So why do taxpayers own some ferries?

May 17th, 2014 at 9:05 am by David Farrar

The Dom Post editorial:

wants to “move on” from the saga of the Aratere. It’s easy to see why. The ferry has had years of trouble and has earned an enormous amount of bad publicity. Politicians like Winston Peters question its safety. The ship started breaking down soon after it arrived from a Spanish shipyard in 1999 and quickly earned its nickname The Lemon. The name has stuck.

If taxpayers didn’t own the ferry, then it would not be our concern. If a private company has a lemon as a ferry, then its competitors will pick up more business, and their shareholders lose money.

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79 Responses to “So why do taxpayers own some ferries?”

  1. mikenmild (11,719 comments) says:

    We own the ferries because they are an integral part of the rail network. We tried selling the rail network before – it didn’t work out well.

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  2. Kea (13,359 comments) says:

    I asked this some time ago. It is incredible the government is buying boats to compete with private business. And they are not doing a very good job of it either ! This in spite of being aided by restrictive laws destroying the profitability of faster better boats (because they make waves !) run by private companies and ensuring a monopoly on the market.

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  3. peterwn (3,307 comments) says:

    The service could have been private if the Union Steamship Company had the balls to introduce its own service – the Government wanted it to. There were no drive-on/off or roll on/off services prior to the Interislander. The government of the day had to plug a market failure gap. Part of the problem was ‘them and us’ union attitude – if a country of 5 – 6 million people hosts one of the world’s largest shipping companies (think Denmark and Maersk) then perhaps with forethought and all round cooperation, the Union Company could have been one of the major players today.

    Interestingly I think the future will lie in an efficient method of moving containers between the islands without the need for them to sit on railway wagons – that requirement rules out purchasing or chartering second hand ships, and ships that accommodate railway wagons are almost hopelessly expensive to build.

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  4. mikenmild (11,719 comments) says:

    Kea
    The Kiwirail ferries do not enjoy a monoploy position. Strait Shipping is a full on competitor.

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  5. tas (646 comments) says:

    Kiwirail is a perfect illustration of why the government shouldn’t own companies without good reason. Sure it’s great when they make big profits and the taxpayer earns a great return. That’s the argument Labour made against selling assets. But they forget that they can just as easily lose money and cost the taxpayer dearly. Bailing out Kiwirail and Solid Energy will have cost the govt at least $100 for every man woman and child in the country. That’s a fair amount of dosh.

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  6. WineOh (630 comments) says:

    Possibly the real issue is that we are in the habit of buying on a bargain- we pick up old boats that nobody else wants to run them across a surprisingly harsh body of water – then act all surprised when things keep breaking.

    Is it seriously that much of an issue though, when is the last time somebody died on a Cook Strait Ferry since the Waihine. Is this a bit of a manufactured crisis?

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  7. mikenmild (11,719 comments) says:

    Did the government have any realistic alternative to buying and rescuing Kiwirail? Should it, like Air Nz, have ever been sold in the first place or are there some services that the government can’t afford to see fail?

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  8. WineOh (630 comments) says:

    Easy solution of course- a wobbly pontoon bridge across Cook Strait. What could possibly go wrong?

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  9. Michael (911 comments) says:

    I can see the Bluebridge ferries loading and unloading each morning out the window. If they are fully loaded they go, even if they are 15 minutes early (or 5 minutes, normally). I don’t think I’ve ever been on a rail ferry that’s departed early.

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  10. tvb (4,512 comments) says:

    The Labour Party say this is a vital link between the two Islands and the taxpayer must underwrite it no matter what, however much it costs including wages and conditions of trade union members who give money and resources to the Labour Party.

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  11. trout (944 comments) says:

    The Union Steamship Company would never have risked taking over the ferry service because of the leverage the Seaman’s Union had engineered, and the consequent political issues. The ferry service was a featherbedded operation (remember the 2 crew who were flown back and forth to Waiheke (expenses paid) between shifts) thanks to Seaman’s Union activity. Whilst the Union Company ran the service under contract all the massive cost overruns were picked up by the taxpayer.

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  12. spanish_tudor (84 comments) says:

    Why do taxpayers own TV and radio networks? And forests? Coal mines? An airline? A bank? Sell the whole bloody lot!

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  13. Dave Mann (1,251 comments) says:

    Oh FFS…. I am not a socialist by any means, but I’m getting really pissed off with this continual shit about government ownership of things. The taxpayers own a bloody ferry because we have a minuscule population and if the government hadn’t established the ferry service (NZ Rail) then we wouldn’t have one at all. It is a public SERVICE operated for the public GOOD, for Christ’s sake. I bet its not profitable and as such nobody would be able to thrive if they bought it. In private (or overseas) ownership it would either sink (literally) or the prices would go through the roof, just like our power and water supply etc. Get off this ideological hobby horse and face the bloody facts.

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  14. hmmokrightitis (1,595 comments) says:

    And therein is the issue Dave. If users value a service they should pay for it. Ive used the ferry service maybe 3 times in 50 years. Why should I as a taxpayer subsidise either regular or irregular users? Why shouldn’t the users actually pay what the service is worth?

    And even if the ‘greater good’ argument holds, why shouldn’t the service be priced to at least breakeven, or make a small profit?

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  15. mikenmild (11,719 comments) says:

    I think the ferry part of Kiwirail actually makes good money – it’s the rest of the business that needs the taxpayers’ funds.

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  16. WineOh (630 comments) says:

    @hmmok – have you bought anything in the last 50 years that has been produced in the South Island?

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  17. hmmokrightitis (1,595 comments) says:

    Of course I have WineOh, and Im more than happy to pay what it costs plus margins and transport etc etc – again, why should the taxpayer subsidise me for my buying habits?

    Edit: Follow the argument through. I set up a winery on Stewart Island, and demand the taxpayer subsidise my product getting to Auckland, via a long distance ferry. Why cant I?

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  18. mikenmild (11,719 comments) says:

    The government owns the Interislander because it is an integral part of the rail netwrok. Ownership of those ferries cannot be separated from operating the rail network overall. There is healthy competition for Cook Strait freioght and passengers, so I don’t believe we are subsidising the ferries at all.

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  19. nasska (11,804 comments) says:

    Why not for the sake of efficiency do we not forcibly relocate all the population & all business to Auckland & close down the provinces completely? No need then for state highways, rail or ferries & most of Air NZ could be dispensed with.

    Mind you there wouldn’t be much in the way of overseas earnings & the financial churn produced from the high rise slums in Auckland wouldn’t provide much wealth.

    ~Still we’d be ideologically pure & that’s what counts. ~

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  20. Psycho Milt (2,419 comments) says:

    So why do taxpayers own some ferries?

    Because NZ is too sparsely populated for the private sector to provide effective infrastructure, as has been amply demonstrated on many occasions. The fact that you personally don’t need a ferry service across the strait doesn’t mean the country doesn’t need one.

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  21. HB (328 comments) says:

    tas (540 comments) says:
    May 17th, 2014 at 9:33 am
    “Kiwirail is a perfect illustration of why the government shouldn’t own companies without good reason. Sure it’s great when they make big profits and the taxpayer earns a great return. That’s the argument Labour made against selling assets. But they forget that they can just as easily lose money and cost the taxpayer dearly. Bailing out Kiwirail and Solid Energy will have cost the govt at least $100 for every man woman and child in the country. That’s a fair amount of dosh.”

    not as much as we had to pay to bail out South Canterbury Finance….

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  22. emmess (1,432 comments) says:

    Don’t worry, I am sure the 4 billion dollar Kiwirail turnaround package will fix the worlds oldest start up.

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  23. Ed Snack (1,927 comments) says:

    Logical Fail Psycho, if it is needed then people who use it should pay for it, simples. I have used the ferries a number of times en route to the South Island on holidays, and it costs quite a bit for a family of 4 with a car; should I be subsidised ? I’d leave it to private enterprise, someone will want to run a service and make it pay, then we wouldn’t have the politicisation of the service which has not been so bad of late. I well remember the regular holiday strikes to push for greater manning levels and higher pay.

    And just a reminder to Wineoh, we didn’t buy the Aratere as an old ship that no one wanted, it was purpose built in Spain, and built to a budget like all ships. It was just badly built, maybe we should have got it built in Japan or Korea, but as I understand it the Spanish bid was the lowest and was massively subsidised by the EU at the time.

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  24. NK (1,257 comments) says:

    Why do taxpayers own ferries? Shit, ferries are the least of our concerns as taxpayers. Why do taxpayers own the middle class? That is the better question. With all the middle class welfare we have in this country now, I’m much more concerned about getting rid of that, than some silly boat.

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  25. Komata (1,202 comments) says:

    FWIW

    Why does Kiwirail operate ferries?

    This might help answer that question:

    There will be many no-doubt who recall the days of the ‘Hinemoa’ and ‘Maori’ and the ‘Overnight Inter-Island Steamer Express’ service to Lyttleton. They will also recall that effectively, the railway systems of the North and South Islands were independent operations. There was a very limited service of railway goods (NOT wagons) between Wellington and Picton via (I think) the ‘Holmdale’. There was absolutely NO railway service (as we now understand the term) between the two land masses.

    This was all very well, but was stifling economic growth. The fact that Cook Strait was between the two islands was a major, unbridgeable, obstacle. Due to it being the meeting point between the Tasman and the Pacific and because the winds are channelled through it from the South West, Cook Strait has extremely rough water (some of the worst in the world BTW), and building a physical bridge was impracticable due to both the weather and the geology. Not many options were available. The best option was the creation of a ‘ferry bridge’ that would carry railway wagons ‘straight over’ the stait, avoiding any need to unload at Wellington.

    The option made perfect sense, and, as it was going to be exclusively a Railways department operation (and confined ONLY to railway wagons, NOT motor vehicles) it was logical that the then NZ Government Railways Department (NZGR)should run it. The ‘Aramoana’ was the result. Her arrival revolutionised inter-island trade and effectively created a ‘nationwide’ railway network for the first time since the start of railway construction in 1863.

    That is the reason why Kiwirail (the successor to the NZGR) wound up running rail ferries – they are (even now) literally ferries for RAIL traffic. This trade (as part of the national railway system) is the justification for such vessels’ existence. The Aratika came years later and was the first ferry which could accommodate both rail and road vehicles, and a larger number of passengers than the previous vessels. However, as that is not what is being asked-about, I won’t detail the reasons and results of her introduction.

    BTW: An unexpected consequence of the arrival of the rail ferries was a huge increase in people going across the Strait. Previously anyone ‘going south’ had used the ‘Overnight Inter-Island Steamer Express’ service I referred-to earlier (the only one available BTW), but the quicker rail-ferry service, when combined with a better air service and lower cost, eventually destroyed it, with the Wahine (of shipwreck fame) being the last ship to operate it. However, that is another area altogether and outside this discussion.

    Thanks for asking the question. Hope this helps…

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  26. m@tt (631 comments) says:

    If you can find a private company that wants to do it at low to no profit out of the goodness of their heart then go for it.

    The reality is that just providing a rail and heavy freight ferry services across the strait is never going to make a private company any more than they would just putting their capital in the bank. As alluded above by others a larger vessel operator, like we used to have in The Union Steamship Co., could probably make it work. Unfortunately combinations of our remoteness, the relative improvements in economy of long distance air freight over the decades since USC and our laws around foreign vessels on the coast means we’re unlikely to have another USC in the near future.

    Sometimes it just makes good sense for the government/tax payer to provide a national service that is not commercially viable but is still required by the country, whether your ideological stance can handle that or not.

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  27. Mrs Trellis (34 comments) says:

    “We tried selling the rail network before – it didn’t work out well.”

    We tried buying back the rail network – it didn’t work out well. :)

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  28. Ed Snack (1,927 comments) says:

    M@tt, but if it’s not commercially viable it’s not worth having. In what way is it a “national service” if it costs money that the users of it are prepared to pay for directly ?

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  29. Psycho Milt (2,419 comments) says:

    Logical Fail Psycho, if it is needed then people who use it should pay for it, simples.

    The principle that individuals should receive only those services they are able and willing to pay for directly themselves isn’t a logical one, it’s an ideological one.

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  30. johnwellingtonwells (137 comments) says:

    Komata
    I think the Rangitira carried on until it was past its use-by date

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  31. m@tt (631 comments) says:

    “but if it’s not commercially viable it’s not worth having”
    I’ll stop you right there as the premise of your question is based on an ideological position. There are in fact many things which are not commercially viable but worth having.

    I worked in the transport sector through the eighties and nineties and I can tell you that a regular rail service that included multiple regular sailings per day between the islands is an absolute base requirement for our countries logistical infrastructure to function reliably. The positive flow on through us as consumers and therefore as a contributor to our economy is the real benefit you receive. As it stands today, without inter-island freight services we’d be beholden to international vessels providing coastal services as a by product of their international service, one in which delays are still very much the norm due to our remoteness and the inevitable flow on affect of schedules run over a long distance service. Even in it’s woeful current state, it’s still providing a better service than any viable alternative. It must not be left to fall into complete disrepair.

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  32. Southern Raider (1,831 comments) says:

    I’ve got a relative who works at KiwiRail (has only been there a couple of years) and feedback is it has to be one of the most backward dis functional companies in NZ.

    Too many old timers doing fuck all. No leadership. No business plan. No investment strategy.

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  33. gazzmaniac (2,307 comments) says:

    Lots of people on this thread are talking about how New Zealand is too small to let the private sector operate a ferry service, blah, blah. The Bluebridge ferry competes with Interisland Line and makes money.

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  34. tom hunter (5,086 comments) says:

    PM – The principle that individuals should receive only those services they are able and willing to pay for directly themselves isn’t a logical one, it’s an ideological one.

    matt – I’ll stop you right there as the premise of your question is based on an ideological position.

    When you’re talking about services such as health and education that’s a fair point.

    But this is a commercial operation whose primary reason for existence is supposedly to support other commercial operations, yet it’s not earning enough to cover capital expenditure and perhaps not even operational expenditure? That most definitely is not an ideological position but a simple matter of commercial life and death and one denied at the expense of others.

    There’s a fair bit of begging the question here as well:

    multiple regular sailings per day between the islands is an absolute base requirement for our countries logistical infrastructure to function reliably.

    Then why cannot it pay it’s own way sufficiently to buy decent vessels? Perhaps NZ rail should be charging more? But if they could, then surely they would already. The fact that they’re not tells us that NZ businesses have alternatives, and the reason they’re not using those to the extent they should is that taxpayers are subsidising this service. That’s something I usually see the Left jumping up and down about, unless it’s a business they like – for ideological reasons.

    I take your point that one alternative might be that we would be “beholden” to international vessels to provide coastal services but there’s usually more than one alternative in how business is done, and the word “beholden” betrays an old-fashioned mindset about poor victims being dealt to by robber barons. Global shipping is massively over-supplied (there’s virtually an entire navy moored somewhere off Indonesia), with the result that shipping is cheap and getting cheaper. The point about our remoteness is the same excuse I hear importers still using when they’re queried about the huge markups on imported stuff. Contracts can be written in such a way that they last for a few years, overlap, and cover multiple shippers so I don’t see why we have to be “beholden”. If the overall cost does go up then perhaps that’s telling us that the NZ businesses were underpaying for this valuable infrastructure in the first place.

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  35. burt (8,316 comments) says:

    mikenmild

    We own the ferries because they are an integral part of the rail network. We tried selling the rail network before – it didn’t work out well.

    And so the circular justification of socialism is laid bare. We “must” own the rail network right… therefore we must own Ferries as well. It didn’t work out well last time… why ??? because we didn’t own it and we must. When the private owners let it run down as badly as it was run down before we sold it… that was a disaster and we needed to spend twice what it was worth to buy it back – why ? because we must own it… Our ideology insists that we do.

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  36. burt (8,316 comments) says:

    gazzmaniac

    The Bluebridge ferry competes with Interisland Line and makes money.

    BUT it makes money for evil private owners…. mikenmild’s ideology insists that it must be public owned and must lose money… it’s just not right that it returns a private benefit when it could be a tax payers money pit !

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  37. burt (8,316 comments) says:

    gazzmaniac

    What’s more, the Bluebridge isn’t going to hire 2,000 more staff than it needs to hide unemployment …. It’s just evil wanting to get a return on an investment !

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  38. Psycho Milt (2,419 comments) says:

    …this is a commercial operation whose primary reason for existence is supposedly to support other commercial operations, yet it’s not earning enough to cover capital expenditure and perhaps not even operational expenditure? That most definitely is not an ideological position but a simple matter of commercial life and death and one denied at the expense of others.

    It is an ideological position – one that says that if a particular piece of required infrastructure can’t provided at a profit by the private sector, it should not be provided. The fact is, NZ’s private sector is not up to the job of providing decent infrastructure (due to small population, low population density, highly varied geography etc), but its public sector is and sometimes the public sector has to step in. It has stepped in to cover this instance of required infrastructure, just as it did for roads, bridges, railways, sewerage systems, hydro-electric schemes etc. That is logical – telling the country it’ll just have to without then, is more like cutting off your nose to spite your face.

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  39. burt (8,316 comments) says:

    Psycho

    That was all very true in the 20’s, 30’s and even into the 40’s & 50’s. By the 70’s & 80’s it was starting to sound old and tired “state = good” rhetoric. Now it’s just the soundbites of a past time remembered fondly by the people who haven’t noticed ‘The red way’ worked once but can’t last forever. – MOVE ON !

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  40. burt (8,316 comments) says:

    Psycho

    The last government to build big hydro schemes is denigrated as possibly one of the most destructive in the history of NZ. You must remember how that nationalising everything and regulating everything was evil when down by a blue team but is perfect when done by the red team. You lovers of the “Labour dream” are complete partisan hacks you know that don’t you ?

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  41. Liberty (271 comments) says:

    Mikenmild
    Did the government have any realistic alternative to buying and rescuing Kiwirail?

    It was a foolhardy purchases. Paying over the top for rust bucket train set. To fulfil Cullens socialist dream.
    They should have let it fail. The scraps could have been brought for a song.

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  42. Fentex (1,037 comments) says:

    I’m all for competition where it’s mechanisms work and cooperation where it’s more efficient.

    This question about the ferries wouldn’t come to the fore if they were cost effective/efficient enough not to bring themselves to our attention by their expense and failures.

    It’s possible that it’s just a run of bad luck, it’s also possible (and on the sum it seems more likely) it’s a sign that the ferries don’t work efficiently.

    If I were a minister charged with caring for them I’d be looking to the plethora of efficient ferrying companies around Europe for contractors to take over the route under a very hands off SOE model designed for possible sale if it runs profitably.

    And even if not, if it runs reasonably efficiently, renew the tender often enough that competitive bidding for the contract minimises it’s subsidy (if ferries are essential infrastructure for low population – but productive regions – then a subsidy may make sense as a cooperative contribution).

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  43. burt (8,316 comments) says:

    Fentex

    That’s a pragmatic approach, using sound principles to balance the factors associated with necessity, service levels and cost. But it’s not public ownership so it’s never going to work. Vote for economic destruction like the other loopy lefties and dig deep into the tax payers pocket to fund the ideology – Or get out of NZ !

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  44. burt (8,316 comments) says:

    Like a lot of proposals of the left, the solution to the sate owned Ferries making a loss while private operators profit will be to block the private business and declare the state owned Ferries a glorious monopoly again. All problems associated with cost are now moot.

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  45. Johnboy (16,994 comments) says:

    They have this stupid obsession that rail wagons should get equal opportunity to cross the strait with trucks. We all know it would be far better to have all rail freight in standard containers that could cross the strait in an ordinary ferry on the back of a trailer.

    It’s all part of Labour Party/Union politics.

    Get rid of KiwiRail Ferries. Contract it all out to Bluebridge or equiv. Pop the twenty or forty footers onto the back of a truck/trailer and pop them back onto the rail if you insist on the Picton side.

    Rail crossing the strait is a nonsense! :)

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  46. Johnboy (16,994 comments) says:

    Never let it be said that my harangue is anti Jenny Cuttriss the first Interislander female master!

    Good on you girl….. Norman is proud of you! :)

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  47. Kea (13,359 comments) says:

    Johnboy, and the other thing they need to do is change the law to stop selfish property owners and green fanatics shutting down faster ferries, on the basis they cause waves on the beach ! I would hand out prizes for the fastest boat with a big bonus for running the prop over a dolphin. ;)

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  48. kowtow (8,770 comments) says:

    ‘if a private company has a lemon of a ferry ,then its competitors will pick up ………..survivors!

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  49. Psycho Milt (2,419 comments) says:

    If I were a minister charged with caring for them I’d be looking to the plethora of efficient ferrying companies around Europe for contractors to take over the route under a very hands off SOE model designed for possible sale if it runs profitably.

    And most likely you’d find they’d have a look at the numbers and tell you it’s not worth their while, because it’s, well – a small, low-density population transporting a small amount of freight across a fairly difficult piece of water. You could make it worth their while of course, but then you’re paying extra for a solution that suits your ideological preference.

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  50. Johnboy (16,994 comments) says:

    Folk that own beaches should capitalise on ferry wash by offering homestays with wakeboarding Kea! :)

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  51. Johnboy (16,994 comments) says:

    We only have Rail Ferrys cause once upon a time NZR was significant when trucks were all Bedfords Or Morris’s.
    No need for them at all now. The freight can still travel by rail to Wellington and back on rail in Picton if it seems financially or politcally correct but it can pop over the gap on a trailer in the back of a non-rail ferry ship.

    Keeping the heaps of shit on is merely a Cullenism! :)

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  52. Johnboy (16,994 comments) says:

    Jesus Minus you really are a fuckwit eh! :)

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  53. Judith (8,534 comments) says:

    If taxpayers didn’t own the ferry, then it would not be our concern.

    It would certainly be concerning to the tax payer if they could no longer get cross the ditch in their own vehicles, and it would certainly be of concern to the Government when business owners and shipping companies etc could no longer get their goods across the ditch because the private companies had the same problems that are currently being experienced.

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  54. Johnboy (16,994 comments) says:

    Most of us that get across the strait in our own vehicles use cars Judith. Fuck all of us use our own trains.

    Rail Ferrys are an anachronism and need to be scrapped! :)

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  55. burt (8,316 comments) says:

    Rail Ferrys are an anachronism and need to be scrapped!

    Sorry, you can’t do that. The rail workers and the ferry workers will go on strike. Next idea, and be sure it’s about public ownership and monopoly state provision or you can leave this country now !

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  56. Akld Commercial Lawyer (166 comments) says:

    http://www.kiwirail.co.nz/uploads/Publications/2013%20Annual%20Report%20%28Web%20Version%29.pdf

    The financial statements are available on the attached link. As others have already pointed out above, the Interislander presently doesn’t meet its cost of capital. Noone other than the taxpayer is going to fix that – Toll’s track record in Oz is such that they know this industry as well as anyone and would have been able to access bank debt at lower cost than almost any NZ-based business. But they couldn’t get it to pay its way.

    I am not a big fan of the “beholden” thread, but you only need to look at what happens when NZ businesses come up against smarter, bigger players – eg UK supermarkets to see that they capture the margin, not us.

    All up, if it makes sense (on a national balance sheet basis) to cart bulk freight by rail between the North & South Islands – then we will have rail ferries. And the Clifford Bay project would suggest that we will for the medium term, but the economics are marginal. Elsewhere, rail outstrips most other things for bulk freight. But the shape of NZ and the spread out population do us no favours.

    And before we get too misty-eyed about the Union Shipping line, is there any where else in the world with both a small population and a viable coastal shipping network with a no of competitors? I don’t think so. (My clients would also say it would mean having to deal with Lyttelton – which they spend their working lives avoiding like the plague).

    Perhaps the kernel of this thread is not about the economics of Cook Strait – but irritation that the MSM and a certain part of the voting catchment are dumb enough to pay any attention to anything coming from NZ First. From where I sit, they are just oxygen thieves – and giving them column inches just highlights the problem we have. IMHO, the MSM are just too lazy and too entrenched in either idealogy or the idea that news is about scandal and not hard analysis – to focus on the need to dissect policies.

    I also disagree with part of the OSullivan hagiography in the Herald – I think the PM continues to display poor impulse control. By even mentioning the prospect of tax cuts (small and still some time away) he both undermined the great work English & Co have done getting the economy back on its feet and gave the MSM something that has largely stopped them doing any analysis.

    Enough

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  57. Sir Cullen's Sidekick (894 comments) says:

    If we try to sell, then we have to cross the strait sitting on the backside of Norman and Tuatara…..Take your pick fellows….

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  58. tom hunter (5,086 comments) says:

    It is an ideological position – one that says that if a particular piece of required infrastructure can’t provided at a profit by the private sector, it should not be provided. The fact is, NZ’s private sector is not up to the job of providing decent infrastructure (due to small population, low population density, highly varied geography etc), but its public sector is and sometimes the public sector has to step in

    You’re painting such a broad-brush here that you’re confusing things of which that might be true – dams and roads, and in the past – with what is not true now. If there were no alternative to rail for freight transport between the islands and if the private sector could not do the job due to massive capex demands and/or profits that could not cover the costs then I could see the argument for the public sector stepping in and doing the job.

    But there are alternatives for freight transport in general and clearly there are private sector outfits carrying freight across the straight for a profit that more than covers all their costs.

    What this is really all about is the overall “need” to have a connected rail network from the Bluff to Auckland, and the resulting need to have ferries that can roll-on/roll-off train wagons, as per Komata’s potted history above – and I would think that an added reason nowadays would be the fear that Kiwirail might find itself held to ransom by private operators across the straight if it sold its ferries and sub-contracted that part of it’s network.

    But that’s still begging the question: why do we need this type of rail network at all? You mention a small population, low population density and difficult topography, but those are all factors that count against a rail network. We’re not a Mid-West or Western US state, or Europe where rail has my full support because it makes economic sense.

    We did need rail 150 to 100 years ago because other transport modes were not up to the job, and Komata comments that the lack of a rail-ferry link was stifling economic growth – which is a little hard to accept since our best economic growth periods were occurring without such a system in place. As far as I can see from his comments this link arrived in the 1960’s, precisely as things were turning to shit for us economically. Given how much money the rail network has lost over the decades it’s awfully hard to make a solid case that it helped our economic growth.

    In the face of such decline (whatever the ownership model) and the loss of hundreds of millions of dollars (probably a couple of billion by now) the continued support cannot be anything but ideological, and pointing the finger back with the counter-claim is merely projection. Opposing it is just pragmatic common sense.

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  59. Psycho Milt (2,419 comments) says:

    But that’s still begging the question: why do we need this type of rail network at all?

    Well, that’s the interesting question, isn’t it? To the libertarian, there is no benefit whatsoever in a freight network that keeps hundreds of thousands of truck movements off the public roads and does a lot less damage to the environment – accountants don’t include such things in their books. Fortunately, these days we have universal adult suffrage, it’s not only the owners of capital who get to choose a government, and the citizen voter’s opinion counts for something.

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  60. Ed Snack (1,927 comments) says:

    Psycho, you keep piling on so many straw men it’s hard to keep up ! So the citizen voter thinks that they are entitled to everyones assets do they ? All of them, or are we allowed to keep a petty allowance for “ourselves”, if that “ourselves” can have any real meaning in a world of “citizen voters” and identity politics.

    Can anyone explain the social good in a link that doesn’t pay for itself because the people who use it aren’t prepared to pay what it costs ? I understand the political use, it is always great politics to appear generous with other people’s money though. Why then is it incumbent upon the taxpayer to pay those people money by subsidising their operations ? You just don’t seem to understand, there is no benefit in a service that people aren’t prepared to pay for in the commercial realm. Government ownership is just an excuse to interfere and appropriate other peoples money for things that politicians think they know better than you about.

    Tell me again, why should the general taxpayer subsidise me travelling to the South island for a holiday ?

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  61. jcuk (713 comments) says:

    Time and time again we hear about the result of the lowest quote being unsatisfactory and breaking down or in the case of the railway wagons leading to the unemployment of numerous skilled and good workers. I get extremely annoyed at the petty minded, I suspect right wingers though for sure there are leftwingers with miniscual intelligence who think purely of the bottom line instead of the good of the country …. by the way Americans keep AMTRAK going and it is a boon for tourism as well as providing transport for those who cannot drive or fly … such a pity NZders have such a pitiful mindset, small minded, that they expect everything to pay for itself and to hell with the good of the country.

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  62. jcuk (713 comments) says:

    NZGR and successor lost money because they were politicians toy making jobs for the polies to crow about in their districts and it took Roger Douglas to say ‘no more money’ and with the right direction NZR’s own staff worked out how to make it profitable but the polies then sold it off to be assest stripped and reduced to the sad state it is in today where the foolish polies reluctantly dribble in cash to stop it completely failing …. the country needs a rail link efficiently run and not hampered ecconomically by truckies being subsidised with effectively free roads to operate on.

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  63. tom hunter (5,086 comments) says:

    To the libertarian, ..

    The wonderful thing about this debate is that we don’t actually have to drop into the esoteric world of ideological fighting – although I would note that if the thing was making money, or even just covering it’s costs, and I still wanted to shut it down and flog it off, that would be ideological.

    It would also be the mirror image of your stance.

    Can anyone explain the social good in a link that doesn’t pay for itself because the people who use it aren’t prepared to pay what it costs ?

    That’s the funny thing here. Psycho the socialist is fully prepared to sacrifice a portion of his money (and ours too of course) to subsidise a bunch of ruthless capitalists who are too tight-arsed to pay the full price. Weird. Fortunately he’s got the perfect out:

    … there is no benefit whatsoever in a freight network that keeps hundreds of thousands of truck movements off the public roads

    The prevalence of Just-In-Time shipping systems mean that any modern rail network has to involve hundreds of thousands of truck movements from the hubs anyway, so what we’re talking about is the substitute effect of long-distance hauling, which businesses increasingly avoid anyway, leaving train transport to basic bulk commodities like coal and grain, items notably lacking in most of NZ.

    The comparison also highlights the lack of business imagination that’s actually encouraged by such subsidisation; without it business would have to do any number of things differently – different modes of transport using smaller packages of goods, re-locating the business, and so forth, all of it resulting in reduced costs and perhaps even …

    .. a lot less damage to the environment – accountants don’t include such things in their books.

    No they don’t, for the very practical reason that people have not been able to actually put any value on it. Yet despite this dreadful approach good things can happen anyway. As it has in the US with CO2 emissions, where efforts to reduce emissions by putting a cost on CO2 in myriad ways (and failing) did not matter as the environmental objective was achieved anyway thanks to something that accountants do place on the books, the price of natural gas – and as a result of the technology of tracking that government not only did not support but actually opposed for the longest time.

    Funny how that happens!

    By the same token, since no actual value is applied to this public good there’s no reason why we should not pump even more money into Kiwirail to expand it, no? That’s the downside of such valueless claims. One can just see some Green Party lunatic demanding that another few hundred million be used to expand Kiwirail while Parker as Finance Minister weighs up the “incalculable” value of less damage to the environment vs. the very calculable value of fewer hip operations.

    Which means that Kiwirail will simply continue to stagger along much as it has these last 50 years, constantly losing money and being propped up by the state, not expanding because even the believers don’t believe to that extent, but not shut down. A zombie business surrounded by a bodyguard of Pyscho’s determined to fight for 19th century technology in the 21st century.

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  64. jcuk (713 comments) says:

    I live beside both the SIMT and SH88 and suffer from the damage endless trucks do to the road while the SIMT is largely empty. Trucks start operating a 4am and continue through the day so there is a noise problem too.

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  65. tom hunter (5,086 comments) says:

    and as a result of the technology of tracking

    fracking! It’s fracking you fucking auto-correcting piece of crap!! :)

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  66. stephieboy (3,399 comments) says:

    Tom hunter ,in terms of the the general fakery of Libertarianism which one defines you best.?

    Paleo,

    Crank magnets,

    South Park,

    Paulbot….”

    etc,etc, etc

    http://rationalwiki.org/wiki/Libertarianism

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  67. jcuk (713 comments) says:

    Tell me again, why should the general taxpayer subsidise me travelling to the South island for a holiday ?

    Because you as a responsible citizen know that holidays are good for health and productivity and are happy to subsidise all the other travellers when you are not. Putting your money were it does good in a holistic way and not penny pinching like the typical person … ‘he’s getting more than me’ type of irresponsible idiot.

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  68. tom hunter (5,086 comments) says:

    … by the way Americans keep AMTRAK going and it is a boon for tourism as well as providing transport for those who cannot drive or fly

    Oh christ, just when I thought it could not get any worse.

    Have a read of this 2012 NY Times article, which talks about how Amtrack has lost $834 million on it’s food services alone from 2002 to 2012 – even as it charges $9.50 for a burger.

    Amtrak has been trying to figure out how to break even on food since Congress required it to do so in 1981, and it’s never been able to.

    part of the problem with the food service is that supervision of the business is split between two different Amtrak departments and carried out in an uncoordinated manner. Neither has established goals to reduce costs.

    Only in government. Even juicier is that according to the US government auditors that $9.50 burger actually costs the taxpayer $16. Is it any surprise that the whole thing is losing money? Still, passenger numbers are increasing: the ever excitable Huffington Post informs us that Amtrak went from carrying 20.1 million riders in 1997 to 31.2 million in 2012. That’s almost 3% per year and if they can keep that up for the next 12 years they’ll be carrying 44.3 million riders each year.

    The only trouble is that in 2012 airlines carried 732 million people, and that’s going to expand to 1 billion per year by 2024!

    Still it could be worse: the US Postal service is going broke even though it has a legal monopoly on it’s core product!

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  69. stephieboy (3,399 comments) says:

    tom hunter, and your answer is to abolish the state and “privatize” every thing.

    Now what sect member are you, paleo, south park, paul bot… etc. ?

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  70. RRM (10,018 comments) says:

    Remember when an entrepreneur brought in a giant jet boat fast ferry to offer an alternative service, so the Interislander line hired one of their own, and undercut the guy on price by about $10 per fare, until he packed up and went home, and then the Interislander’s fast ferry immediately vanished without trace also?

    From memory Picton (residents who thought the ferries owed them a living had a hand in it too, whinging about the speed and wake of the ferries… odd since most of the coast of Tory channel appears to be solid rock, and you see precious few small boats in there anyway…)

    It was great while it lasted, the fast ferries were better appointed, cut over an hour off the trip, and were just generally a lovely way to arrive in the south island.

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  71. RRM (10,018 comments) says:

    But let’s not pretend malfunctioning machinery is a function solely of the public sector…

    …in about 2003-2004 when I was a JAFA, the car to have if you were anybody was a Volkswagen Passat, either the W8 engined one if you were a boss, or the 1.8T turbo one if you reported to the boss. Or the equivalent Audi A4.

    At one point around this time VW did a range-wide facelift, and all the new Golfs and Passats went to having huge, circular tail lights made out of LEDs. They were an extremely conspicuous design at the time, which made it even more conspicuous that a lot of these brand new high tech eurotrash cars were driving around Auckland with one tail light dead, direct from the showroom floor.

    As the driver of a British Leyland product built in the dark red 1970s by unionists of the worst kind, and wired by the prince of darkness Joseph Lucas & Company, I found this highly amusing :-)

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  72. Kea (13,359 comments) says:

    “and wired by the prince of darkness Joseph Lucas & Company”

    LOL :)

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  73. Psycho Milt (2,419 comments) says:

    Psycho, you keep piling on so many straw men it’s hard to keep up !

    What straw men? Every argument you and Tom Hunter have presented has been a variation on “the principle that individuals should receive only those services they are able and willing to pay for directly themselves,” as I wrote further up the thread. The majority don’t share your ideology, so trying to persuade them with arguments based on that ideology is pointless.

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  74. Psycho Milt (2,419 comments) says:

    A fine example is this one from Tom Hunter: businesses don’t take the environment into account “…for the very practical reason that people have not been able to actually put any value on it.” For the libertarian, what counts is who pays for what so putting a price on everything is important and what you can’t put a price on doesn’t count. For the non-libertarian, the fact that it’s blatantly obvious that rail freight is a lot less damaging to the environment and a lot less inconvenient for people using the roads is significant regardless of whether someone can put a price on it or not.

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  75. Dave Mann (1,251 comments) says:

    Keep plugging away Psycho…. I’m with you, even though we are probably on different sides of the political spectrum, lol. If you add up all your ‘dislikes’ on this thread they probably add up to more than my measly 23! In my view its sad to find so many people here who can’t acknowledge reality because their minds are closed by ideology.

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  76. tom hunter (5,086 comments) says:

    For the libertarian, what counts is who pays for what so putting a price on everything is important and what you can’t put a price on doesn’t count.

    For the non-libertarian, the fact that it’s blatantly obvious…

    We should encourage Kiwirail as a romantic place for tourists, since you can’t put a price on love either! Drawing conclusions that are “blatantly obvious” when there are no solid numbers on which to base that, is an art much loved in religious communities, and probably the mindset that sees Kiwirail in this position.

    The majority don’t share your ideology, so trying to persuade them with arguments based on that ideology is pointless.

    Fortunately, as I pointed out to you, I don’t have to persuade them with arguments based on that ideology. I can simply point to the continuous losses by Kiwirail and ask them how much more public money they want to waste compared to hip operations and such like. That’s an argument that’s going to win sooner or later.

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  77. Dave Mann (1,251 comments) says:

    Hey Tom, following your logic, there’s nothing wrong with MY hip, so why should I be forced to contribute to that useless Mrs Smith’s hips? Eh? Why? Go on…. answer THAT one mate! :D

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  78. Psycho Milt (2,419 comments) says:

    Mrs Smith probably doesn’t provide much of a return on the public investment in her hip replacement either, Dave – significant net loss to the taxpayer in all likelihood…

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  79. tom hunter (5,086 comments) says:

    So comparing apples to oranges is more logical than comparing apples to apples. Who knew?

    Still it’s good to know that poor old Mrs Smith’s hips are going to be sacrificed at some point so that some business can save money on rail freight – if you’re a crony capitalist.

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