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Dunedin South MP Clare Curran said there was much irony in the justification for the sale because of a reduction in forward orders, particularly as both the Government and KiwiRail had stopped Hillside from building the flat wagons, a contract that eventually went to companies in China.
"While I applaud the Dunedin City Council, the Otago Chamber of Commerce and the unions for putting a positive spin on it, you could see this coming for at least a year.
"KiwiRail and the Government have pissed on Dunedin," she said.
The Government was sanctioning the sell-down, according to Ms Curran, who has battled for more than three years to bring attention to the fate of Hillside.
Ms Curran found it unbelievable Prime Minister John Key and Finance Minister Bill English were unaware the announcement was coming, when it was a matter of high public interest.
There was a no surprises policy from state-owned enterprises or entities and if the KiwiRail board - many of them appointed by the Government - had not made shareholding ministers aware of the sale, it was an issue of negligence.
"I am outraged. For Government ministers and the Prime Minister to pretend it has nothing to do with them and they didn't know about, it is duplicitous at best."
The strategy to sell Hillside Workshops started about 18 months ago, Ms Curran claimed.
KiwiRail employed a person whose job it was to find new contracts. She understood that person did not find any new contracts and that his real job was to institute change management and ready the workshops for sale.
When more than 40 staff were made redundant last year, the plan was in play, she said.
Former Labour cabinet minister David Parker said if the KiwiRail board had made the same announcement without telling a Labour government, the board would have been sacked.
Mr English told the Otago Daily Times he was not aware of the sale announcement before it was made, but he, and most of New Zealand, were aware of issues around the viability of Hillside and had been for a long time.
"We are looking at the problem differently than Labour. We are representing the taxpayers' $4.5 billion investment over a 10-year term for KiwiRail.
"We have to focus on that investment to make sure the extra cash we are putting in, and the cash they might generate, is consistent with the 10-year plan."
Mr English was adamant the decision to put Hillside up for sale was a board decision. KiwiRail was a $5 billion business and the Government was not involved in every decision.
"Hillside is a small part of a big picture. We wouldn't expect to know every detail."
He accused Ms Curran of taking a negative political view that would not help Dunedin and no way could the decision be seen as anti-Dunedin.
"The Government is pouring money into Dunedin, particularly through the science and education budgets. More Government money than ever is going into Dunedin." The best thing for Dunedin was to have a supportive owner of Hillside that could secure ongoing contracts.
KiwiRail could, and had said it would, help find a new owner, Mr English said.
"As a Southern MP, what I hope for is a working viable Hillside to offer opportunities for our young people. What I do know is we need a commercially sustainable solution.
"If it depends on Clare Curran or Bill English, then it's not a viable solution," he said.
Otago Chamber of Commerce president Peter McIntyre and chief executive John Christie both assured the ODT they were not privileged to any prior knowledge of the decision.
Both were alerted through embargoed press releases after KiwiRail chief executive Jim Quinn told the staff.