KiwiRail decision ‘opens up’ opportunities

UPDATED

### ODT Online Thu, 13 May 2010
Quinn dashes Hillside’s hopes
By Mark Price
Any lingering hopes KiwiRail’s Hillside workshops might get the chance to build trains for Auckland have been dashed. KiwiRail chief executive Jim Quinn met staff in Dunedin yesterday to break the news the workshop would not be bidding for the contract to build 38 three-car, electric multiple units (EMUs) and 13 electric locomotives as part of Auckland’s $500 million urban rail development. That decision had left rail workers “gutted”, according to Rail and Maritime Trade Union general secretary Wayne Butson.

KiwiRail was “actively” trying to find work for the workshops from “any source we can get” and was “keen to present Dunedin’s engineering capability to the wider world”.

Read more

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### ODT Online Thu, 13 May 2010
Opinion: On right track for trains
By Steven Joyce
Phil Goff’s emotional approach to KiwiRail does not change the facts – the Crown owns a struggling business and needs to make some tough calls, on behalf of the public, to turn KiwiRail around, writes Steven Joyce.

It is all very well for Phil Goff to make an emotional argument for Auckland’s new trains to be built at Dunedin’s Hillside workshop but this is precisely the kind of “do it at any cost” mindset that got us into the difficult position we now find ourselves in with regard to KiwiRail and the Government’s books more generally.
Read more

Post by Elizabeth Kerr

99 Comments

Filed under Construction, Design, Economics, Geography, People, Politics, Project management

99 responses to “KiwiRail decision ‘opens up’ opportunities

  1. Elizabeth

    ### ch9.co.nz May 13, 2010 – 6:56pm
    Rail and Maritime Trade Union members furious
    Members of the Rail and Maritime Trade Union as well as the Labour Party’s member for Dunedin South are furious over the recent decision by KiwiRail not to bid for work to build trains for the Auckland Rail network. The decision is being labelled as a kick in the gut’s for the local engineering industry, and Union leaders are calling for the people of Dunedin to raise their voices.
    Video

    • Elizabeth

      ### ODT Online Fri, 14 May 2010
      Protest rally planned
      By Mark Price
      Members of the Rail and Maritime Transport Union at KiwiRail’s Hillside workshops are planning a rally through Dunedin’s George St at 11am on June 8 in protest at not being able to tender to build electric trains for Auckland.
      Read more

      • Elizabeth

        ### ch9.co.nz June 8, 2010 – 6:35pm
        Rail and Maritime Union call for a proactive approach from Kiwirail
        Members and supporters of the Rail and Maritime Union today marched down George Street calling for a more proactive approach from KiwRail to secure manufacturing contracts for New Zealand workers. The Union’s President, as well as a local MP, believe that jobs will be lost if contracts are given to places such as China, where labour costs are far lower than in New Zealand.
        Video

        • Elizabeth

          @OtagoChamber Speeches from the Hillside Engineering gathering in the Octagon, Dunedin, yesterday http://ow.ly/1VY8k

        • Elizabeth

          ### ODT Online Sat, 28 Aug 2010
          Big opportunity to ‘sell’ Hillside
          By John Lewis
          Three of the four shortlisted tenderers for construction work on the $500 million tender for Auckland’s trains have signalled they may visit Dunedin within the next month to investigate the city’s engineering capabilities. It is hoped the visits will lead to Dunedin industry getting some subcontracted work for the build.

          KiwiRail was expected to release its Request for Tender – a list of specifications for the train build – within the next week.

          Read more

        • Elizabeth

          ### ODT Online Sat, 26 Jun 201
          KiwiRail bid group widens scope
          By John Lewis
          A group of Government, Dunedin City Council and Dunedin business representatives, established to win some of the construction work on the $500 million tender for Auckland’s trains, has widened its scope to encompass all of Dunedin’s engineering firms.
          Read more

  2. Elizabeth

    ### ODT Online Thu, 20 May 2010
    Opinion: A dispassionate look at decision on trains
    By Harry Love
    “Economic man” may be rational, but this doesn’t always make him right, argues Harry Love.
    It is an unfortunate but persistent truth that economic man, that quintessence of rational thought and action (or inaction), invariably assumes that any argument opposing his own must be emotional, and therefore flawed.
    Thus Stephen Joyce, in his attempt to refute the arguments of Phil Goff and others for the building of new trains at the Hillside workshops (ODT 13.5.10).
    Let us, then, without emotion, look at his argument for traces of passion or prejudice which might contaminate the purity of his logic.
    Read more

    -Harry Love lives in Dunedin.

  3. wirehunt

    If they don’t start doing some of this work in New Zealand soon they won’t be able to afford to do it as everyone will be on the dole.

    Hell, if our own government won’t do kiwi made why should any other companies do it?? Take it offshorem, boys, it’s cheaper and it’s not like they need jobs in NZ anyway…..

  4. Elizabeth

    Tweet:

    @10PARK BUGGER >>> Chinese firm beats Hillside to KiwiRail contract http://bit.ly/fgiiKF #Dunedin

  5. Yet another reason why this govt with its ideological head up its arse needs to be put against the wall.

  6. Phil

    Oh, it’s in line with the current policy of staring no further than 6 inches in front of its nose.

    • Elizabeth

      ### ODT Online Wed, 15 Dec 2010
      Fears for future of Hillside
      By Stu Oldham
      Kiwirail has awarded an estimated $29 million manufacturing contract to a Chinese company in what has been derided as a potentially terminal blow to its Dunedin workshop.

      “If we can’t build wagons at a manufacturing workshop, then what is the point of us being in existence. It’s gut wrenching.”
      -Jim Kelly, Hillside-based Rail and Maritime Transport Union national president

      Read more

      • Elizabeth

        ### ch9.co.nz December 15, 2010 – 8:16pm
        KiwiRail CEO will not guarantee Hillside future
        Yesterday, the news broke that the tender to build 300 flat-deck carriages was going to China’s CNR Corporation, and not to Dunedin’s Hillside. Speaking from Wellington, KiwiRail CEO Jim Quinn wouldn’t guarantee Hillside’s future beyond ten years.
        Video

        • Elizabeth

          ### ODT Online Thu, 16 Dec 2010
          Editorial: Derailed
          The decision by KiwiRail to award the tender contract for 300 container flat-deck wagons to the China CNR Corporation against its own Dunedin Hillside Engineering workshops is a savage blow to the city and the province and leaves the Government vulnerable to accusations of “short-termism”.
          Read more

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          ### ODT Online Thu, 16 Dec 2010
          Unions back Hillside
          By Stu Oldham
          Engineering businesses warn any hit to KiwiRail’s Hillside Engineering workshops will hurt Otago’s economy as unions vow to stand alongside workers worried about their future.
          Read more

          ****

          ### ODT Online Thu, 16 Dec 2010
          Social networks could play part
          By Dene Mackenzie
          Social networks Twitter and Facebook could play a part in pushing the case for the Hillside Engineering Group Dunedin workshops to build flat-deck wagons for its owner KiwiRail.
          Read more

        • Elizabeth

          ### ODT Online Fri, 17 Dec 2010
          Govt defends Hillside decision
          By Stu Oldham
          The Government has already committed $750 million to help KiwiRail and it would be hard to argue it should follow that up with a subsidy to build its wagons, Transport Minister Steven Joyce says. It would also be hard to ask KiwiRail to give preference to local tenders because of the effect intervention might have on free trade agreements, Mr Joyce said yesterday.
          Read more

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          ### ODT Online Fri, 17 Dec 2010
          Hillside doubt Chinese ability
          By Stu Oldham
          Hillside Engineering workers do not believe the Chinese company contracted to build KiwiRail’s new wagons will get the job done on time, Rail and Maritime Transport Union national president Jim Kelly says.
          Read more

        • Elizabeth

          ### ODT Online Sat, 18 Dec 2010
          Hillside – a tale of changing fortune
          By Dene Mackenzie
          Six years ago, it seemed nothing could stop the rise and rise of the Hillside Engineering Group workshops. Now, it seems that once again the workshops are fighting for their lives. Hillside Engineering Group is no stranger to uncertainty and fear for the future, having battled several downturns and survived – just. Now the situation has come full circle for Hillside as fears for its very survival again arise.
          Read more

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          ### ODT Online Sat, 18 Dec 2010
          Bright future was seen for workshops
          By Dene Mackenzie
          In 2004, great things were being talked about for the Hillside Group Engineering workshops, in Dunedin. The group had survived a major downturn in 2000, when there were fewer than 160 workers employed on site.
          Read more

  7. Now while I’m disappointed in this, it is worth pointing out that China is becoming a train super-power. Their high speed train network is already 5 times bigger than France’s TGV network, and they are soon to have over half the world’s high speed trains. They started off buying trains and technology from established high speed train builders (Kawasaki, Alstom, Siemens, Bombardier), the companies that make bullet trains, TGVs, Germany’s ICE etc. However, China is now building hundreds to their own design. Their economy of scale is no longer just giving price advantage, but superior technological developments as well.

  8. Elizabeth

    With great sadness…

    Up to 70 positions could be affected in the “right sizing” process.

    ### ODT Online Thu, 9 Jun 2011
    40 jobs to go at Hillside
    KiwiRail will axe 40 jobs at its Hillside workshops in Dunedin as it makes changes that will see it switch from building rail units to maintaining its foreign-built locomotives and wagons. The railworkers’ union has blamed the job losses on the Government and KiwiRail buying Chinese-built locomotives, rather than having them built here.
    Read more

    DUNEDIN, what are we going to do for the Hillside workers !!!!!!

  9. Russell Garbutt

    Appalling news regarding Hillside, but probably foreseeable and caused completely by those that cannot determine the difference between value and cost.

    It appears that Hillside could deliver the goods to the required standard, but not below the cost of the Chinese imports and not to the required timescale. The timescale seems to me to be one of preference and it doesn’t appear to be absolutely essential to meet this deadline. We might like them delivered by whenever, but the end of the earth will not happen if it’s a little later.

    But it is the cost of delivery which is the most stupid. Kiwirail simply sees the size of the cheque as being the only real determinate when assessing costs. It has no responsibility for welfare payments, loss of income to communities, effects on individuals and families, on-going potential for work in heavy manufacture etc etc. The doctrine that drives this is flawed and until the real costs of using cheap imported goods from China and other countries is properly determined and factored into the assessment of tender projects, then more of this sort of stuff will happen.

    All politicians from all parties seem as guilty as each other in this.

  10. Peter

    I’m all for Fair Trade and giving developing countries a helping hand, but China is not one of those countries.China is soon to overtake the USA as the world’s leading economy.
    This is more a case of Fair Trade in reverse. We are slowly impoverishing ourselves as a very small, distant and vulnerable economy setting ourselves up to the mercy of other stronger economies. If the likes of Jim Quin, National and Labour think this kind of economic system is the way of the future, they are not the kind of people we want to protect the economic livelihoods of ordinary New Zealanders.

    • Elizabeth

      Today’s ODT Online on Hillside:

      Hillside’s ‘kick in the guts’

      The decision to cut Hillside’s workforce to 132 employees brings the tally near the engineering outfit’s historic low of 113 workers during the early 1990s.

      Wane Butson, Rail and Maritime Transport Union (RMTU) – “We’re talking about 70 high-skilled and scarce jobs, which the rail industry can’t afford to lose.”

      Job cuts ‘the beginning of the end’

      Joyce cops blame for KiwiRail cuts

      Green Party co-leader Metiria Turei said Mr Joyce had to accept the blame for the job losses, and that building rail carriages for Auckland public transport in New Zealand seemed like a “no-brainer”…”Yet despite all the evidence setting out the economic benefits and social advantages of building these trains here at home, KiwiRail has shortlisted firms from South Korea and Spain to do the job,” she said. “Instead of creating jobs in Dunedin and Lower Hutt, KiwiRail is creating jobs in Seoul and Madrid with the full backing of Mr Joyce.”

      Editorial: A rail demolition job?

      KiwiRail, under this Government, has clearly decided to get out of the business of manufacturing engineering. Yesterday’s announcement, in addition to the proposal to shed the 41 jobs, revealed longer-term directions: “Currently this business is structured to support the ‘retain and refurbish’ needs of our existing, aged rolling stock fleet,” it said. “It now has to deliver a service more focused on preventative maintenance and repair that is delivered closer to where the rolling stock is being used” – an ominous signal that this round of redundancies is unlikely to be the last of such exercises – foreshadowing Hillside’s painful slide into manufacturing irrelevance.

      This Government appears to have washed its hands of Hillside, and many will see in this an expedient Pontius Pilate moment. The workshop is one of Dunedin’s more significant employers. This redundancy proposal smacks of politically-loaded short-termism. And if it is not that, it is even worse: the likely destruction of a once-proud and still potentially vibrant industry.

      • Elizabeth

        Tweet:

        @NZPlanning Sending work overseas has ‘long term cost’:   Dunedin mayor Dave Cull says if the Government wants to lift emplo… http://bit.ly/jS2Bw9

        Dunedin mayor Dave Cull says the Government has told KiwiRail to take the lowest price for the manufacture of wagons, but he says they could be made for not much more in Dunedin.

  11. Calvin Oaten

    This all just goes to show how bankrupt government philosophy is. Roger Douglas promoted the concept of removing the state from providing all services, on the basis that private industry can do it best. Picked up by Ruth Richardson and the devastation can be seen to this day. We see it perpetuated in this government’s determination to sell off remaining assets and studying only the bottom line. that is the only reason why the Hillside debacle has arisen. China can supply the goods cheaper up front. How? Ability to source raw materials cheaper and a much lower labour cost. Result: Kiwi Rail gets a cheaper deal up front while the country gets to pick up the tab by way of welfare costs, (redundancies) family stresses, community economic effects (loss of purchasing power). Asset sales result in loss of control of strategic services resulting in price increases to the consumer, export of vast amounts of capital overseas (profit dividends to new owners off shore ) and under investment in plant and technology. We saw it in the rail system prior to NZ buying it back, we see it in Telecom as we speak. We see it in our power prices, (remember Max Bradford promising an immediate drop in costs of at least 10%). It looks awfully like the current government is of the same mind. BEWARE!

  12. Calvin Oaten

    So why isn’t Dave Cull up in Wgtn banging on the government’s table, lobbying on our behalf? Sooner mutter ‘rhubarb rhubarb rhubarb’ over a closed road. We certainly got what we deserved when we voted that lot in.

  13. Peter

    It’s about time we heard more about promoting economic nationalism and self sufficiency in this country than to bend to the dictates of the so called free market with its promises of greater wealth that clearly have come to nothing much for most people. Are we really better off economically since the ‘reforms’ of the 1980s? More job insecurity, higher private and public debt, greater inequality between the rich and the poor, consumer based growth in the economy compared to real valued added growth.

    • Elizabeth

      ODT Online – more on Hillside today:

      Hillside cuts would hurt industry in Dunedin

      Proposed job cuts at Hillside Workshops, in the wake of KiwiRail’s decision to reduce its mechanical business operations in Dunedin, would hurt the city’s engineering industry. Several large subcontractors supplying goods and engineering services to Hillside in South Dunedin said yesterday the proposed job cuts could affect their businesses.

      Union may refuse to unload wagons

      Chinese-built railway wagons destined for New Zealand could be left stranded port-side as unions consider a protest against KiwiRail’s decision to cut 70 industry jobs. Maritime Union of New Zealand national president Phil Adams, of Dunedin, said the union was still considering industrial action over KiwiRail’s plans to reduce its engineering and design operations.

      Rail magnate’s view ‘illogical’

      An American rail magnate keen to invest in New Zealand’s rail network says KiwiRail’s decision to spend $500 million on Chinese-built locomotives could have lasting implications for the industry’s economy and skill base. “It’s a big decision given the socioeconomic impact on your own workforce. There are skill sets that once they are lost are hard to get back,” B. Allen Brown, founder and chief executive of multinational Michigan-based Railmark Holdings Ltd, said.

      • Elizabeth

        ### ODT Online Tue, 14 Jun 2011
        Hillside employees to launch campaign
        By Matthew Haggart
        Hillside Workshop employees will launch a publicity campaign alongside the Rail and Maritime Transport Union to garner support for a bid to try to overturn a KiwiRail decision to cut 40 jobs at the South Dunedin engineering “institution”. Hillside-employed RMTU national president Jim Kelly said workers will take part in a stopwork meeting this week to plan their campaign, which is expected to include a petition and a protest rally through Dunedin streets. Hillside’s union delegates are scheduled to meet their KiwiRail bosses this week as negotiations begin about the proposed 40 jobs, which will be cut from the engineering outfit’s roster of 172 employees.
        Read more

        • Elizabeth

          With respect to the issue of the moment, there is a growing level of dissent among city residents as they watch with disappointment the refusal by Transport Minister Steven Joyce to offer assistance to KiwiRail’s Hillside Workshops as it faces the redundancies of nearly one-quarter of its workforce.

          ### ODT Online Mon, 20 Jun 2011
          Editorial: Movies and casinos, but not rail?
          It is puzzling that this Government can break the rules – or at least create new ones – to allow films to be made in Wellington, or facilitate the growth of gambling in Auckland, yet it will not lift a finger to protect jobs and safeguard the future of an important national engineering industry in Dunedin.
          Read more

          ****

          ### ODT Online Mon, 20 Jun 2011
          Price trumps value in the dodgy world of economics
          Jim Childerstone has trouble with the maths and the logic of the proposed Hillside lay-offs. A virtual hornets’ nest has been disturbed in Dunedin with the potential loss of jobs due to Chinese and other Asian workers’ being paid peanuts compared with our own workforce. Dunedin’s Hillside KiwiRail workshops are about to fire 40-odd factory hands qualified in the art of building rail rolling stock, carriages and locomotives. Many have years of experience, and yet the country is bereft of workers with such practical engineering skills.
          Read more

          • Jim Childerstone is a local writer and commentator.

  14. Peter

    Great idea of the Maritime Union to leave the Chinese built wagons stranded on the wharves. These guys need to fight back hard and not be sucked into mealy- mouthed assurances of ‘future work’ ‘elsewhere’. No buying into the ‘regrettable’ kind of talk.

    • Elizabeth

      So long as we continue to get our exports out through ports, don’t care what action the Union takes against the government in light of the KiwiRail fiasco.

  15. David

    There comes a point where paying extra to keep something made locally, is just not feasible.

    If reports are correct, and the Chinese contract is 25% or $125 million cheaper, then that means the taypayer would be throwing away nearly $2 million per worker to keep the work here.

    The opportunity costs of that money are enormous – instead of saving just 70 jobs, we could create 2000 new ones.

  16. Calvin Oaten

    David, ‘Rogernomics’ writ large. How do you create 2,000 new jobs without first a job description?
    I believe a country (society) exists within an economy which does – or should – facilitate the orderly exchange of goods and services within that society. It can add to the value of that economy by producing goods and services which are to the advantage of that society. It can also, by exporting goods and services grow its economy by receipt of payment for those goods and services. Manufactured goods, primary produce, tourism etc facilitate those actions. We reduce the economy by exporting money in return for goods and services imported, such as material substitution imports, the repatriation of land, profits, jobs and dividends to overseas company owners and shareholders.
    To minimise the latter any society has an obligation to protect its citizens’ welfare and activities by encouraging full utilisation of all possible resources. Exporting jobs to China and thus facing the social possibilities of supporting or losing the displaced workers makes no sense at all to any but the most ardent ‘free marketeers’. The ownership of our strategic energy, transport, food production, education, health services, in fact all possible facilities would make for a richer, sounder, occupied society.
    The short term gain of selling assets for a one shot cash injection has been proved a fallacy since 1984. Where are the benefits, other than to the exploiters, both here and offshore? Our society gained nothing except a lowering of living standards. The Hillside affair is just an example of the shortsighted view of our so called intelligentsia. The government of the day shows an intellectual deficit here which can only bode ill for this country. Surely, the first call is for support of our own society, particularly in the face of the tyranny of a low wage nation which can only result in our society being lowered to their level. Why must we suffer this? Is it as a sacrifice to the “Free Market”? If so, just 4 million people in the South Pacific are likely not to fare well.

  17. David

    Calvin – your theory is good. Even if the contract cost a few thousands more per job saved, it would probably be worth it.

    But the idea of throwing nearly $2 million of hard earned taxpayer dollars away to save EACH job is absolutely crazy.

    Spending so much money to save so few jobs does not make our country stronger – it makes it weaker and will cost many more jobs than it will ever save.

  18. Calvin Oaten

    David – actually, we would not be ‘throwing nearly $2million of hard earned taxpayer dollars’ away. Rather, saving the interest on the whole monetary cost of the labour portion of the contract exported. Then again there is the cost over time of the loss of those workers’ income from the internal economy, i.e. local retail, food etc. A figure never quantified by the proponents of the immediate bottom line. It is a ‘one shot’ exercise, to hell with the ramifications. That is one of the problems of “bottom line accounting”. We are talking about a nation’s welfare here, not just what the ‘abacus’ says.
    I disagree that it would make the country weaker. What will make it weaker is the philosophy behind the whole argument. I think Roger Douglas has proved that conclusively. Dr Brash is now propounding the whole “mantra” again. He says we must do these things to catch up with Australia. Why? Who will catch up with Australia? Only the few at the top. It could be argued that they already have. Compare the salaries of top bureaucrats and CEOs and you might be surprised. Brash and Co. seem just to want to dumb down the middle class. There, now I am sounding like a socialist, which I am not. It is just that after a lifetime I see how the masses can be, and are exploited to the advantage of the few. These people influence the regulators to their own advantage and we see it every day. Just look at the local scene and I rest my case. Obviously David, you don’t work at McDonalds.

    • Elizabeth

      The return of homegrown migrants, enjoying their Overseas Experience, should also be encouraged to the city of their birth or education. It is also time for the [Dunedin City Council] to cease being coy about attracting Christchurch residents and businesses to resettle in the South following what seems to be an endless series of devastating earthquakes.

      ### ODT Online Tue, 21 Jun 2011
      Editorial: Building a city’s population
      To judge by opinion over the past few days, large numbers of Christchurch residents want to leave the city to live elsewhere. Dunedin should be doing all it can to encourage them south, perhaps by offering some form of subsidised accommodation, assistance to find employment and schooling, and a welcoming helping hand. The city needs inward investment to broaden and underpin economic activity and hence growth: it should seize every opportunity.
      Read more

  19. Peter

    Don Brash’s diagnosis of our economic malaise may be right-or Right- but his party’s prescription is more often than not punitive and self defeating for the country as a whole,but more particularly for those who can’t defend themselves.
    He wants NZ to ‘catch up with Australia’, but also wants to depress wages in a low wage economy like our own. It doesn’t make sense. This prescription will only depress the country further and forestall the paying off of private debt which Kiwis at last seem to be acknowledging with their curbing of unnecessary consumption.
    Our economic system is falling apart through its own illogic.

  20. David

    Calvin says “That is one of the problems of “bottom line accounting.”

    But your analysis completely ignores the bottom line altogether.

    If you think a nearly $2,000,000 taxpayer subsidy is worth it to save each job, what level of subsidy do you think would be too much to pay?

  21. Calvin Oaten

    Is it $2m per job? How exactly does one quantify that? An accountant/economist does it easily 2+2=4. If 2+2=3 then it is not viable, end of story. Firstly, the labour content of the contract is but part of the story. Why do you think China is content to keep its labour costs so low? So they can make money for the greater cause. They have a plan, and are dedicated in carrying it out. You only have to look at how it is flexing its muscles in the international arena now. Whereas NZ seems ready to prostitute itself to any bidder. Why? Is it because of a feeling of insecurity in our national mana? Who knows?
    If the guys at Hillside can build the wagons in an industrious manner and are only uncompetitive because of their comparable wage structure then surely, if NZ is to have any future for its workforce then build they should. The alternative is to have all work done offshore, export our skilled labour to Australia and elsewhere, leaving only the essential workers needed to exploit our natural resources (dairy, meat & wool, timber, minerals etc.) if we can retain ownership of them.
    There is more than one “bottom line” and money is not the only one. But it certainly effects the others. A viable society is not just about money. It is about self respect and the desire to do work to sustain a standard of living for self and family. Take away that belief and you get a breakdown of that ethos, people will become an economic burden on the state, or simply up stakes and leave. We see it happening as we speak, with news of increasing numbers leaving with their families and skills to Australia and elsewhere. David, you claim $2m per job (debatable I am sure if the true facts were known) is too big a cost, but if it was looked at as a long term investment, what then? We might well find it to be extremely profitable in say twenty years. That is more the Asian mindset approach to these things, long term, which is where we fall down big time. So, should NZ aim to be self sufficient in all activities possible, or simply go for the cheapest immediate options? Our government obviously thinks the latter, and that is why we can look forward to cashing in on all of our assets as the panacea to all our problems. Except it won’t be. We will, in fact become minions in our own lands, beholden to the dictates of the new owners. It won’t happen in my time (I hope) but it will happen, if we continue on the same route we are.

  22. David

    Calvin – you obviously think spending an extra $2 mil to save each job is ok. What about $3 million, $5 million – what point is too much for you?

    Or do you not actually have a cost that is too much

    Let me put it another way.

    Do you not think there is any other area of spending, anywhere in the country, where the taxpayer could get a better return than one job per $2 million?

  23. Calvin Oaten

    David, you still are in the “bottom line” mindset. And fair enough, you are part of the great majority. You still see it as $2m per job. I simply believe it is not that simplistic. But you obviously do. So there we are, who is right? Time alone will tell, but Greece might just be the fuse that exposes the globes’ whole monetary system for what it is. A great fraud. Debt is the problem, not how much we should value jobs in our society, and in our local case, watch the cards come tumbling down around our ears. When? I don’t know, but the world is in the early stages of a “Great Correction” and it has a long way to run. Good luck with your philosophies, I will stick with mine. We will see who is right in the fullness of time.

  24. David

    Calvin says “David, you still are in the “bottom line” mindset.”

    Unless taxpayers’ contributions are infinite, there will ALWAYS be a bottom line for government spending – it’s just a fact of life.

    So the question then becomes what’s the best use of $2 million – save one job, or create many?

  25. Calvin Oaten

    So the question then becomes what’s best use of the $2m – save one job, or create many? First there is no $2m. It has to be borrowed. Second, create what jobs? Answer, in China.

  26. David

    Calvin – you talk in circles, but are unable to answer the question –

    What is the maximum you think NZ taxpayers should pay (per job) to keep the work in NZ?

  27. Calvin Oaten

    David, let’s go round this circle, if Kiwirail pays an extra $125m for the wagons which should have an economic life of 25 years, and the profit is reduced by that $125m this equates to $5m per year less the tax that profit would have attracted at 33% then the taxpayers’ lost profit would be $3.35m per year. Forty jobs would cost $83,750 per year to keep. Assume half of those don’t get jobs and end up on a benefit, this would cost the taxpayer around $420,000 per year. Let’s round the foregone profit at $3m so the job cost would be about $75,000 each per year. But, of course what about the purchasing power of those 40 people if they keep their jobs and the benefits to the region? If those people earned around $75,000 per year it would be all square. Is that a circle or what? Your call.

    • Elizabeth

      ### ODT Online Wed, 22 Jun 2011
      Union-Kiwi Rail talks break down
      By Matthew Haggart
      Negotiations between Hillside union delegates and their KiwiRail bosses have broken down on the eve of a public rally to campaign against proposed jobs cuts at the South Dunedin engineering outfit. Tensions between KiwiRail representatives and Hillside workers have been simmering, after the state railway carrier announced 10 days ago it intended to cut 70 jobs from its nationwide engineering and design operations, with the South Dunedin workshop the hardest hit.
      Read more

  28. JimmyJones

    But Calvin, they don’t earn or spend $75,000 per year. My guess is that they earn under $50,000/yr. That leaves $41,000/yr after tax and not all of that will be spent locally. Anyway you would be paying $75,000 + $50,000 = $125,000 per year to provide a local spend of up to $41,000/yr. Sounds like a bad deal to me.
    The other thing is KiwiRail loses money (negative profit) and every year relies on a big central government subsidy for its capital expenditure programme. The government’s budget for this is fixed and adding $125 million of extra costs means less capital expenditure and a delay in completing the new projects and rejuvenation. The flow-on effect of this is probably an even worse profit than is currently predicted.
    You would think that if John Key had some influence over this, that he would have timed it for after the election; also he wouldn’t have paid $1 billion for something only worth $1.95.

    {JimmyJones, is the “$1.95.” in your last sentence the figure you mean? -Eds}

  29. David

    Calvin – your numbers are nonsense.

    – The contract keeps workers employed for a couple of years. But you calculate the benefit of the tax and salaries not from two years, but from 25 years.

    – The $125 million has to be paid up front – not at $5 million per year (if it is borrowed the interest alone would be $7.5million per year, plus the capital repayments – say $12.5 million per year for ten years).

    – Your tax rates are way out. Up to $48,000 is 17.5% – not 33%.

    – Your salaries are way out.

    The numbers used to justify the staduim were not good, but they were far more accurate than your numbers above.

    I’m all for keeping manufacturuing here, even if it costs a bit more.

    But nearly $2 million taxpayer subsidy per job is financial lunacy.

    Instead of saving 70 jobs, with the same money we could create 2000 jobs.

  30. Peter

    David. You say ‘Instead of saving 70 jobs, with the same money we could create 2000 jobs.’ Where and what kind of jobs are you talking about, exactly? How do you get to 2000 jobs instead of say 1500 or 2500 jobs?

  31. Calvin Oaten

    Fair enough David, I realise that figures are just like statistics, I repeat again, ‘bottom line’ accounting is done by accountant/ economists who are very like the “Great Mot Mot Bird”. Forever flying backwards looking at last years figures.
    I am reminded of the great industrialist Henry Ford who was castigated by his fellow industrialists for instituting the ‘outrageous’ “five dollar” an hour wage. “Ruination” they all cried in unison from their mansions on high. Ford said “if I don’t pay my workers a living wage then how are they going to be able to buy my cars?” This could just as well be “if we don’t employ and pay our workers, who will ride in our trains?”
    That, in a nutshell David, is my argument. I say again, the wagons should be built in NZ if they can. And they can, and we know that. The bean counters know it too, but are blinded by their science.

  32. JimmyJones

    {JimmyJones, is the “$1.95.” in your last sentence the figure you mean? -Eds}
    {Yes, one dollar-95 cents is what I intended. It is approximate and the actual value could have been a lot less than that. JJ }

  33. David

    Peter asks “Where and what kind of jobs are you talking about, exactly? How do you get to 2000 jobs instead of say 1500 or 2500 jobs?”

    The additional cost to get the wagons made at Hillside is said to be 25% or $125 million. It may be more or less than this – but this figure has not been denied.

    So $125 million would give 2000 people a salary of $62,500 for a year. Whether jobs were street sweeping, planting trees, road construction or whatever – it would benefit the country a lot more than saving 70 jobs (which will only put $3-$4 million of wages into the economy.

    The point is to show the cost of what $125 million COULD do. Create 2000 jobs or save 70.

  34. David

    Calvin says ” I say again, the wagons should be built in NZ if they can. And they can, and we know that.”

    We could build cars in NZ. They would cost twice as much but we could do it…

    We could pay to superheat giant glasshouses and grow tropical fruit instead of having to import it… It might cost $100 per pineapple, but we could do it.

    We could make our own tvs here. They might cost a few thousand more, but we could do it.

    We could make our own wagons here. It might cost $2 million per worker more, but we could do it.

    Calvin – you might like to ignore “bottom line” accounting (when it suits), but it is a fact of real life.

    If it wasn’t, then there would be no issue with stadium spending (where you seem to favour the use of the “bottom line”).

  35. Peter

    David. These kind of jobs wouldn’t fit into all the ‘smart economics’ talk we hear about of ‘upskilling the workforce’ and making NZ competitive’. It would certainly help the unskilled underclass, but there doesn’t seem to be any commitment from Labour or National to spend money on ‘make work’ schemes like the PEP schemes of yesteryear. No government would put people into $62,500 jobs.
    There is so much idle talk of other job possibilities by us, the chattering class, but the truth is we don’t know what to do with employing people who are not smart IT or design/creative freaks, niche business entrepreneurs etc etc. I think we far too casually say, ‘ oh well, we’ll let that sector (manufacturing) go to China, or wherever, and we’ll get into high end product stuff… as if other countries haven’t also cottoned onto that idea. A low wage country, compared to other developed countries overseas, is on its way to an economic hiding. That’s why the numbers heading to Australia are the highest in 32 years.

  36. David

    Peter – few govts anywhere are successful at creating sustainable jobs.

    Job creation primarily comes when private business makes good profits – it’s that simple.

    The 2000 jobs @ $62,500 was merely a comparison to show how much taxpayer money it would cost to save just 70 jobs.

    Peter says “That’s why the numbers heading to Australia are the highest in 32 years.”

    Wrong – the record numbers have been attributed to the earthquake. And the wage difference to Australia is not what it seems.

    While Aussies may get paid 30% more, it costs them more to live. What you can buy in NZ with NZ$1, will cost AU$0.98 in Australia.

  37. Peter

    The Christchurch earthquake is one component, to be sure, but the net effect is the same people are leaving NZ. I agree Australia isn’t necessarily ‘a land of milk and honey’ for all Kiwis – or Australians for that matter. Often it is a perception of greener pastures over there. Still, that perception seems to count for something and people are going.
    My 25 year old son has been in Melbourne for the last three years. I came here, from the same place, 32 years ago, as it happens, when migration to Australia last peaked. It’s not easy for him over there, financially, but the ‘possibilities’ are greater and that’s what people go for.
    There are many reasons why private businesses do or don’t make profits. When your customers are unemployed or on low wages there simply isn’t the money to spend. One reason for lack of profitability. Screwing peoples’ incomes down may help short term profits, but it doesn’t last as the economy shrinks because of lack of demand. Additional to all that, mindless consumption is becoming increasingly unfashionable as it’s seen as ‘unsustainable’. No easy answers to our conundrum, eh. Oh yes… I forgot… build a stadium and they will come. Challenging world we live in.

    • Elizabeth

      ### ODT Online Thu, 23 Jun 2011
      Direct KiwiRail to change track, Govt urged
      By David Loughrey
      A packed public meeting in South Dunedin last night slammed a KiwiRail decision to cut 41 jobs at the Hillside workshops, as a line-up of political, council and business figures vowed to fight the Government and keep skilled jobs in the city.

      The meeting to save the Hillside workshops attracted more than 300 people, including Hillside workers, who heard from Dunedin Mayor Dave Cull, Dunedin South Labour MP Clare Curran, Otago Combined Trade Unions convener Glenda Alexander, Green Party co-leader Metiria Turei, Otago Chamber of Commerce president Peter McIntyre, Michael Tritt, of Greenpeace, and Rail and Maritime Transport Union South Island organiser John Kerr.

      Read more

  38. David

    Because of scale (and mining etc), Australia will always have many more oportunities.

    It’s not all negative for NZ – many people go to Australia, and come back, In that way it acts as a presure valve for NZ when things aren’t so good here (.i.e. everyone is better off if say 10,000 people are working in Australia rather than sitting on the dole here – NZ taxpayers are better off, and the people are better off).

    Many of those people come home again, sometimes bringing with them considerable funds they’ve earned while being away.

  39. Calvin Oaten

    David, you name many things we could do here but don’t. Why? Because they don’t make sense because of all sorts of reasons. Market size and volumes are the common reasons. We do do good low volume engineering and have a long history of it. We can build rail wagons and do it well. The only difference is the cost of labour. If we follow your reasoning the 40 lost jobs would quickly become all jobs at Hillside, followed by the whole industry. Would you sooner have all work done in China and perfectly balanced balance sheets? Except that those balance sheets would have no numbers on them. Silly I know, but that would be the ultimate outcome until our labour costs reduced to the common mean, i.e. the same as China. Then perhaps we could export wagons to China, except that we would have no industry to do so. In the meantime the hillside redundants can get jobs at McDonalds to tide them over. Would you like that option?

  40. Calvin Oaten

    David, I don’t ignore the ‘bottom line’, I just believe there is more to it than that. Just as there is more to it than to simplistically claim “$2m cost per job”. To be fair you must cost in the ongoing effects of those job losses. Not something that seems to concern the traditional accounting. Someone else’s problem you would say, just so long as the cheapest option for the wagons is pursued. Steven Joyce and KiwiRail management obviously are of the same mind. So that is how it will be. Tell that to the Hillside people.

  41. David

    Calvin says “We can build rail wagons and do it well. The only difference is the cost of labour”

    Nonsense.

    The total cost of labour for a year for the 70 workers is $3 – $4 million.

    But our price to build the wagons is $125 million more.

    So even if the NZ workers worked for nothing, it would still cost $121 million more to make the wagons in NZ.

    So no – the only difference is not the price of labour. It’s not even the main difference, or even a significant difference. It is a very, very minor difference in the overall cost.

  42. David

    Calvin – as I’ve said previously, I think we should build the wagons here, even if it costs a bit more.

    But there comes a point when it costs so much more, that it is financial insanity to do this.

    You don’t seem to have any cut off point where it becomes ridiculous.

    We could waste millions of dollars to save each job and it would still fit with your ideology of doing the work here at any cost.

  43. Calvin Oaten

    Very good David, “the price of labour is not even the main difference, or even a significant difference. It is a very, very minor difference”. You actually know that? So we all can look forward to a continuing fall in our standard of living. Meanwhile how much do we know about China’s manufacturing processes? Their materials are obviously cheaper if what David says is correct. We know roughly, how many are killed in sweat coal mines, for what wages?. Coal smelts steel, steel is the chief component of railway wagons. What of the steelworkers’ wages? Do we really believe the only labour content is in the actual wagon construction? Then do we know anything about industrial subsidies applying in China? Particularly exporting incentives. No, we don’t, and we don’t want to enquire either. Better just buy while the price is right. See you in twenty years time, and ask me if these wonderful deals still apply. Not that we will be looking for any. Sorry David, I am not convinced, but then obviously, nor are you.

  44. Calvin Oaten

    David, if you want to talk about financial insanity then that’s a whole other subject. Governments, both central and local are extremely well versed in that art. Like central government spending over $30m (for starters) on the RWC. How many jobs would that “create”? Then on the local scene we are spending $200m plus for temporary jobs at best on the stadium. Oh, instead of our people rebuilding Christchurch it would be far better to import Chinese labour for the duration. People would get far cheaper houses. Nonsense! you say. And you would be absolutely right. There is no easy answer to these things. Sometimes the right thing to do is not necessarily the cheapest.

  45. David

    Calvin – face it – you’ve avoided the real question every time.

    You have no cut off point where spending milllions of dollars to keep each job goes from being worthwhile to being insane.

    That’s exactly the same as having no top price where the stadium becomes uneconomic.

  46. Peter

    David.No argument with the points you have made concerning Australia and NZ. As you say, it is not all negative here. If it was, I’d return to Australia. In my personal situation, I’m actually better off here financially.
    Australia could be seen to be a safety valve for our people who can’t get jobs here. All points to Australia being more attractive for so many Kiwis – about 400k odd.

  47. Calvin Oaten

    David – face it – what is the real question? We don’t know the true comparative costs. You repeat the $125m difference. But how can we know if that is a true reflection of all comparisons? What of the social costs, both here and in China? Have they been quantified? If so, by whom, and what are they? If not, then why not? I am not avoiding the real question. Why would I? I just don’t know it. Nor do you. In fact I don’t believe the full ramifications have been addressed by anyone, least of all, KiwiRail management and government. Just the “bottom line”. If that is, as you describe insanity, then I say again, tell that to the Hillside workers. They will tell you that they weren’t even given a fair go to compete. So you win? A hollow victory, I suggest.

  48. David

    It may pay to look at the background of this – in the fact that KiwiRail is a basketcase.

    The govt has made it clear that if it is to sink over a billion dollars of hard earned taxpayer dollars into the company, it needs to run as a commercially viable company, otherwise all that money is wasted.

    Spending millions of dollars more than is necesary does the exact opposite – it makes the company unviable. You may as well just close the whole thing down to stop haemorrhaging money.

  49. Lindsay

    The reality is that there is practically nothing you can manufacture in this country that you cannot manufacture cheaper in Asia. If you are going to totally embrace the free market then you can only compete by lowering wages and conditions to those in China.
    I have never seen FTA’s as the holy grail that some of our leaders have, sure we get to buy lots of imported stuff really cheap, but at the cost of our manufacturing industry.
    The US which is always pushing free trade when it suits them, sticks hefty tariffs on steel and beef because it might damage their own industry. You know what the French think of removing tariffs, so why do we balk at a subsidy to prevent one of our own industries collapsing.
    Steven Joyce says it would be hard to ask KiwiRail to give preference to local tenders because of the effect intervention might have on free trade agreements, but the Chinese have just stuck a tariff on milk imports to protect their producers.
    When we are all unemployed it will be little comfort to know that we can still hold our heads high because we have stuck to our free market principles.

  50. Calvin Oaten

    Now we are getting to the nub of the matter. Should NZ have a rail system? That would be a question which should be addressed to Roger Douglas. Before his reign NZR was a hopelessly inefficient system, used by successive governments to hide unemployment. Problem, the vultures to whom it was sold in a ‘fire sale’ process simply stripped it bare and flogged it off. Finally, the Clark/Cullen government bought it back. Paid over the odds for it and left it in a totally under capitalised position. Now it has to battle its way back. Its day will come with oil tracking the way it is. How long, we don’t know, but it will come right. Meantime it seems right to persevere and protect the infrastructure and skilled staff for the day when they are needed to expedite expansion. That means Hillside as well. So it could be argued that the premium involved for the controversial wagons could be looked at as an investment in the future. If we wanted to talk of a level playing field, perhaps road transport road user charges should contain a component to subsidise rail infrastructure costs. A perfect example of this would be the Wenita log contracts from Mt Allen going to road outbidding the Taieri Gorge Rail. Free use of county roads with ratepayers picking up the maintenance costs. Taieri Rail getting nothing to level the deal. Yet on a straight head to head fuel consumption and carbon footprint rail won hands down. Again the ‘bottom line’ won through. The other day I watched a train passing the stadium drawing 35 containers driven by one man and an assistant. That represents 35 trucks and 35 drivers. You couldn’t convince me that road would beat rail in a fair contest in this. That is why rail needs more wagons. Imagine the difference in overseas funds employed if the wagons are built in NZ as opposed to importing those 35 tractor units and trailer running gear. There are so many factors involved here that one would be very skeptical of the evaluation done of value to the country.

  51. David

    Lindsay asks “so why do we balk at a subsidy to prevent one of our own industries collapsing”

    1/ Because it’s not an industry – it’s 70 jobs
    2/ Because $2 million per worker is not a subsidy – it’s a lottery win.

  52. Peter

    The ideology of the free market in its purest form, as espoused by the likes of ACT, is akin to Pol Pot style fanaticism and that’s why ACT wallows around 2-3% in the polls on a good day. The world doesn’t operate on the simplicities of economic purism because we are dealing with human beings and not theoretical, economic units. People will never sing in unison. Thank God for that.

  53. David

    Calvin says “How long, we don’t know, but it will come right.”

    No it won’t.

    It’s going to lose hundreds of millions per year, and forcast to do this for at least the next decade. Even in the hands of private experienced railway operators, they still couldn’t make a profit.

    That’s because NZ is the hardest country on the planet to run a viable railway system
    – we have no rail traffic to neighbouring countries
    – we are on separate islands
    – our topography is steep
    – we have a low population and low population density
    – many places have no rail links (i.e. Nelson, Queenstown, Rotorua)
    – some short journeys have long detours (i.e. Gisborne – Whakatane has to go via the bottom of the North Island)
    – we have few bulk products suitable for rail
    – we have low volumes. In the time it takes to get enough goods to load a train from Dunedin to Invercargill, road transport has already arrived there and is on its way back, before the train has even finished loading.

    Rail is more efficient with bulk point to point loads, like coal from one place on the West Coast, through to Lyttelton.

    It’s probably close to being competitive for Mt Allan logs, but rail would mean double handling, and it’s too short a distance for fuel efficiency to have much of an advantage.

    And while you may only count two staff running a train, overall there are another 20 railway staff for every engine (including all those not being used).

    NZ has pretty much every factor against it, so we should stick to what rail can do most efficiently – point to point bulk loads.

    • Elizabeth

      Which is where Fonterra is going with its use of rail, and this is set to increase. The Port of Tauranga is going to be it.

  54. Peter

    David. Wouldn’t another factor be the competition for funding between road and rail? Competition that isn’t necessarily just based on the economics of both, but also on politics? I’m not qualified to answer this, but it makes you wonder.Is there a level playing field?

  55. David

    Peter – there has always been an argument that trucks would pay for ALL roading costs, because roads are designed to take x number of truck trips.

    Cars are largely ignored because it takes thousands of car trips to do the damage of one truck trip.

    However if trucks paid for all the costs, then you could say they subsidise the cars who get roads for free.

    So it’s probably fair that cars and truck users pay for roads, and the rail users pay for the railway.

    Elizabeth – that’s good that Fonterra can use rail – it’s a good example of the type of loads where rail can be more efficient.

    • Elizabeth

      Private companies and cooperatives, like Fonterra, are either utilising or looking at utilising rail for their primary and intermediate produce going out by container to port(s). Given the scale the agribusiness sector works at rail will never be sold off between critical points along the value chain. The government knows this, and is driven by the market leaders.

      Dangerous to sit in Dunedin and pontificate while the rest of the country gets on with it.

  56. Calvin Oaten

    David; you have convinced me. The obvious answer after studying all of your arguments is to close the whole loss making business down. Save the millions of dollars by firing all staff and then cash in big time with the sale of assets. There must be millions of dollars in scrap steel just for the lines alone. Then there is all the copper in the communications area. Recycling of buildings (the Dunedin Station is an excellent example) and sale of land. A huge release of capital, just what any self respecting accountant would advocate. “THEN WHAT”? All on the dole? But hold on, where are the taxpayers to pay the tax to pay the dole? But hey! Dr Brash and his “free marketeers” will be absolutely chuffed. Myself, I can’t wait, gone will be all my concern over nebulous things like “fair societies”, a fair day’s work for a fair day’s pay and all those trite annoyances. Yes David, you are absolutely right. Silly me for being so obtuse.

  57. Calvin Oaten

    David, I forgot. The bridges, there must be lots of them too. Lots of scrap steel there as well.

  58. Calvin Oaten

    Elizabeth, your on to it. But it did once belong to NZR.

  59. David

    Calvin – how have I convinced you of an extreme point of view that I never argued for?

    I think you’ve made up your own extreme position, then falsely insinuated it is mine.

  60. Calvin Oaten

    Elizabeth, you are not committing the sin of taking me seriously, are you?
    David, why would I dare insinuate that any serious idea was yours?

    • Elizabeth

      Nope, Calvin. Right now I’m part of larger discussions for economic development and entrepreneurship – am saying little if anything here at all. Rest assured.

      • Elizabeth

        Hear RMTU’s John Kerr on the Hillside debacle, the role of rail in sustainability & more at http://sustainablelens.org/?p=146

        • Elizabeth

          ### ODT Online Sat, 25 Jun 2011
          Hillside workers call for supporters to rally
          The next event in the battle to save Hillside Engineering workshops will see supporters taking to the streets in a rally. Rail and Maritime Transport Union South Island organiser John Kerr said the event would be held in the central city on Saturday, July 9. Details were yet to be confirmed.
          Read more

        • Elizabeth

          ### ODT Online Wed, 29 Jun 2011
          Hillside glimmer of hope
          By Matthew Haggart
          Stalled negotiations between Hillside Workshop delegates and KiwiRail bosses are back on track, after a union campaign to save 40 jobs at the South Dunedin engineering plant secured an important deadline extension yesterday.
          Read more

        • Elizabeth

          ### ODT Online Wed, 6 Jul 2011
          Opinion
          Govt can intervene over KiwiRail deal
          By John Kerr
          The Government can step in and do the right thing over contracts to build wagons in China rather than at Hillside, Dunedin, the Rail and Maritime Transport Union South Island organiser John Kerr says.

          Michael trotted out his working class credentials: his grandfather was a member of that elite of the trades, a boilermaker, at Hillside. Michael now finds himself in the unenviable position of defending the Government’s stance on KiwiRail in general and Hillside in particular.

          Read more

          The fate of Hillside workshops is of growing concern to Dunedin. Michael Woodhouse, National’s list MP based in Dunedin, put the Government’s perspective on June 30.

        • Elizabeth

          ### ODT Online Wed, 6 Jul 2011
          Wellington work no help to Hillside
          By Matthew Haggart
          A rebuild of wellington’s commuter rail services is unlikely to lead to work for under-fire South Dunedin rail engineering outfit Hillside Workshops, a KiwiRail manager says. The Government confirmed an agreement yesterday to transfer KiwiRail-administered assets for Wellington’s passenger rail and commuter services to the Greater Wellington Regional Council.
          Read more

        • Elizabeth

          Tweet (7 July, 6:58pm):

          @DunedinTV Transport Minister talks to Rail and Maritime Union protesters http://tinyurl.com/3bqrsc6 #channel9 #dunedin #tv #nz

        • Elizabeth

          (via ODT Online, 8 Jul) Police had kept an organised group of about 30 placard-waving protesters well away from the official ceremony, but a construction worker in the south stand of the Forsyth Barr Stadium was determined to be heard. Link

        • Elizabeth

          ### ODT Online Mon, 11 Jul 2011
          Hundreds turn out for Hillside
          By Chris Morris
          Hillside boilermaker Stuart Johnstone and twins Skye and Kane get their message across in the Octagon on Saturday. Photo by Gerard O’Brien.
          Songs and shouts of protest, led by Dunedin Mayor Dave Cull, have delivered a strong message to KiwiRail and the Government to save 40 jobs threatened at Hillside Engineering. Rallying cries came as a large crowd gathered in the Octagon for the Save Hillside demonstration on Saturday afternoon. Mr Cull did not hold back, criticising the threat to Hillside jobs as “short-sighted, simplistic and destructive”.
          Read more

        • Elizabeth

          ### ODT Online Thu, 14 Jul 2011
          KiwiRail confirms Hillside job losses
          By Matthew Haggart
          KiwiRail will go ahead with its decision to cut up to 44 jobs at its Hillside Workshops in South Dunedin, employees have just heard. Speaking from outside the Hillside Workshops main gate, Rail and Maritime Transport Union organiser John Kerr said the job cuts “flew in the face” of a month-long consultation period with union delegates.
          Read more

        • Elizabeth

          ### ch9.co.nz August 29, 2011 – 7:27pm
          KiwiRail reports operating surplus
          KiwiRail has reported an operating surplus, before depreciation and grant income, of just over $100m. Chairman John Spencer says it’s an increase of more than 28% on the previous year. Last month KiwiRail made 44 workers redundant at its Hillside Workshops in South Dunedin, while today redundancies were averted in Lower Hutt when 10 workers quit. Spencer says the arrival of 20 new locomotives, and 535 wagons are increasing the capacity of the network, which he hopes improves service for their customers.
          Ch9 Link

          ****

          ### scoop.co.nz Monday, 29 August 2011, 3:29 pm
          Press Release: KiwiRail
          29 August, 2011
          KiwiRail on track with 29% increase in operating surplus
          Despite the effects on the business of the Christchurch earthquakes, the Pike River disaster and the major slips at Kaikoura and in the Manawatu, KiwiRail still made substantial progress on its road to becoming a self-sustainable business, Chairman John Spencer said today. The operating surplus, before depreciation and grant income, was just over $100 million, an increase of 28.9% on the previous year. Operating revenue also increased despite the difficult operating conditions to $667 million, an increase of 2.6%.
          Read more

        • Elizabeth

          ### ODT Online Tue, 6 Sep 2011
          Parliamentary select committee to consider Hillside jobs petition
          By Matthew Haggart
          A parliamentary select committee is scheduled to consider a petition from almost 14,000 mainly Dunedin-based signatories, as last-ditch efforts to retain engineering jobs at the Hillside workshops continue. Rail, Maritime, and Transport Union (RMTU) workers presented the petition to Parliament last month, after a Save Hillside campaign was launched in response to a round of redundancies at the landmark South Dunedin engineering outfit by KiwiRail.
          Read more

  61. Peter

    David. I guess you are referring to road user charges for trucks. Your point for charging road user charges for cars has some merit and would go some way toward a level playing field for both both road and rail. Not sure if any government would have the political courage to introduce this. (As they don’t even seem to want a capital gains tax on property – especially of the speculative kind.)

  62. Peter

    If KiwiRail are wise they won’t employ present DCHL directors, or dear old Malcolm, as future KiwiRail directors! The business would be down the gurgler before you could say, ‘Forsyth Barr Stadium.’

  63. JimmyJones

    Things have gone downhill since Jim Bolger left: Net Profit has decreased from $194 million to $34m. Actually, they’ve got a bloody cheek telling us that they made a profit because it would have been a big fat loss without the $458m taxpayer subsidy. Apparently this is not illegal, but it is misleading. It would be misleading if you thought that the profit resulted from running a successful business and didn’t know that it came from a government grant.
    This is a defect in our accounting rules. I would call it a loophole. The DCC and the rest of the stadium team are aware of this loophole and that is why the Net Profit for DVL is forecast to be $0 for the next few years. Our feckless city councilors are blissfully content with this because they don’t understand that this result is because of a large ($6.5m) ratepayer subsidy (“subvention payment”). See the latest DVL Statement of Intent for details. I should note that Lee Vandervis has some understanding of these things and voted against the Annual Plan and so is less feckless than the others.
    Keep in mind that the annual cost to ratepayers for the whole stadium (not just DVL) will be a lot more than $6.5m. I expect we will pay $15m – $20m each year. The wisdom of paying this was not considered in the Larsen Report, and while the stadium team want us to pay, our elected decision-makers are yet to make an informed decision.

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