Thursday, May 15, 2008

Cullen falls for "the con job of this century."


Cracking front page lead from the Dominion-Post today outlining the murky dealings of Toll boss Paul Little.
Better still is the growing evidence the Fiscal Fool truly was taken for a ride.
Just read it and weep!

Fresh questions are also being raised about the price the Government paid and whether it was as naive in buying Toll's spin that the Australian company was a reluctant seller.

Highly placed sources have said that Toll's supposed reluctance was "the con job of this century".

And there's more:

"NZPA sources say the Government has underestimated by far the costs it faces despite Dr Cullen calculating all-up costs at over $1 billion.

One said Toll NZ was "a pig of a business".

Though Toll has made limited reinvestment in rolling stock and ferries, capital spending over five years had considerably outpaced depreciation.

"Basically it produces very poor cash flows. Depreciation is understated in an economic sense."

He said there was huge capital expenditure required. As well as two ferries and 15 locomotives, nearly all the wagons needed replacing.

New wagons were hard to procure and going up in price every day, like all rail equipment, because of the soaring cost of steel.

Hundreds of bridges needed replacing.

"The reality is they are all old and they all cost $50m to replace."

Far from being a reluctant seller, as Mr Little said at the May 5 press conference, NZPA was told Toll was ecstatic to sell.

It had worked out the volumes on New Zealand tracks were just too small, the investment required so large that even with government subsidies there was no prospect of making an adequate return. Toll saw a government with an appetite to buy and decided it was far better to exit.

Toll was in a poor contractual position because it had never finalised the price to pay track operator On Track, but government negotiators failed to exploit that.

As well, the government negotiators basically took Toll's word for it on what the rolling stock was worth."

If anyone has any doubts about the government's incompetence, hopefully, this article should remove them.

2 comments:

Anonymous said...

Far from being a reluctant seller, as Mr Little said at the May 5 press conference, NZPA was told Toll was ecstatic to sell...............

Indeed it seems Mt LITTLE must have been estatic immediately after the sale as the hundreds of thousands of shares he bought just before the sale rocketed up in value....If these Aussies can so fundamentally exploit the business nous of our finance minister I take leave to ponder how he will get on dealing with the Chinese and eventually the Japanese.......Baxter

Anonymous said...

how he will get on dealing with the Chinese and eventually the Japanese

who cares? He'll be in jail for corruption and will have nothing more to do with anything.