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Govt will keep KiwiRail running: Key

NZ NewswireNZ Newswire 26/04/2016

The government is committed to keeping KiwiRail running for years to come, Prime Minister John Key says.

There will be money for it in next month's budget and there's a huge amount of infrastructure upgrading still to do, he told reporters on Wednesday.

"The government is going to be contributing to the fortunes of KiwiRail for a very long period of time," Mr Key said.

"No one is arguing that there isn't a place for KiwiRail in New Zealand ... rail provides a range of benefits for the country."

KiwiRail's viability is under scrutiny following the release of a report showing that in late 2014 it concluded the best option for the government, on a purely commercial basis, was to quit the freight business altogether.

Three other options involved slimmed down versions of the rail business if it continued.

State Owned Enterprises Minister Todd McClay says the review covered commercial aspects only and the government rejected all four options.

"I don't think we should expect any large change at all in the ownership or structure of KiwiRail," he said.

The 2014 review became the basis for a government decision to maintain a national rail network, despite it having no prospect of running profitably, and led to a $400 million two-year funding commitment.

KiwiRail is starting negotiations for a new funding package and is looking for a small number of rail upgrade projects to demonstrate the value of rail to New Zealand beyond purely commercial returns.

Chief executive Peter Reidy said one such project was in Wiri, South Auckland, where 3km of new track could unblock a major rail freight and passenger bottleneck and help alleviate road congestion.

Also in his sights is a plan that would remove trucks travelling through central Christchurch to the Port of Lyttelton.

"Our shareholder will need to continue investing in infrastructure, but at a reduced rate over time," said Mr Reidy.

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