New Zealand Railways Corporation

New Zealand Railways Corporation

Type	State-owned enterprise
Industry	Transport
Founded	1982
Headquarters	Wellington, New Zealand
Area served	New Zealand
Key people	Jim Bolger (Chairman) Jim Quinn (Chief Executive)[1]
Products	Rail
Services	Rail network ownership, maintenance and construction.
Divisions	KiwiRail Network KiwiRail Passenger Tranz Scenic Tranz Metro KiwiRail Freight Hillside Engineering Interislander
Subsidiaries	ONTRACK Infrastructure Limited KiwiRail Holdings Ltd
Website	kiwirail.co.nz

New Zealand Railways Corporation (NZRC), trading as KiwiRail Group, is the state-owned enterprise that manages, maintains and operates most of New Zealand's rail transport system on behalf of the Crown. Its main operations include KiwiRail Freight, Rail Passenger group (including the brands Tranz Scenic and Tranz Metro), Hillside Engineering, The Interislander ferries and KiwiRail Network (formerly ONTRACK).

History

National rail landowner, network provider and train operator

New Zealand Railways Corporation logo, 1981 - 1990.

Like the New Zealand Railways Department that preceded it, NZRC had a responsible Minister, the Minister of Railways. This ministerial office was dissolved in 1993.

NZRC was created as a statutory corporation by the New Zealand Railways Corporation Act 1981 from the New Zealand Railways Department. Along with rail operations, NZRC inherited New Zealand Railways Road Services bus, truck and parcels services and SeaRail inter-island ferries.

During the 1980s NZRC faced many business challenges, such as the growth of competition from road freight operators following the deregulation of the land transport industry from 1982 by the repeal of the Transport Licensing Act 1931. NZRC's revenues were halved by the new competition.^[2] In 1984 international consultants Booz Allen Hamilton reported to the National government on how a viable rail network could be created. The report recommended, amongst other things:

• Reducing staff numbers;
• Re-orienting freight services towards bulk commodities;
• Increasing the length and weight of freight trains;
• Rationalising the locomotive and wagon fleet;
• Rationalising railway workshops; and
• Re-focusing long-distance passenger services towards tourists.

This prompted the Opposition Labour Party to launch a "Save Rail" campaign. Despite this, rationalisation of NZRC began with the election of the Fourth Labour government in July 1984. Staff cuts were drastic, infrastructure was reduced and older classes of locomotives were scrapped, and workshops at Addington (Christchurch), East Town (Wanganui) and Otahuhu (Auckland) were closed. In 1985 NZRC began a major corporate restructuring program, transforming the old functionally-based branch structure into three core business groups:

• Railfreight (later Railfreight Systems), combining rail and road freight and including all rail engineering functions;
• the Passenger Business Group, consisting of New Zealand Railways Road Services passenger and parcels operations, later branded Cityline for suburban trains and buses, InterCity for long-distance trains and buses, and Speedlink for rail and road parcels; and
• SeaRail, the rail and road ferry service between the North and South Islands.

By 1989 large operating losses and interest had generated a debt of $1.2 billion.^[2][3]

Break up and asset sales

New Zealand Rail Ltd (NZRL) was established as a Crown Transferee Company under the provisions of the New Zealand Railways Corporation Restructuring Act 1990, and took over NZRC's rail transport and shipping activities, including the railway tracks, on 28 October 1990, leasing the railway corridor from NZRC for $1 per year. Branding initially remained unchanged, except that suburban passenger trains were rebranded CityRail.

NZRL was sold for NZ$400 million to a consortium of Wisconsin Central Railway (40%), Berkshire Partners (20%) and Fay, Richwhite & Company (40%) in 1993. The company was renamed Tranz Rail in 1995, with urban passenger trains rebranded Tranz Metro, long-distance passenger Tranz Scenic, and freight Tranz Link. Tranz Rail was purchased by Toll Holdings in 2004 and renamed Toll NZ.

Non-core assets remained with NZRC prior to their disposal. Many of these assets were written down by the Government, for $830 million. Speedlink Parcels was sold to New Zealand Post, and InterCity bus services were sold in 1991 to Intercity Group New Zealand Limited, a group of four of the country's largest private coach companies – Ritchies Coachlines, Tranzit, PTL Route Services and Nelson SBL. Railway stations in Auckland, Rotorua, Christchurch, Dunedin, Napier and Oamaru were sold, along with substantial tracts of land previously used for rail operations. Cityline bus services were sold to various purchasers.

National rail landowner

Ownership of the railway corridor underneath the tracks remained with NZRC, which managed the lease of the corridor to NZRL (Tranz Rail 1995-2003, Toll NZ 2004) until 2004, when the Crown re-acquired the rail track infrastructure from Toll Holdings. A separate deal transferred ownership of the Auckland metropolitan rail network from Tranz Rail to the Crown in 2001.

Network provider

From 1 July 2004 NZRC assumed the Crown's responsibilities under the rail access agreement with Toll, and adopted the trading name ONTRACK.^[4] Recently ONTRACK began Project DART, a major $600 million upgrade of Auckland's suburban railway network, and will also upgrade parts of Wellington's suburban network. These upgrades, along with other projects around the country, followed years of under-investment in the rail infrastructure.^[4]

Track access negotiations

ONTRACK and Toll NZ were in dispute about track access fees from mid 2006 and an independent arbitrator, Bill Wilson QC, was called in to resolve the issues.

Separate talks continued between Toll and the Government on long-term access arrangements. On 31 January 2007 Toll stated that ^[5] "...the discussions with the Crown on a long term sustainable access regime have generally been positive", but "Toll NZ is still concerned that the Crown appears to be unwilling to recognise the inequality of the funding support between road and rail and the need to adopt a more commercial approach to track access management".

Renationalisation of rail infrastructure

The Labour Government announced in May 2008 that the rail and sea operations of Toll NZ Ltd less its trucking and distribution operations was being purchased for $NZ665 million.^[6] The purchase was completed on 1 July 2008 and the company renamed KiwiRail.^[7] It planned to spend an estimated NZ$1 billion over five years to develop a modern effective rail system. Most of this expense is in purchasing new locomotives to replace aging stock.^[8]

On 1 October 2008 KiwiRail became a subsidiary of NZRC, the ONTRACK brand continuing to be used by NZRC's infrastructure arm.^[9]

See also

• Rail transport in New Zealand
• List of New Zealand railway lines
• Rail privatisation in New Zealand

Preceded by New Zealand Railways Department	New Zealand rail owner and operator 1981-1991	Succeeded by New Zealand Rail Ltd
Preceded by Tranz Rail	New Zealand rail infrastructure owner and maintainer 2004-	Succeeded by Incumbent
Preceded by New Zealand Railways Department	New Zealand railway land owner 1981-	Succeeded by Incumbent
Preceded by Toll NZ	New Zealand rail service owner and operator 2008-	Succeeded by Incumbent

References

1. ^ "New KiwiRail chief lays it on the line". New Zealand Herald (Auckland: APN Holdings NZ). 15 January 2009. http://www.nzherald.co.nz/rail/news/article.cfm?c_id=296&objectid=10551896. Retrieved 14 January 2009. 
2. ^ ^{a b} Evans, Lewis; Grimes, Arthur; Wilkinson, Bryce; Teece, David (1996). "Economic reform in New Zealand 1984-95: The pursuit of efficiency". Journal of Economic Literature (Nashville) 34 (4): 1856–1902. http://people.stfx.ca/x2004/x2004cegEcon/Economic%20Reform%20in%20New%20Zealand.pdf. ^{[dead link]}
3. ^ (PDF) The Privatisation of New Zealand Rail. New Zealand Institute for the Study of Competition and Regulation Inc.. 1999-07-10. http://www.iscr.org.nz/f249,4986/4986_tranzrail_part_1_100899.pdf. Retrieved 2008-07-04. 
4. ^ ^{a b} Ontrack - a key player in rail renaissance - industrial safety news, Volume 3, Issue 1, Summer 2008, Page 22
5. ^ "Xtra Business - Toll track access". 31 January 2007. http://xtramsn.co.nz/businessandmoney/0,,13273-6882883,00.html. 
6. ^ "Rail buy back marks new sustainable transport era". New Zealand Government. 5 May 2008. http://www.scoop.co.nz/stories/PA0805/S00053.htm. Retrieved 2008-05-13. 
7. ^ NZPA (2008-07-01). "Bolger to head Govt's 'KiwiRail' service". The New Zealand Herald. http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10519311. Retrieved 2008-07-04. 
8. ^ Allan Swann (2008-10-17). "Rail boss outlines $1 billion spending plans". National Business Review. http://www.nbr.co.nz/article/rail-boss-outlines-1-billion-spending-plans-36602. Retrieved 2008-10-01. 
9. ^ NZPA (2008-09-24). "Single SOE for state-owned rail companies". Otago Daily Times. http://www.odt.co.nz/news/politics/23737/single-soe-state-owned-rail-companies. Retrieved 2008-10-01. 

External links

• Ontrack Deed of Grant for level crossings
• History of the Railways in New Zealand