Unrealistic Turn Around Plan behind Kiwirail job losses

The Labour Party says Kiwirail’s plan to sack 200 workers is a direct result of the Government’s unrealistic Turn Around Plan for the company.

The Plan requires Kiwirail to find $3.75 billion to repair and upgrade the company's assets, and Labour’s transport spokesperson Phil Twyford says that’s forcing Kiwirail to lay off workers.

"The Turn Around Plan was designed before the Christchurch earthquakes and the international recession slowed Kiwirail's business. Revenue has dropped and now the company cannot meet the Plan's ambitious targets for capital expenditure.

"The Government should inject more money from the National Land Transport Fund. If it can find $12 billion to build motorways, most of which are very poor value for money, then surely it can invest more in Kiwirail to upgrade the tracks?

"The lay offs are a false economy. They are going to save $20 million by deferring three years of track upgrades. But if they don't improve the tracks on the main trunk line they will never be able to shorten the freight time between Auckland and Wellington and compete with long haul trucking.

"Kiwirail has made heroic progress getting the organisation back on its feet. It is well on its way to building a modern, efficient rail network after it was run into the ground during its years of private ownership. Rail is too important to the country's transport future to allow Kiwirail's Turn Around Plan to falter, or to hobble it by sticking to unrealistic financial targets.

Under the Plan Kiwirail has to contribute $3.75 billion for capital expenditure from its own balance sheet while the Government commits only $750 million.

"It is not good enough for SOEs Minister Tony Ryall to fob the job losses off as just a decision for Kiwirail, as he did this morning. The Government must take responsibility for the under-funding of rail. “