FF critical of railway's cut-price deal offers

AL WILLIAMS
Last updated 05:00 21/07/2012

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Federated Farmers has taken another swipe at KiwiRail.

South Canterbury provincial president Ivon Hurst earlier this week blamed KiwiRail for the loss of container trade at Timaru's port.

KiwiRail hit back yesterday when freight manager Iain Hill said Mr Hurst's claims were inaccurate and misleading.

Mr Hurst responded, stating KiwiRail was offering cut-price deals to bulk suppliers.

"If a private financial institution was backing KiwiRail, instead of the Government, it would not be offering cut-price deals to bulk suppliers.

“KiwiRail has objected to my comments on the subsidised rates offered to Fonterra in shifting product through Lyttleton," he said.

“This is a commercial decision, according to KiwiRail freight manager Iain Hill. Of course it is, but with the $22 million backing provided by the government this year, KiwiRail's job in making commercial decisions around deals with large bulk suppliers such as Fonterra, is made so much easier.

“The question remains, if the financial backing came from traditional sources of credit, namely banks, investment banks or private shareholders, where a dividend was required to justify investment, would KiwiRail be so forthcoming with cut-price transport rates?

"Surely this is the crux of the argument.

“This then leads to the observation that if one sector of the competitive transport industry is distorted by cheap government financing, then other parts of the same sector produce distorted outcomes,” Mr Hurst concluded.

KiwiRail chose not to respond.

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- The Timaru Herald

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