Rt Hon Winston Peters
Minister for Rail

Rail Minister Winston Peters has described KiwiRail’s payment of $8 million to a management consultancy firm as unacceptable.

“We are not criticising McKinsey, whose services were tendered in a lawful and competitive manner. We are criticising the decision to pay that sum,” says Mr Peters.

KiwiRail engaged McKinsey on 6 December 2023, but did not tell the Government about it until 7 February 2024 or disclose the value of the payment to Ministers until 6 June 2024. The Ombudsman determined recently that the total payment value should be released.

“We want railways to succeed for this country, and we have provided KiwiRail with a rock-solid commercial foundation to do that,” says Mr Peters.

“KiwiRail is receiving new locomotives and wagons, modern and efficient mechanical depots, better systems to manage these assets, long-term infrastructure certainty like road freight operators have with the State Highways, and we have sorted the ferry replacement – again.

“The response to a difficult balance sheet should not be to bring in management consultants. This would not have happened had they told us their plans.

“The response should be to tighten spending, lift service quality and build the customer base, and that is exactly what KiwiRail is now doing.

“Freight is about schedule reliability. If you can prove to customers that you turn up when you say you will, then loyalty will grow and volumes and earnings will follow.

“We are pleased KiwiRail is focussed on this. Reliability is strong, especially for major industry customers, and Interislander is delivering near 100% reliability. Safety is heading in the right direction too.

“Earnings are on target and the company has achieved $30 million in savings so far this year. KiwiRail has firm targets to attract more volume from existing and new customers, and we were pleased to see a real customer strategy laid bare in recent discussions with KiwiRail’s senior management,” says Mr Peters.

© Scoop Media