Tense negotiations between the Government and Toll during the rail system buy back have been revealed in documents released today.
Finance Minister Michael Cullen said at one point he was "within hours" of announcing the talks had collapsed as the two sides argued over the value of Toll's assets and the conditions the company was demanding.
The Treasury released hundreds of pages of documents covering the negotiations that ran from August 2007 to July 1 this year, when the Government announced it had bought the system for $690 million.
Dr Cullen said in his statement accompanying the documents that there had been "a huge range" of valuations of Toll's assets.
The Australian-owned company believed they were worth more than $1 billion, and the documents show it fought for the best price it could get.
In an email dated April 9, senior government advisor Chris Mackenzie warned that Toll believed it was being "driven into a corner" and could decide to retaliate with a public release of information about Ontrack, which owns the rail lines.
Dr Cullen said the Government went into the negotiations knowing that buying the system was an economic necessity.
He said 15 years of private ownership had failed and the Government believed the network would deteriorate further unless it was returned to public ownership.
"We were simply not prepared to write a blank cheque to buy back the trains," Dr Cullen said today.
"A huge range of valuations existed ...Toll believed, however, it was worth over $1 billion.
"We paid a reasonable and fair price. Having KiwiRail in Kiwi hands will allow us to protect rail services for provincial economies, move more freight off roads and onto tracks, and help make our economy a truly sustainable one."
The Government renamed the system KiwiRail and promised to spend millions turning it into a world-class 21st century network.
It is being run by an establishment board under former prime minister Jim Bolger.
