KiwiRail only worth $369 million

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The final valuation of KiwiRail was $369 million – more than half the price the Government paid for it.

The Labour government bought TranzRail from Toll on July 1 last year for $690m. A provisional valuation in the government financial statements in September 2008 put the value at $442m.

Today Transport Minister Steven Joyce said the final valuation by PriceWaterhouseCoopers was $388.29m.

A Treasury report said a fair value for KiwiRail at the purchase date would have been $369.54m.

"This results in a final financial loss on acquisition of Toll NZ Ltd of $320m," the report said.

In Parliament Mr Joyce said a further $210m was spent on loans and $90m on operational subsidies.

"It's quite obvious to anyone looking at this transaction that the previous government significantly overpaid for KiwiRail and paying that much handicaps its future," he said.

The public was not told about the large financial burden including the backlog of needed expenditure before the purchase was made, he said.

Progressive MP Jim Anderton pointed out that a National government had sold the rail in the first place and it had been stripped by the buyers and had subsequently suffered from lack of investment.

Mr Joyce said that was ancient history.

"No one in their right mind would pay the kind of money for KiwiRail that the previous government paid."

The previous government said $1b was needed to bring the rail back up to standard. Mr Joyce said any investments would need to be sensible.

In a later statement Labour transport spokesman Darren Hughes said senior government figures had disparaged rail and its potential.

"The reality is that provincial New Zealand rail lines would gradually have become the lines to nowhere if (former finance minister) Michael Cullen and the Labour Government had not had the foresight to buy KiwiRail," he said.

"That purchase was made with an eye toward an uncertain future about which it would take a brave pundit indeed to say rail won't play an important part."

Mr Hughes questioned National's commitment to rail.

-NZPA