Opinion: Plan for Hillside prompts searching questions

Brilliant autumn sunshine shone on my old alma mater last Monday as Dunedin South MP Clare Curran and I visited Hillside Workshops. Photo: Gerard O'Brien.
Brilliant autumn sunshine shone on my old alma mater last Monday as Dunedin South MP Clare Curran and I visited Hillside Workshops. Photo: Gerard O'Brien.
OPINION: Brilliant autumn sunshine shone on my old alma mater last Monday as Dunedin South MP Clare Curran and I visited Hillside Workshops.

The Hillside situation worries me.

In the 1950s, it employed thousands of workers; now a mere 200.

KiwiRail recently outsourced the next 500-carriage contract to China to save money.

I hope the lifetime cost of those carriages will be better than early reports of repair needs indicate.

Now, KiwiRail is calling for expressions of interest in a possible sale of Hillside.

I have yet to review the financial case for this, but I have a number of questions when KiwiRail kindly gives us access.

First, selling the plant after having just off-shored its main production contract can't help the sale price.

Did KiwiRail know it would look to sell Hillside when it sent the carriage contract offshore?

Did it factor into the supposed "savings" the likely capital write-down of selling a plant with a thin forward order book?

Second, Hillside contains advanced skills such as foundry and heavy welding that are unique to that site and are of an international standard.

Once they and their capital equipment are lost, they will be difficult and costly to replace, if that is even possible.

It is hard to see how KiwiRail can properly maintain and customise its fleet without such core skills on board.

What risk analysis has been done in this regard?

How is this capability loss being valued in the sell/no-sell decision?

Third, a resilient rail system is a national strategic advantage, especially in a world inevitably facing dramatic rises in oil prices.

Rail is far more energy efficient than road transport.

It will be vital in future to move logs, coal and milk to our plants and ports.

How is this strategic value being reflected in KiwiRail's decision-making?

Fourth, how does KiwiRail's decision-making reflect the important spill-over benefits to the wider Dunedin business community?

Some 75 companies provide inputs to Hillside and for some, Hillside has been a crucial springboard to wider success.

Selling or closing Hillside would hollow out a sector that has already had a hammering.

Fifth, will the wider costs and benefits of the change be counted?

Retrenching Hillside will reduce tax paid through GST and PAYE.

It will increase the cost of unemployment benefits.

More painfully, it will cause real trauma for many families.

KiwiRail could argue these issues are "not its problems".

But they certainly are Dunedin's and New Zealand's problems.

So what is the current Government doing to ensure that the best decision is reached?

Will it direct or incentivise KiwiRail to include these wider benefits?

There is no sign of that.

The National Government has not lifted a finger to ensure the long-term consequences of closing Hillside are materially reflected in KiwiRail's decision-making.

Frankly, Dunedin deserves better than that.

Your next Labour-led government will get alongside local business.

We will commit to a positive partnership for sustainable growth and decent jobs.

We won't just turn a blind eye when a company like KiwiRail is making irreversible decisions that have huge implications across the community.

We would explore ways to make sure KiwiRail's decisions reflect their wider importance to the Crown and the community, while keeping a clear eye on the value of taxpayers' investments.

We would use a clear, simple plan to engage with major sectors of the economy.

We would work with all regions to help them maximise their potential.

For example, we would get behind initiatives such as the Dunedin Economic Development Strategy, not just dismiss it because times are tough, as Economic Development Minister Steven Joyce has done.

Because it is precisely when times are tough that extra effort must be made to remove roadblocks and open doors to the jobs of the future.

Dunedin is a tale of two cities - the heavy engineering tradition and the knowledge economy driven out of its renowned tertiary education sector.

Our shared challenge is to get the best out of both.

Selling off and closing down Hillside Workshops achieves neither goal.

It is time for the Government to step up and engage with KiwiRail on exactly what this would mean for Dunedin.

• David Cunliffe is the Labour Party economic development spokesman.