Documents prove Nicola Willis too hasty in cancelling ferry contract – Editorial

Editorial

Within months of unceremoniously scrapping the previous Government’s iRex project, Finance Minister Nicola Willis was advised by the crack team, set up by herself, to go back to try to salvage something with the scorned shipbuilder.

As it turns out she couldn’t, telling the Herald this week such an option turned out to be “too expensive”.

Embarrassingly for the Finance Minister, Winston Peters appears to now be running his own salvage operation and may just achieve what Willis' $300,000 Ministerial Advisory Group (MAG) recommended she do.

When Nicola Willis stepped into her new finance role in 2023, she made quite the entrance with her shock announcement to scrap iRex entirely.

She said the new Government would not be giving any more money to KiwiRail for its new mega-ferries and portside infrastructure after costs blew out to $3b.

She was unapologetically here to rein in costs, introduce some fiscal discipline and cut wasteful spending. There was a new budget boss in town and this was her stamping her authority.

Willis agreed we desperately needed new ferries to replace Interislander’s three ageing vessels. She just couldn’t accept the endless cost blowouts for the previous plan under Labour.

But the building of the mega ferries was never the problem – it was the portside infrastructure needed to support them that was leading to eyewatering escalations.

The $551 million contract with Hyundai Mipo Dockyard (HMD) in South Korea to build the ferries was already safely locked in. There was a chance to negotiate smaller ships.

When Willis scrapped the project, she said she’d set up a team of experts – a MAG – to help find a new solution. She said the Government’s concern was that, “given KiwiRail got us into this mess, it wasn’t appropriate to simply rely on their advice”.

Willis said it would not be sensible to rush into making the wrong decision and repeat mistakes of the past.

Within weeks of her MAG operating, Willis was being told to urgently try and renegotiate the contract KiwiRail had secured.

With the benefit of hindsight, and new documents released this week shedding more light on the aftermath of her bombshell decision, it’s clear Willis should have pressed pause and reassessed the project rather than cancel it outright.

It would have avoided damaging our relationship with Hyundai, would have avoided the hefty break fee we’re now lumped with and would have avoided us needing to go back cap in hand.

Who knows what’s now being added to the deal to entice Hyundai back to potentially build us new – smaller – ferries.

Willis' critics have long labelled her decision “unbelievably reckless and irresponsible”, cancelling new ferries without any viable alternative.

The fact her own advisory group of experts was telling her to try to renegotiate a contract with Hyundai to retain ship building slots – within weeks of being fully briefed on the situation – will further cement those views.

Add to that the fact one of the architects of iRex, Winston Peters, is now Minister of Rail and was back at Hyundai’s South Korean shipyard just last weekend. Repeating mistakes of the past or repairing them?

With still no signed contract for new ships, one wonders whether Willis is now regretting her hastiness.

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