Trains now called KiwiRail

Rail and ferry services, now rebranded KiwiRail, were returned to taxpayer hands in a ceremony at Wellington railway station this morning.

The $690 million buy from Australian-owned Toll NZ adds train and Cook Strait ferry services to the rail network, already owned by state enterprise OnTrack.

Talks went down to the wire late yesterday, with tough negotiations over a six-year rent holiday, estimated to be worth up to $20 million, granted to Toll on premises used by its Tranzlink trucking business.

It is understood the Government was concerned it could run foul of the Commerce Commission after rival trucking companies raised objections.

In a standoff, the Government refused to pay more in place of the rent holiday, while Toll NZ argued it was an essential part of the heads of agreement struck in May.

The rail system will be run by an establishment board under former prime minister Jim Bolger.

The KiwiRail establishment board would manage the service until decisions about how it would be run were made. The Government already has a separate state-owned enterprise OnTrack to look after the tracks.

Finance Minister Michael Cullen said a Rail Development Group would report to him and State Owned Enterprises Minister Trevor Mallard in early August with recommendations for the structure and management of the rail business. Cabinet would  then make decisions.

Dr Cullen said options ranged from a single SOE including OnTrack and KiwiRail as separate divisions to a separate crown entity and SOE.

Also on the board with Mr Bolger, who chairs Kiwibank and New Zealand Post, were Brian Corban, Mark Franklin, Ross Wilson, Brian Jackson, Linda Constable and Ross Martin.

The new name - KiwiRail - continues the Government's branding theme that includes Kiwibank and KiwiSaver.

Insiders said the trains' new livery would include a "non-Labour reddish" colour as well as the yellow front and rear required for safety reasons.

Branding of the Interislander ferries, and TranzScenic and TranzMetro train services would not be changed.

Dr Cullen said options ranged from a single SOE including OnTrack and KiwiRail as  separate divisions to a separate crown entity and SOE.

"New Zealand's rail network is now back in New Zealand's hands," Dr Cullen said.

"We will now be able to make the investments necessary to develop a world-class 21st century rail system for New Zealanders."

He said potential reconfigurations in Auckland and Wellington would see changes to maintenance and storage to cope with more stock for metro areas.

Prime Minister Helen Clark said government ownership would allow it to make strategic decisions and investments to help rail make New Zealand more sustainable.

The deal will give taxpayers ownership of 180 mainline locomotives, 4200 wagons, the rail ferry Arahura and leases on two other ferries.

About 2300 people work in the rail and ferry services. 

- with NZPA

- © Fairfax NZ News