August 25, 2015

New Zealand government confirms KiwiRail subsidy

Written by  Richard Worrall
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New Zealand government confirms KiwiRail subsidy David Gubler

THE government of New Zealand has offered a financial lifeline to embattled state-owned railway KiwiRail by committing to a $NZ 200m ($US 130.7m) annual subsidy for the railway.

Finance minister Mr Bill English says the subsidy is required because KiwiRail has not been able to increase income from its rail operations as set out in its financial turnaround plan. "They have found it very difficult to achieve the targets for growing their business," English says.

Taxpayers have already pumped over $NZ 1bn into the company as part of the $NZ 4.5bn turnaround plan which aims to transform KiwiRail into a viable business although the railway continues to report losses.

English says the public continues to support operating the railway company over allowing more lorries on to the country's roads, adding that performance had been hit by declining productivity at state-owned coal mining company Solid Energy, one the railway's largest customers.

The railway is considering other options to raise capital, including the sale of Wellington station. KiwiRail has sold $NZ 40m of property in the past two years.

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