Kiwirail electrification contract awarded to overseas companies

A $371 million contract for the Papakura to Pukekohe rail electrification has apparently been awarded to overseas companies from China and South Africa. Apparently cost was the deciding factor.

Winston Peters, Minister for State Owned Enterprises:

“KiwiRail cannot be influenced by ministers in their tender process, and must follow government procurement rules, which at this time do not allow them to discriminate against foreign-owned companies.”

Obviously government procurement rules have to be followed, but this is a bit awkward for Peters who has promoted New Zealand business.

Neither Labour nor NZ First have done anything effective to change the rules.

And now the Government is currently trying to promote local business to aid recovery from the economic impact of Covid-19.

NZ Herald: NZ firms Fletchers and Downer ‘fuming’ as $371m Govt KiwiRail contract goes overseas

Construction companies Fletcher and Downer are reportedly “fuming” after a $371 million Government rail contract has been awarded to overseas companies – costing the Kiwi firms hundreds of local jobs.

Three sources within the companies have told the Herald on Sunday they were unsuccessful in their joint bid for the Papakura to Pukekohe rail electrification contract in South Auckland.

Construction companies Fletcher and Downer are reportedly “fuming” after a $371 million Government rail contract has been awarded to overseas companies – costing the Kiwi firms hundreds of local jobs.

Three sources within the companies have told the Herald on Sunday they were unsuccessful in their joint bid for the Papakura to Pukekohe rail electrification contract in South Auckland.

The source said the contract would have saved many of the 1000 local jobs slashed late last month in response to Covid-19 economic losses.

KiwiRail chief operating officer of capital projects David Gordon would not confirm the contract was already decided.

Gordon admitted price estimates were a factor in judging the applications.

Minister for State Owned Enterprises, Winston Peters, would not be drawn on the wisdom of the KiwiRail electrification contract going overseas, but pointed out the unsuccessful firms could still win another $315m Auckland rail project soon.

“KiwiRail cannot be influenced by ministers in their tender process, and must follow government procurement rules, which at this time do not allow them to discriminate against foreign-owned companies,” Peters said.

Newshub in 2017:  The comprehensive list of Winston Peters’ bottom lines

Mr Peters wants all Government carpet procurement to be sourced from New Zealand woollen carpet manufacturers. It also applies to all other Government procurements: buy NZ-made products first.

LIKELIHOOD: HIGH. This is an easy win for Mr Peters, with both Labour and National unlikely to fight him on this one. It could mean higher costs for Government departments though.


It’s also embarrassing for Labour who kicked up a big stink about KiwiRail contracts not being kept local when they were in opposition.

Labour leader Phil Goff in 2011: Labour policy to retain jobs

Kiwi jobs will not keep disappearing overseas if Labour gains power, party leader Phil Goff said in Dunedin last night.

Launching Labour’s procurement policy before Hillside Engineering rail workers and others, Mr Goff said government departments would be required to look at the wider economic benefits when tendering contracts.

Keeping work local contributed to the tax base, while building workers’ skills and creating job opportunities.

Local firms would miss out only where there was an overwhelming economic case for tenders to go off-shore.

Labour leader Andrew Little in 2015: Labour will use buying power to create jobs

Labour will use the government’s $40 billion in buying power to create jobs and back local businesses by requiring suppliers to make job creation in New Zealand a determining factor for contracts, Opposition Leader Andrew Little says.

“Labour will require Government organisations to design contracts so that companies focused on job creation have a fair chance of winning them, and then oblige them to report on the value of contracts they have awarded based on this criteria.

“It’s time to put Kiwi jobs and businesses first,” Andrew Little says.

Five years later it’s as important than ever that local business is supported. Awarding a rail contract to overseas companies may be a reality of economics, but if this was a National government it’s likely that Labour and Peters would have been making a noise about it,

The high price of travelling by train

For some time I have been wanting to travel on the Tranz Alpine rail journey from Christchurch to Greymouth, spend a day or two on the Coast, then return to Christchurch. I priced out a trip last night – and found that the return trip for two would be $480, plus accommodation in Greymouth, plus travel to and from Christchurch, plus a night or two accommodation in Christchurch. So the trip would cost $1000+ – I decided that was two much for a few days of holiday.

I recently flew from Dunedin to Auckland return, virtually one end of the country to the other, for about the same prices as across the South Island and back.

Coincidentally from Stuff: KiwiRail has priced Kiwis off its trains, yet taxpayers fork out to subsidise it

Our rail is subsidised by you, but most New Zealanders will never experience it because of the thankless and short-sighted management at KiwiRail.

​KiwiRail, the beneficiary of a $1billion bonus in the Wellbeing Budget, denies some everyday New Zealanders the opportunity to travel on its trains. The carriages of trains such as the Northern Explorer, Coastal Pacific and Tranz Alpine are packed mainly with two types of people: tourists and rich elderly folk.

on Saturday I, too, stood aboard one of the Great Journeys of New Zealand.

I got on at an almost deserted train station in Auckland, with a bag full of books, headed for Wellington. The 11-hour journey was beautiful, there’s no doubt about that. The tracks cut through sheep-filled paddocks, jump past waterfalls and curl their way up the 121-year-old Raurimu Spiral.

You can’t get on board the Northern Explorer or TranzAlpine for under $99. Tickets generally cost between $119 and $219. You can’t even get on the Coastal Pacific, between Picton and Christchurch, which is booked out almost every day.

KiwiRail’s pricing is obscene.

It’s a great journey, yes, but why does it cost so much? Most days you can fly Wellington to Auckland for $49 on Air New Zealand.

I’ve also thought of doing the Northern Explorer – fly to Auckland, take the train from Auckland to Wellington, then fly back to Dunedin. The train trip, about a quarter of that distance, is going to cost about the same as the air travel.

The local Taieri Gorge Railway trip costs ‘from $105’ per person – it’s much shorter, but at least that’s return. But I haven’t done that trip for a long time (I last did it over 15 years ago), and the price is a major factor.

In checking this out I see that there’s a special offer for locals (Dunedin residents), half price in June. It’s tempting at that price.

Dunedin to Waitati return, a nice scenic coastal trip but quite short, is ‘from $70’. Reasonable at half price.

Trains can take an almost endless number of people. Add on another carriage, hire a few more train guards and go. Unlike with planes or buses, increasing the price of tickets to equal demand cannot be justified with trains.

The only forseeable reason KiwiRail has decided to set its price so high is to remain exclusive. It’s expensive for the sake of it. The people at the state-run rail company have made a decision to price New Zealanders off our trains.

This isn’t just bad for travellers. It’s bad for regional New Zealand and the environment, too.

The Wellbeing Budget was meant to put New Zealanders at the heart of spending. From what I can see, it has given KiwiRail the green light to keep running a business that does not serve everyday Kiwis.

An affordable railway system could reduce our carbon emissions. It could encourage people to live in places like Taumarunui and other towns Air New Zealand can’t service. Instead, KiwiRail has decided to forget about the hand that feeds it. It has abandoned towns and priced out most Kiwis, yet we just gave them a $1b bonus.

I’m more likely to drive around for South island trips, and fly north, because the pricing is far from tempting.

The Nation: Simon Bridges

Lisa Own will interview Minister of Transport Simon Bridges on The Nation this morning “about Auckland’s traffic woes and whether the right projects are being funded”.

It’s likely this subject will also come up:  Rail proposal that Minister’s office tried to block released

Kiwirail has publicly released the proposal for a new Auckland railway line which the Transport Minister Simon Bridges wanted to be kept secret.

New Zealand First released a series of emails last week showing Mr Bridges’ office had urged Kiwirail not to release the business case for the rail line, saying the prospect made it “extremely uncomfortable”.

The emails showed Kiwirail had planned to release the document in full, but many parts of the business case released today have now been redacted – including its benefit to cost ratio.

Following the release of the emails between Minister Bridges’ office and Kiwirail, Chief Ombudsman Peter Boshier wrote to Prime Minister Bill English seeking an assurance ministers were not flouting the law when dealing with requests for official information.

NZ First leader Winston Peters has now requested the Chief Ombudsman to formally investigate the matter.

Mr Bridges said he was not aware of the business case or what his officials were doing, but he argued they had every right to be contesting the release of the information.

He said parts of the Third Main business case were “materially wrong”.

Delays, manipulation and flaunting  of the Official Information Act by Ministers is a growing issue, and helps reinforce perceptions of third term arrogance.

Also from RNZ: Ombudsman urges ministers to follow OIA rules

Chief Ombudsman Peter Boshier has written a letter to Prime Minister Bill English after the Transport Minister’s office tried to stop KiwiRail from releasing a report.

He said such incidents risked eroding public confidence in the government and democracy.

It can also erode support in a Government.

Simon Bridges became an MP when National came to power in 2008, beating Winston Peters in the Tauranga electorate, so has always been in government.He hasn’t experienced what it is like seeking information as an opposition MP.

He stood for deputy leadership of National after John Key stepped down and Bill English took over the party, but withdrew when it became clear Paula Bennett had the numbers.

It will be interesting to see how he comes across this morning.

Bridges says he feels confident about the Govt’s contribution to Auckland’s infrastructure.

Bridges says selling assets to fund infrastructure is a decision for Auckland Council to make.

“As we do more, of course we want to see the Council do more as well”

I don’t know whether it’s bridges or Auckland traffic but I can understand why most people are not interested in politics.

The interview finishes on the OIA – and Bridges waffles around “the substance of what we are talking about here”.

He claims that he and his office were entitled to their opinion and disagree with the business case that they were not allowing to be published, or something.

Good governments should always support as much transparency as possible, and they shouldn’t try to manage and manipulate official information.




Curran versus KiwiRail

Last week Clare Curran had a column in D Scene – Profits put ahead of safety at KiwiRail.

You can’t say you weren’t warned. A parliamentary inquiry into manufacturing this week heard there are no checks on the manufacturing standards of the wagons imported from China.

This week Jim Quinn from KiwiRail responded, claiming that Curran’s column “contains several factual errors”. Here are the points he addressed.

Curran: One of the most chilling revelations was that no quality checks are being taken on the standard of manufacture of the Chinese imported wagons. The inquiry, initiated by opposition parties, heard that welding on wagons and locomotives was substandard and no checks were undertaken to ensure they met our standards.

Quinn: Multiple levels of inspection were in place during construction and we have been very happy with the manufacturer’s response to any warranty issues.

Curran: I have since been told that a directive has been issued to KiwiRail staff that no-one is to stand on, or ride in the controversial IAB wagons. (That directive does not apply to New Zealand-built wagons).

Quinn: The no-ride instruction applied to this wagon is the same as applied to other similar flat-deck wagons – including the Hillside-built IAC class. It is due to the deck shape and the cut outs on it’s deck.

Curran: The wagons also have a speed restriction placed on them due to systemic flaws with their design and construction.

Quinn: The IAB wagons are being used successfully on our trains all over the network and there is no speed restriction on their operation. These wagons have  been instrumental in enabling us to meet increased customer demand for freight movements.

The cracking on the footstep is due to the design of the wagon, which is the same as for the locally built wagon – which also has a no-ride instruction. We are in the process of rectifying this design issue with the manufacturer.

This raises questions about either the integrity of the manufacuring inquiry, or the integrity of Jimm Quinn and KiwiRail. If anyone has anything to add to this your input is welcome.

Phil Twyford responds on Gisborne-Napier rail

It’s good that some MPs respond to requests for clarification as Phil Twyford has done here.

1.       We are pretty confident a comprehensive cost-benefit analysis would justify keeping the line open now, and likewise re-opening it. However if the costs of re-opening massively blow out between now and when we are elected then we would have to take another look at it.

2.       Under MMP all political promises have to be seen in light of the need to win majority support for them. You will know the Greens are also committed to re-opening the line.

3.       There are good indications local horticulture, and more importantly forestry, will deliver an increase in freight that may over time get volumes up to the break point identified  by BERL. Obviously the success of the line depends on local businesses stepping up.

4.       This debate is to some extent about what you mean by ‘unprofitable’. Kiwirail applies a narrow financial sense of profitablility to justifiy mothballing the line. If you applied this logic to the country’s roads you would have to close half of them. Labour believes a comprehensive cost-benefit analysis is more sensible. With this kind of infrastructure decision you need to be extremely cautious about destroying a sunk asset and closing off future options.


Phil Twyford
Member of Parliament for Te Atatu

Labour Party Spokesperson on Transport, Auckland Issues, Associate Environment Spokesperson

My comments on this:

  1. Sounds reasonable. That in effect makes the pledge to reopen the line a pledge to seriously look at reopening the line and do so if cost-benefits stack up.
  2. That’s a practical view on how policy pledges work – nothing is guaranteed until coalition agreements have been negotiated, and sometimes individual policy support is subsequently negotiated.
  3. Quadrupling freight volumes is a huge hurdle, especially if reliant on “local businesses stepping up”.
  4. I think this needs a lot more discussion. Labour have also talked about taking account of wider costs including social costs in relation to the closure of Hillside Workshops. Changing the current business-like models for SOEs like Kiwirail would be a major shift for Government, and their would be significant issues to resolve, for example how to prevent ad hoc political interference in the running of SOEs, or whether ministers can have any say on the operation of SOEs.

Typical ‘Eddie’, appalling Standard

‘Eddie’ is a Labour Party SpokesPseudonym at The Standard well known for promoting distorted and false information to smear. Today’s post is typical:

Nats back to censoring the press

The Government has injuncted* RNZ from running a story based on a leaked Kiwirail document that shows National’s under-investment in Kiwirail will make the tracks more dangerous and less useable at a time when it is firing 200 maintenance staff.

It’s really reached that point now, where the Nats think they have the right to censor coverage that they don’t agree with.

Key set the standard (assisted by the craven Police) by having media outlets raided during an election campaign to chill them into not running the details of what he said to a political ally in a public cafe in front of the nation’s media.

Now, ministers obviously think its open season – they can bully, threaten, and take court action against any media outlet that is preparing to “publish an opinion …. in a most irresponsible way”.

That’s Mallard-like brazen bullshit.

A commenter takes ‘Eddie’ to task:


Funny, Radio NZ National makes no mention of the Government placing an injunction on them over this story. It has stated that KiwiRail has placed one on them though.

[kiwirail is part of the government. The ministers will have been informed under no surprises. Brownlee endorsed the action. Eddie]

Accusations presented as fact with absolutely no evidence – a typical ‘Eddie’ post.

This black ops campaign does Labour’s image no favours.

And it’s the height of hypocrisy for ‘Eddie’ to accuse of censorship, ‘Eddie’ famously tried to censor me for question previous smearing misinformation:

Dunne isn’t angry, but…

“Eddie” digs dirt deeper

Twyford and Curran on Kiwirail

KiwiRail obtained a High Court interim injunction preventing media organisations from publishing the contents of a leaked internal report. Another High Court hearing in Wellington upheld the interim injunction, but said media could “reasonably and fairly” report discussion in Parliament yesterday about the business plan.

This is what Twyford and Curran said in parliament:

1. KiwiRail—Confidence in Board

[Sitting date: 23 August 2012. Volume:683;Page:1. Text is subject to correction.]

1. PHIL TWYFORD (Labour—Te Atatū) to the Minister for State Owned Enterprises: Does he have confidence in the board of KiwiRail?

Hon GERRY BROWNLEE (Minister for Canterbury Earthquake Recovery) on behalf of the Minister for State Owned Enterprises: Yes.

Phil Twyford: Has the board of KiwiRail advised him that from 2014 onwards the rail asset will decline and disruption risk will grow, that when spending gets back to current levels it will take many years to pull back from the decline, that virtually all rail routes will run down in some way, and that by 2015 KiwiRail will be doing 50 percent less track renewal work; if so, how can he still have confidence in the board?

Hon GERRY BROWNLEE: I do not know where the member got those statistics from. What I would urge him to do is to identify where he got them from and whom he got them from. What I suspect is that this is an internal document in which KiwiRail has scoped risks to its network and made it clear that it needed to make investment in its network. So, if I might say, rather than those things happening, we expect over the next few years $750 million to be invested in upgrading the network, and that will include up to $80 million a year in maintenance. That is quite a different picture to the one the member is trying to paint.

Phil Twyford: Has the board of KiwiRail advised him that the amount to be spent on timber bridges will be cut substantially, projects on the main trunk line will be cancelled or deferred, the overall condition of railway sleepers will decline, and KiwiRail will have to accept a higher level of unplanned disruptions such as slips and erosion?

Hon GERRY BROWNLEE: Well, once again, the member is trying to speak as if he has some document that he can authoritatively quote from without giving any context of it. My answer is no, it has not advised me of that.

Phil Twyford: Has the board of KiwiRail advised him that the coal routes between Lyttelton and the West Coast and the route known as the golden triangle of forestry, which runs between Hamilton, Murupara, and Kawerau, have been coded by KiwiRail as TM4, which means their track metrics are unacceptable and pose a safety risk and are prejudicial to the customer base; if so, how can he still have confidence in the board?

Hon GERRY BROWNLEE: I assume that the member is indicating that KiwiRail has itself identified a number of risks to the network that will require investment. I can confirm that in 2012 the capital investment is $216 million, in 2013 it will be $163 million, in 2014 it will be $133 million, in 2015 it will be $174 million, and in 2016 it will be $175 million. In 2005, when his Government bought the thing, it spent $53 million.

Mr SPEAKER: Order! The supplementary question contained two questions. The first one was whether the Minister had been advised and the second one was, if so, how he still has confidence in KiwiRail. It would be helpful if either of those questions were answered and if the Minister could indicate to the House whether he had been advised of these matters. It would appear from his answer he had not, but it would be helpful to know, or whether he still has confidence in the board, because those were the two questions asked. I call the Hon Gerry Brownlee—because the Minister did not answer—

Hon GERRY BROWNLEE: I was unaware that you were asking questions, Mr Speaker, but the answer simply is that I have confidence in the board of KiwiRail because it identifies risks to the network and then comes along with a capital programme that would be needed to mitigate those risks. That is a good thing.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I thought one of the rules, when electronic devices were allowed in here, was that answers from Ministers were not to be supplied by way of that, the way they were through Mr Joyce’s device then.

Mr SPEAKER: Order! That is not a point of order. How members use their electronic devices, so long as they do not interfere in the proceedings of the House, is up to them.

Andrew Williams: Given the numerous instances of rail track defects and neglect, will he immediately review the KiwiRail Turnaround Plan and direct the KiwiRail board to stop the planned redundancies of around 200 maintenance staff; if not, why not?

Hon GERRY BROWNLEE: Well, one of the ways in which you can measure the quality and condition of a rail track is by looking at the incidence of derailment. Derailment may be just one wheel or it may be a whole train. In New Zealand seldom is it a whole train. But what I can report to the House is that the incidence of derailment in the last couple of years has fallen dramatically—fallen dramatically—because track maintenance has been a priority for KiwiRail since it took over the very distressed asset paid for at a record amount. In fact, it was paid for at what you would say is a bonanza price for the then owners by the New Zealand First – Labour Government.

Clare Curran: Does he agree with the statement—

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. You will be aware that there was never any New Zealand First – Labour Government, so why was he allowed to say so?

Mr SPEAKER: I really think that if the Speaker was to interfere in every one of those little comments, it would be too much interference. I think the matter should be allowed to pass.

Clare Curran: Does he agree with the statement of the Associate Minister of Transport, Simon Bridges, on 14 August that “The Turnaround Plan that KiwiRail is instituting is about business sustainability and putting precious funds to their best possible uses, but in no way, shape, or form is this compromising safety.”; if so, has he been informed by the KiwiRail board of an engineer losing his sight from flying shards when tightening a nut while repairing one of the faulty China North Rail locomotives?

Hon GERRY BROWNLEE: Yes, I do agree with the comments made by the Hon Simon Bridges.

Clare Curran: I seek leave to table an email informing me of this incident where the engineer lost his sight.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection.

  • Document, by leave, laid on the Table of the House.

Clare Curran: Has he been informed by the chair of the board of KiwiRail of the appointment of Leon Bennett, the former private secretary for Wayne Mapp, who is not a chartered professional engineer, to the most senior mechanical engineering position in KiwiRail; if so, what action did he take when he was informed?

Hon GERRY BROWNLEE: No. That is an operational matter, and Ministers do not interfere in those operational matters.

Phil Twyford: Will he ask the chair of the board to tell KiwiRail management to call off the cuts to network maintenance because of the risk they pose to the organisation?

Hon GERRY BROWNLEE: Once again, the member is presuming to speak from an authoritative document that he has not named and that he has not tabled, and that therefore has, I think, very little authority. What I can say is that the chairman of KiwiRail has been overseeing a Turnaround Plan that will see KiwiRail invest $750 million over the next few years in the network. That is a good thing.

Phil Twyford: I raise a point of order, Mr Speaker. The question was direct and quite simple, and I do not believe that the Minister even addressed the question.

Mr SPEAKER: I will allow the member to repeat his question, because when I repeated the question for the member last time, I was accused of asking questions on behalf of members. So the member may repeat his question.

Phil Twyford: Your assistance is always appreciated. Will he ask the chair of the board to tell KiwiRail management to call off the cuts to network maintenance because of the risk they pose to the organisation?

Hon GERRY BROWNLEE: Well, I do not accept the hypothetical behind the question.

Phil Twyford: Will he acknowledge not only that KiwiRail cannot meet the financial targets of the Turnaround Plan, as the Minister did in this House last week, but also that the Turnaround Plan is unrealistic and is driving KiwiRail to make decisions like sacking 181 workers and deferring $200 million of network maintenance?

Hon GERRY BROWNLEE: Once again, a supposition is put to the House as if it is authoritative. It is not. What I can say is that KiwiRail is doing its very best to effect the Turnaround Plan. It will put $750 million into the network in the next few years. That will make the operation safer. All the member is doing is pointing out to the whole world what a huge dog this thing was when his Government bought it.

Mr SPEAKER: Supplementary question, Phil Twyford—[Interruption] Order! I want to hear Phil Twyford’s supplementary question. [Interruption] Order! That is sufficient. I want to hear Phil Twyford’s supplementary question.

Phil Twyford: Is he satisfied that the board of KiwiRail acted appropriately in trying to cover up information on the cuts to network maintenance by taking out an injunction against the news media publishing the contents of this report?

Hon GERRY BROWNLEE: Yes, absolutely, because the media outlet that wanted to publish an opinion about that document was going to do so in a most irresponsible way.

Hon Trevor Mallard: I seek leave to table the infrastructure and engineering business plan 2013-15 of KiwiRail.

Mr SPEAKER: Leave is sought to table that document. Is there any objection?

Hon GERRY BROWNLEE: I raise a point of order, Mr Speaker.

Mr SPEAKER: The member can object.

Hon GERRY BROWNLEE: Well, Mr Speaker, you cannot ask the House to grant leave to circumvent a court injunction.

Mr SPEAKER: I beg your pardon—I beg your pardon. Let me seek advice on this.

Hon Trevor Mallard: Just to make it absolutely clear, my understanding is that there is not a general injunction against the publication of this document. It applies to only one radio station. It does not apply to me and it does not apply to the House.

Mr SPEAKER: The interesting point that is being made was the last point—that such an injunction probably does not apply to this House. But members, in deciding whether or not they will grant leave for the document to be tabled, may well bear in mind the issue that there are injunctions around the document, or court orders around the document. That is a matter that members may well consider in deciding whether or not to grant leave for it to be tabled. But it is my feeling that it would be inappropriate for me to refuse the House the opportunity to decide whether or not it wishes to grant leave for the document. So I will put it to the House. Leave is sought to table that document. Is there any objection? There is objection.

Hon Trevor Mallard: In light of the invitation of the Leader of the House, the acting Minister of State Owned Enterprises, to provide documentation that backed up my colleague’s questions, I seek leave to table the executive summary and outcomes section of the infrastructure and engineering business plan.

Mr SPEAKER: Leave is sought to table just the executive summary and outcomes from the report as a document. Is there any objection to that course of action? There is objection. [Interruption] Order! Any member of the House has the right to refuse leave for a document to be tabled.

InTheHouse video: 23.8.12 – Question 1: Phil Twyford to the Minister for State Owned Enterprises

Related: Curran on Kiwirail report