KiwiRail, bought last year for $690m and now valued at $388m by Treasury, is proving a headache for the Govt. Treasury papers show it would have run out of cash by November 30, with the result Finance Minister Bill English had to approve a cash injection for operational funding. All other funding has subsequently been deferred pending a proper business case being presented. Treasury analysts estimate the national rail network would shrink to about 2300kms from the current 4000kms if rail were to be allowed to reach its commercial equilibrium.

CEO Jim Quinn says work is continuing on whether to break the rail network into smaller economic links while mothballing uneconomic tracks. Those could be preserved, with the option of re-opening in future as demand returned. Quinn believes a big part of his task is to make sure the value of KiwiRail to the NZ economy is understood. Within a year he aims to have a long-term vision in place, underpinned by a detailed 5-year plan. But with a budget too small to rebuild the rail network immediately, he has to find a convincing formula to bring it up to the standard to function effectively as a transport business.

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