Interislander ferry replacement: The colossal cost to economy of ferries with no rail capacity - Todd Valster

Most inter-island rail freight runs on the only rail ferry – the Aratere. Photo / Mark Mitchell

Opinion

THREE KEY FACTS

• The Government canned a previous plan to replace Interislander’s ageing fleet with two mega ferries soon after it came to power amid a $1.47 billion budget blowout.
• The only rail-capable ferry, Aratere, has had mishaps this year including running aground in Picton and crashing into the Wellington linkspan.
• A Taxpayers’ Union-Curia poll suggests Kiwis are divided over whether the Government should sell the Interislander Cook Strait ferry service to a private operator.

Todd Valster is the national secretary of the Rail and Maritime Transport Union.

OPINION

As a unionist, I don’t enjoy agreeing with a former Act Party leader.

But Richard Prebble was right when he wrote in the Herald late last year about the iRex cancellation, saying, “In a decade, we will think $3 billion for new ferry terminals in Wellington and Picton plus two new ferries was a bargain”.

The only thing he got wrong was the timeframe. Just eight months later, the Government is close to $1b in the hole with no ferries to show for it, and the iRex Cook Strait ferry replacement project is already starting to look like a bargain.

Prebble is also right about the colossal cost to the economy of having ferries with no rail capability. Because to be clear about this - no rail ferries ultimately means no rail.

That’s the magnitude of the decision in play here. It has been estimated the cost of shifting a container from a train to a ferry and back is $150-200. For each container movement, you need a skilled driver on a lifter and another driving a MAFI truck to take the container on to the boat.

There are two container movements needed at each end of the strait. Compared with shunting carriages straight on and straight off a rail ferry, it is more expensive and takes considerably longer.

Rail and Maritime Transport Union members know how much longer because KiwiRail currently runs both rail and non-rail ferries. With road-bridging, it takes two and a half hours at each end to unload a train into a ferry and vice versa. It’s under an hour at each end with roll-on rail. Like they say, time is money.

It’s why most inter-island rail freight runs on our only rail ferry - the Aratere.

The Aratere is the only rail-capable inter-island ferry and has suffered two significant mishaps this year. Photo / Mark Mitchell

Both new iRex ferries were going to be rail-enabled, which would have ensured rail freight between the islands would be more efficient and more cost-effective.

The iRex replacement hasn’t been announced, but it’s expected Finance Minister Nicola Willis will forgo rail-enabled ships to try to shave money off the project. Mostly from the landside infrastructure. That’s what used to be called “penny wise, pound foolish”.

Eliminating rail-enabled ferries on the strait would sever the rail link between the North and South Islands and effectively price the Christchurch to Auckland rail freight route out of the market. Without that route, rail freight will not be viable in the South Island, and most likely nationally.

Putting aside the damage to competition in the freight market and the impact on businesses that rely on domestic freight, the loss of rail would have huge economic and environmental repercussions.

The increase in long-haul trucks needed to replace rail would massively increase the pressure on our roading system and further congest our cities.

KiwiRail carried a million tonnes of goods across Cook Strait on rail in the first half of this year alone. That’s equal to 100,000 average truckloads, or over 500 more trucks a day.

If other routes become unviable without the Cook Strait connection and the rail network it makes viable, it would add more than a million additional truck journeys on our roads a year, creating more congestion and maintenance costs. Just running logs by train from Wairarapa to Wellington saves 20,000 truck journeys every year.

Rail freight generates 70% less greenhouse gas emissions than road freight.

Each additional five-axle truck has about the same impact on the road as 10,000 cars. Transport Minister Simeon Brown has put half a billion dollars into a pothole repair fund. Take away rail freight? Double that fund. Add the increases in lost commuter time due to congestion and the value of rail ferries is obvious.

It’s the landside infrastructure “blow-out” costs which Willis said drove her to cancel the new ferries. But cost increases have hit the construction sector everywhere since the pandemic.

In Tasmania, the cost to the government of building terminals for their ferries has gone from A$90 million to A$375m. Closer to home, the private-public partnership-built Transmission Gully went from an $850m estimate to $1.25b.

It cost Fletcher Construction, a private company, an additional $150m over the 2019 fire insurance payout to finish the SkyCity conference centre. Internationally, the price to build a ship has increased by 53% since 2019.

You can argue whether post-pandemic construction inflation is due to opportunistic price-gouging by multi-national corporations or the genuine effect of international market pressures, but one fact doesn’t change. It costs what it costs.

It’s not like getting rid of rail on the Cook Strait means we don’t have to spend that money. Most of the landside infrastructure spend is about making terminals earthquake-resilient and able to deal with rising sea levels. We still need to do that regardless of what ferries the Finance Minister chooses.

What we don’t need to do is add the massive cost of losing rail to that bill.