Working paper

The Privatisation of New Zealand Rail (WP 99/10)

Formats and related files

Authors: NZ Institute for the Study of Competition and Regulation Inc


The methodology for the study involves determining the nature and amount of economic welfare gains and losses resulting from the privatisation of New Zealand Rail, and the incidence among groups in society. The study measures the welfare change that is attributable to the change of ownership. To do this, the study assesses actual economic results against three ‘counterfactuals’ - analyses of what would have happened if NZ Rail had stayed in public ownership.

The study finds that welfare has increased from the privatisation of rail. This reflects the remarkable improvement in productivity that took place. It finds that government and taxpayers gained the most from privatisation because of the elimination of their commitment to funding rail losses under public ownership. For instance, it cost taxpayers over $1.1 billion to support NZ Rail between 1983 and 1993, and since the 1880s rail was corporatised five times under state ownership and each time the reorganisation failed to deliver a sustainable improvement.