Sunday, 6 December 2015

OECD on KiwiRail

It seems the OECD agrees with me (partially at least):
In rail, liberalise entry, separate infrastructure ownership and service delivery and privatise KiwiRail. Remove legal exemptions from competition policy in international freight transport. Use tolls and congestion pricing to manage demand in road, energy and water sectors.
To my mind separating the infrastructure ownership and maintenance from the rest of KiwiRail doesn't in itself justify opening entry to other operators. However, it's worth remembering at the moment we already have multiple operators - just in different sectors (e.g. AT Metro owning commuter trains in Auckland, Dunedin Railways owning tourist trains in Otago).

My view is that it makes sense to first separate the infrastructure and KiwiRail as operator. KiwiRail would remain an SOE, required to make a profit, and pay for its use of the network in the same way that trucking companies do (i.e. freight carried over distance traveled) to use the roads. According to KiwiRail's own books it would be profitable on this basis.

I wouldn't go for total privatisation though - the model provided by the mixed ownership model could be applied, along with TVNZ and NZ Post, which are both profitable (at the moment). The more important point is getting KiwiRail on its feet.