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.
As the Rail and Maritime Transport Union's (RMTU) organiser for the South Island, charged with advocating for the 170 or so members who work at Hillside, I find myself in the unusual position of having some sympathy with a National MP.
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.
The RMTU is engaged in consultation with KiwiRail over the proposed jobs cull at Hillside. As part of that consultation, we've had access to information on the financial details of the overseas and Hillside bids for the initial order of 300 wagons. We can't disclose that information because it's commercially sensitive.
Of course, there is information in the public domain and Michael Woodhouse has cited some of that. Specifically, he states the Hillside tender was 25% more expensive than the winning foreign bid.
It's hard for the RMTU to refute that without breaching our agreement with KiwiRail over confidentiality of the figures. So we're not going to.
What we can say is that from our analysis, and we've had the information on the respective bids gone over very carefully by financial and engineering experts, is that it's correct that Hillside-built wagons will be more expensive than the those made offshore. Hillside wagons won't be 25% more expensive, though. It'll be considerably less than that.
The Hillside bid was inflated by factoring in the cost of capital expenditure to retool into the initial 300-wagon production run. Those tools and that machinery will have a life far beyond the initial build. They will have a life far beyond the 4000-wagon build KiwiRail needs to cope with increased demand for freight movement in the next 10 years.
We also know that Hillside is loaded with "shared services" costs that include, among other things, that of KiwiRail's CEO Jim Quinn's salary, and those of his corporate services managers and so forth. Now, it's true that all this has to be paid for somehow.
We fail to see how running down Hillside helps do that.
Those are just two of a string of examples that we have asked KiwiRail about. Others include loading contingent costs for repairs into the cost of the Hillside bid instead of focusing on real costs.
Of course, none of the above mentions the downstream cost to New Zealand of chopping these 40 jobs.
Business and Economic Research Ltd, a reputable think-tank, was commissioned to analyse the effects of Hillside losing work before these job cuts were announced. I don't have to rehearse their conclusions here: the Dunedin City Council's business advisory people and the Dunedin Chamber of Commerce can do that far better than I. Suffice to say, dozens of small and not so small businesses rely on work generated by Hillside. These businesses provide hundreds of jobs.
These jobs create wealth and pay taxes.
That wealth gets spent in Dunedin and in New Zealand and those taxes pay for schools and hospitals. Simple really.
So why do I feel sorry for Michael Woodhouse?
Because I give him credit, as the grandson of a Hillside worker, for knowing the devastating effect his Government's policies will have on the people and businesses of Dunedin. As a loyal National MP, he feels he has to try to justify it.
Contrary to what the Government says, it can step in and do the right thing. The State-owned Enterprises Act charges SOEs like KiwiRail with taking into account the wider social implications of what they do, not just focusing on narrow commercial criteria. Moreover, under the KiwiRail statement of corporate intent, KiwiRail can call on the Government for compensation for "projects undertaken by the corporation which have a public good element or purpose and would not be undertaken on purely commercial grounds."
KiwiRail doesn't look at the big picture and the Government as the shareholder has the ability to influence the board to get management to change tack.
Michael Woodhouse knows this. I may be naïve, but I don't believe he's one of those Tories who knows the price of everything and value of nothing. I hope he does the right thing and calls on the Government to intervene, because he can and they should.
