Hon Dr Michael Cullen
Minister of Finance
6 May 2008 Media Statement
Key fails to grasp importance of rail investment
National Leader John Key’s failure to grasp the long-term benefits of a modernised rail system reveals a worrying
short-sightedness, Finance Minister Michael Cullen said today.
In his public comments criticising the government’s buy back of New Zealand’s rail system, Mr Key has focused
exclusively on the headline elements of yesterday’s deal.
“Mr Key needs to understand that this is about much more than a deal done on the day,” Dr Cullen said. “The government’s
buy back of the rail system is a long-term investment in our economy.
“A modern rail system will contribute to a more sustainable transport network. And if we can get more freight off roads
and onto rail, we can expect significant savings on road maintenance as well.
“Combined with the fact that we already owned the track, these factors meant that the government stood to gain much more
from the purchase than any other buyer and would be expected to pay a premium as a result. That said, Toll received
substantially less than they hoped to.
“Mr Key also keeps referring back to the price paid by Toll to purchase the asset as some sort of absolute minimum that
the government should have paid. The truth is that Toll did improve the rail business and it is worth more than it was.
They also paid more for it four years ago than it was worth then.
“What is particularly cynical is Mr Key’s claim that buying the rail means the government does not care about the
pressures on New Zealanders.
“We will deliver a responsible programme of tax cuts in the Budget that will hopefully provide some relief to families.
But we are not about to give up on planning for the future. Mr Key’s failure to look through this cycle raises serious
concerns about how he would manage the economy if elected.”
ENDS