Curran seeks Hillside review

Dunedin South MP Clare Curran has written to the Auditor-general asking for an urgent investigation into the tendering and decision-making processes that KiwiRail used to procure rail wagons in the past two years.

She has also asked for an investigation into the extent and appropriateness of political involvement and interference in tendering decisions made by the KiwiRail board.

She told the Otago Daily Times she believed the board had blocked proposals from Hillside and KiwiRail management for rail carriages to be built at the Hillside workshops, in Dunedin.

South Island organiser for the Rail and Maritime Transport Union John Kerr said in an interview he was at a meeting of the KiwiRail Mechanical Industrial Council on September 27 when a briefing was given on the progress on the sale of Hillside.

At that meeting, a study was presented looking at producing 100 flat-deck wagons a year from Hillside - the type of work the workshops excelled at, he said.

KiwiRail had planned to buy several thousand wagons from overseas, partly because the company believed it did not have the scale to produce them quickly in Dunedin.

Because of the global downturn and the Christchurch earthquakes, KiwiRail had not hit its financial targets and was scaling back its capital expenditure, Mr Kerr said.

A proposal was put forward for Hillside to produce some of the wagons in a short-term production run to first keep the workshops open and secondly make them a more attractive purchase target for any prospective buyer.

Mr Kerr said the meeting was told the decision not to progress with the proposal, which he believed was well within pricing guidelines, was made at board level and with the shareholder - the Government.

"We always believed the board and Government wanted to shut the workshops down but we never heard it expressed so clearly before."

Asked if he was surprised by the news the board and Government appeared opposed to the ongoing production, Mr Kerr said he was only surprised by how clearly it was expressed at the meeting.

Ms Curran is filing an Official Information Act request seeking a paper trail on who saw the production proposal and who acted upon it.

"The Government has consistently claimed that the decisions made by the KiwiRail board are operational and that it has not issued directions to require KiwiRail to choose the lowest cost bidder for rail wagons, or to require KiwiRail to run down and divest itself of core capacity at Hillside. I contend that this is simply not true."

That was why she was asking the Auditor-general to investigate.

The actions of KiwiRail, its board and shareholding ministers - Finance Minister Bill English and State-owned Enterprise Minister Tony Ryall - potentially represented a breach of the social responsibility clause of the State-owned Enterprise Act, Ms Curran said.