KiwiRail will remain a state-owned enterprise (SOE) following a review of its entity form to see if any changes might be needed to support Government objectives.
Transport minister Michael Wood and state-owned enterprises minister David Clark released a joint statement confirming that the organisation will remain a SOE.
“As a state-owned enterprise, KiwiRail will be best placed to participate in several competitive markets, including freight both on-land and across Cook Strait,” Clark says.
“Since 2017, we have invested $8.6 billion to build a resilient and reliable network after decades of neglect and decline.
“Much of this is the bread and butter of our network replacing track, new culverts and bridges, upgraded turnouts, all of which are needed for a safe and effective network,” he says.
KiwiRail will also be expected to enable the Government’s vision for the rail system, as outlined in the New Zealand Rail Plan.
“Getting more people to use the rail network and more freight off the roads is a key part of the Government’s emissions reduction plan,” Wood says.
“Ministers are also considering the role of rail as part of the New Zealand freight and supply chain strategy, and how we can improve inter-regional passenger rail.
“KiwiRail’s operating environment has changed markedly following the Future of Rail review. The wider planning and funding framework has been re-worked, with below-rail funding now being provided through the National Land Transport Fund,” Wood adds.
The entity-form review started in 2020 led by the Ministry of Transport and the Treasury, in consultation with the Public Service Commission and KiwiRail.
It considered the extent to which the Government is seeking commercial-for-profit business outcomes from KiwiRail as opposed to non-commercial public benefit outcomes.
The review found that changes to entity form might be disruptive to the work programme already underway, and that benefits can be delivered effectively in the current entity form alongside continued improvements in reporting transparency and integrated oversight arrangements.
Ministers have also determined that New Zealand Railways Corporation (NZRC), which holds the rail land which KiwiRail leases, will remain a state-owned enterprise.
“Given the links between New Zealand Railways Corporation and KiwiRail’s activities, there are clear benefits in aligning their entity form and public reporting obligations,” Clark says.
KiwiRail chair David McLean says the organisation is pleased to continue its work as a SOE.
“State-owned enterprises are about successful business operations, being a good employer, and exhibiting a sense of social responsibility in the communities we serve …
“KiwiRail’s functions are important for New Zealand – and operating a successful business means we can stand on our own two feet and deliver for our customers,” he says.
“The Government’s commitments support this, with shareholder equity to procure new rolling stock, ferries and other commercial assets to improve our performance for customers and enable our commercial functions to grow and be self-sustaining.
“KiwiRail operates in competitive markets with other freight, ferry and tourism operators, and being a state-owned enterprise enables us to provide efficient services while extending our funding options through commercial financing,” McLean says.
