opportunity to make some money based on their projections of revenue growth etc.

Not that long ago Labour would have ducked for cover and called for a comprehensive cost-benefit analysis of the line’s future potential and risks.

Shearer clearly believes the time for such fudging is past. Labour has to be clear about where it stands. Shearer says Labour would reopen the line. Full stop.

Labour is saying that they will force the company to operate at an even bigger loss than they already do. They are also saying politicians will decide what services are provided, not the board of the company.

Such intervention is not without political risk, however. Transporting logs by train has long been flagged as the saviour of the Napier-Gisborne line. But it has become a mirage. The reality is that for the last decade the line has carried minimal tonnages, such that closure would increase the number of trucks on the state highway by just six per working day.

Now read that part. Labour have just announced that they will spend tens of millions of dollars on keeping a rail line operating, even though it would take just six trucks a day off the state highway!

This is desperate populism, and Greek style economics. We are struggling to get out of deficit and start paying down debt. And Labour will throw tens of millions ($28 mil over three years) at a rail line that would have almost no business!