MPs have been told that state-owned rail operator KiwiRail is battling to be self-sufficient in the face of weak demand for rail freight.
Appearing at a Parliamentary select committee, KiwiRail chief executive Peter Reidy and other managers were asked about the cost of running KiwiRail and why its freight was reducing.
The executives said 46 percent of freight was bulk, mostly coal and milk, and production had fallen significantly in both industries.
"There is not enough demand for rail in New Zealand to generate the revenue that would allow the company to be self-sufficient," Mr Spencer said.
"Despite the challenges, we are making changes that will reduce government investment over time."
Finance Minister Bill English said in December taxpayers were going to have to continue to subsidise KiwiRail with hundreds of millions of dollars a year.
Mr Spencer said the Government's money went into tracks and their maintenance, the same way money was spent on roads.
Mr Reidy said a lot of effort had gone into reducing costs.
"Let's put the facts on the table, we are reducing the cost base of our business because we need to be competitive so we can go to the market and offer attractive rates to exporters.
"It's about future-proofing the business for future jobs and future generations. We're 150 years old and we'll be here another 150 years, but not unless we make some change."
KiwiRail has lost the contract to run Wellington passenger rail services and this will see about 300 Tranzmetro jobs transferred to the new operator Transdev in July.Newshub