Toll have a vested interest in ending the Overlander rail service

So Toll Holdings, the Australian owned rail operator, have decided to axe yet another passenger service, the Overlander between Auckland and Wellington. This follows the chop of the night service over the same route in 2004.

At the time of the axing of the Northerner in 2004 I predicted Toll would cut more passenger services.

"More cutbacks and closures are likely, as the July deal between Toll and the Government stated there would be no new scheduled passenger operations for three years. So even if another operator decided they wished to run a service cancelled by Toll, they would be unable to do so. After three years, Toll is only required to run three return passenger services on a line to maintain its monopoly."

So by ending the Overlander service now, Toll have a year to kill off the service with no threat of the service being taken up by another operator. A new operator wanting to start a new service between Auckland and Wellington will now have to start from scratch.

So while Jeanette Fitzsimons is right to call on the Government to ensure the infrastructure for such a service is not lost, she does not appear to identify the real cause - the 2004 rail deal between Toll and senior Labour ministers.

While the 2004 deal was widely touted as 'taking back the tracks' into public ownership, the deal actually put some significant restrictions on what the Government could do with its new dilapidated 'asset'. At the same time the Government 'bought the tracks' for $2* the Australian transport multinational gained a near effective monopoly on the use of the tracks until 2070. Toll also gained a seat on the board of the track operating company, and the ability to take the Government to arbitration over track access fees and track spending plans. Negotiations over track access fees for the next year have been dragging on for months, so I would not be surprised if the end of the Overlander is part of a Toll 'hardball' negotiating strategy over track access fees.

Toll asked the Government for a subsidy for the Overlander to continue. For a private business Toll are regularly demanding public subsidies - perhaps it would be simplier if the Government just nationalised the company!

Toll have shown no interest in passenger services, apart from what they call 'high value tourist operations'. In March this year Toll cut several North Island towns from the Overlander's schedule - so it could be argued that the drop in passenger numbers was not all pure 'market forces'. It is reminicient of the stupid decision of the previous owners TranzRail to build the new Christchurch passenger railway station miles from anywhere and on no bus routes - the Southerner train service between Christchurch and Dunedin did not last long. With such a mindset, there was no incentive to keep fares competitive with other forms of transport.

And of course if private ownership had not been so darned irresponsible in failing to maintain the tracks passenger rail journeys would now be a darn sight faster and more comfortable.

Update: Many of the comments on Frog's post echo the point made above - if Toll run a rubbish service, they should not be surprised when not enough people use it.

Instead of making deals with Australian mulitnationals with dodgy employment records, the Government would have been far better to nationalise the whole railways and gain a clear start to promote its social, enironmental and transport goals, without having to make concessions to profit centric private investors.

Tags: Politics, Rail, Corporates, Toll Holdings, Privatisation

* Toll ended up getting $2 for the rail network, as a government official did not have a $1 coin in his pocket.