The Government wants competition on metropolitan commuter rail services.
Transport Minister Steven Joyce says Kiwirail should not automatically have the right to operate the trains - even if
owns the rolling stock.
He says KiwiRail should compete with its rival operators for the services, which would keep them up to the mark.
Mr Joyce says the current arrangements reduce financial transparency and make it harder to see how Government subsidies are spent.
Auckland's rail network is operated by a French-based company, Veolia.
Managing director Arthur Bruce says he wants to take services in Wellington off KiwiRail, as well as holding on to those in Auckland.
Wellington Regional Council says about 34 million trips are made on public transport per year. Fares cover about half the cost of running that and central and local Government subsidise the rest.