By: Mike Hosking | Thursday, June 28, 2012 9:19 AM

I had to laugh yesterday when Bill English was asked whether they could rule out selling KiwiRail. It’s one thing to sell it, it’s another to buy it back. But is it really possible you could sell it again? That’s got to be some sort of record.

Rail is a mess. The Government wrote off billions in value yesterday, most of it can be dealt with in accounting procedures. But almost $2 billion in debt has been added to our books. Like we don’t have enough debt to worry about already. The theory is by writing it down, rail can get on and presumably run their business properly and who knows, maybe one day make a bit of money.

The trouble with rail is it’s one of those businesses you really need and that’s why selling it the way the Labour Government did in the 80s was such a catastrophic mistake. A country needs a rail network. Not for passengers necessarily – the days of trains as transport are largely over save the odd touristy excursion. Once the airline wars arrived and they invented grab-a-seat, the train as transport was doomed. But we need to shift freight. Firstly because it keeps it off the roads and secondly because it’s more efficient than roads.

When you sell a company lock stock and barrel the way Labour did, the new owner doesn’t really care about freight per se, they don’t care about lines, they don’t care about the link between ports and markets. They care about profit and in any rail network some lines make money and some don’t. So the ones that don’t get closed or if they’re not closed, they’re run down. That’s precisely what happened to KiwiRail until it got so bad that in one of life’s great ironies the previous Labour Government bought it back and by many accounts paid far too much for it.

So the new Government, the current one, is stuck with it and given they can’t give it away in it’s current state they can do nothing but try and restructure the thing in to some sort of shape so as to allow it to potentially turn itself around.

The ultimate lesson here is there are just some things you can’t sell or if you do, you can’t sell outright. An airline, a rail network, roads, hospitals, schools. For all the good privatisation can bring for businesses directly connected to infrastructure, they need the hand of state at least partially on the tiller. KiwiRail’s hopelessly mishandled history tells us that.

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Photo: NZ Herald