KiwiRail's least cost procurement a false economy

KiwiRail’s discovery of 7000 rotting railway sleepers sourced from Peru raises questions about the organisation’s procurement practices, says Labour’s Transport Spokesperson Phil Twyford.

The rotting sleepers follow revelations of major defects in Chinese-made locomotives and wagons.

“There is a clear pattern emerging of KiwiRail always taking the el-cheapo option and on three occasions now it has turned out to be a false economy.

“Identifying and replacing the rotting sleepers will cost up to $7 million, and is also being linked by KiwiRail management to two derailments.

“There is a serious safety issue here, not to mention the cost to the organisation in money and time.

“These procurement cock-ups are a symptom of an organisation that is under intense financial pressure as a result of the Government’s unrealistic Turn Around Plan. Under the plan KiwiRail has to deliver $4.75 billion from its own balance sheet for capital expenditure and in the current economic downturn that is putting enormous pressure on it.

“It is driving ill-advised least-cost procurement decisions like the Peruvian sleepers and Chinese rolling stock, and the recent announcement of up to 220 track workers being laid off.

“The Government needs to take its boot off KiwiRail’s throat. It makes no sense for it to pour billions of dollars into building low-value Roads of National Significance while setting KiwiRail up to fail,” said Phil Twyford.