Story: Railways

Page 11. Rail transformed

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By the 1950s rail’s golden age was coming to an end. Over the next half-century most long-haul passenger services were withdrawn. Numerous branch lines, stations, workshops and other facilities were closed, and often demolished. Despite the best efforts of an enthusiastic rail heritage movement, much of the physical fabric of New Zealand’s rail system vanished.

Sell-offs and buy-backs

The management of railways has been through radical changes since 1982, when the 102-year-old Railways Department became the New Zealand Railways Corporation, an early kind of state-owned enterprise (SOE). In 1990 the corporation’s core business was transferred to a new limited-liability company, New Zealand Rail, in preparation for its sale.

In 1993 New Zealand’s rail system (including the track network) and inter-island ferries were sold for $328 million to a private consortium made up of US investment group Berkshire Partners, US rail company Wisconsin Central, and merchant bankers Fay, Richwhite and Company. Renamed Tranz Rail, the organisation performed poorly, and in 2003 was bought out by the Melbourne-based Toll Holdings.

In 2004 the Labour-led government (which had already bought Auckland’s suburban rail system in 2001) repurchased the rail infrastructure and vested it in a new SOE, Ontrack. On 1 July 2008 the government bought Toll’s rail and ferry operations for $665 million, renaming the company KiwiRail.

The railway people

The transformation of the rail system since the 1950s has had a huge impact on the rail workforce. With almost 20,000 employees in 1930 and 27,000 in 1950, the Railways Department was for many years New Zealand’s largest employer. The ‘railway people’ had a strong sense of identity and their own distinctive culture, reinforced by family and social networks, departmental housing, trade unions, bands, clubs, sports teams and picnics.

As recently as 1982 railways employed nearly 22,000 workers, a significant proportion of them Māori. Beginning in 1984, 10,000 jobs were cut in five years, with distressing consequences in many communities. By 2001, after two decades of rationalisation, mechanisation and centralisation, and the closure or contracting-out of many services, Tranz Rail employed just over 4,000 people.

A rail renaissance

In the 2000s, New Zealand’s rail story is far from over. Railways have moved record freight tonnages in recent years. Commuter traffic has surged in Wellington and especially Auckland (where a major upgrade programme was undertaken in the 2010s, with the suburban network electrified by 2015). The TranzAlpine service and Otago’s Taieri Gorge Railway have continued to thrive, while steam heritage excursions and rail museums remain popular.

The transport sector is a highly competitive and customer-driven business, but rail’s advantages over road transport in terms of fuel efficiency and environmental impact suggest that it will figure prominently in New Zealand’s future transport plans.

How to cite this page:

Neill Atkinson, 'Railways - Rail transformed', Te Ara - the Encyclopedia of New Zealand, (accessed 23 May 2024)

Story by Neill Atkinson, published 11 Mar 2010, reviewed & revised 11 Mar 2016