KiwiRail has confirmed it is considering cutting as many as 220 staff before the end of the year, but says it is too early to say how many of its Manawatu employees will lose their jobs. And there are signs another 100 jobs could go on top of that.

NZ First revealed the proposal to cut the infrastructure and engineering jobs at KiwiRail yesterday. KiwiRail confirmed it was consulting with staff about potential job losses.

There are about 115 Manawatu KiwiRail infrastructure and engineering department employees.

NZ First transport spokesman Brendan Horan said a "very reliable source" expected a further 100 jobs would go by the end of 2013.

The jobs to go by October were important maintenance staff, he said.

"These are people that do the tamping of the rail and the ballast machines. These are critical jobs that are going."

KiwiRail general manager infrastructure and engineering, Rick van Barneveld said: "As we are still in the very early stages of consultation with staff about these changes, no proposals have been made about final reduction numbers or where these will be made location-wise."

Palmerston North MP Iain Lees-Galloway said the Government had the wrong priorities for KiwiRail and its need to return a dividend was detrimental to the rest of the economy.

"What we should be doing is using KiwiRail ... to provide a 21st century rail network. Retaining these jobs and investing in KiwiRail would not only be beneficial from an infrastructure point of view, but would also keep these people in employment."

Instead, the job losses were putting more people on a benefit and reducing KiwiRail's ability to create a rail network that would drive economic growth, he said.

The Government has so far not commented on KiwiRail's decision, with Prime Minister John Key saying it was an operational matter for the state-owned enterprise.

Additional spending of $250 million was pegged in the Budget in May for investment in rail infrastructure, with the money coming from the partial sale of four state-owned power companies.

Rail and Maritime Transport Union general secretary Wayne Butson said it would be a mistake for KiwiRail to lose staff when "considerable work" was needed to restore the country's infrastructure.

"Workers fear that this current initiative by KiwiRail may herald another major departure of key rail skills to Australia where the rejuvenation of rail transport is a government priority." Mr van Barneveld said the proposal was in response to economic uncertainties.

- © Fairfax NZ News