In the year since Finance Minister Nicola Willis’ decision to effectively cancel project iRex,Labour’s plan to replace the ferries, there had been little detail about the future of KiwiRail’s ferry service, including what kind of ferries would be bought, who would own them, how much they would cost and whether they would be “rail-enabled”, a key aspect of the original plan which KiwiRail and some rail commentators had argued was crucial to maintaining a network spanning both the North Island and the South Island.
On Wednesday, Willis announced that Deputy Prime Minister Winston Peters would become Minister of Rail, taking over many of the responsibilities of the project.
The Government will create a Schedule 4a Crown company to procure two new ferries. Once procured, the ferries would likely be transferred back to KiwiRail to be operated. The company will also work with KiwiRail and the ports to plan the portside infrastructure investments needed to host the new ferries, a key driver of the blowouts of project iRex, of which just $551 million of the more than $3 billion cost was the ships themselves.
The most likely option is for two medium-size, 200m, non-rail enabled but “rail-capable” or “RoPax” ferries, which was the option that emerged from the Ministerial Advisory Group in June. This option allows rail freight to be shifted on and off the ferry on trucks.
However, Peters, a champion of rail-enablement, has secured a key concession, which is that he has until March to find a way of getting a better deal. Peters has invited the private sector to “put forward alternative proposals for a ferry service during the first stage of the procurement process”.
In March 2025, any such proposals will be assessed alongside the Government-proposed option and a final proposal will be chosen.
On Wednesday, Peters appeared hopeful that this might yield a better deal than what was on the table, including rail-enablement, noting that all options were on the table.
The problem for the Government is that while it has agreed a way forward and agreed to a funding envelope, many of the questions that have been hovering over the strait project for a year remain unanswered: the type of ferries is still unknown, the cost is unknown (though an envelope exists), and what this all means for KiwiRail is also unknown – Act leader David Seymour suggested on Wednesday he wasn’t keen for KiwiRail to run the ferries once they are delivered.
“That decision is four years away, let’s see how KiwiRail is doing, who has produced [the ferries] and what private money has come in,” Seymour said.
“I’d like to see businesses that are efficient and unfortunately, KiwiRail has had billions of dollars put in and is running at a loss.”
Ferry costs
Hipkins attacked the Government for taking so long to announce a plan with so little detail.
“They’re not saying how much the new ferries are going to cost, even though we know they’re likely to be significantly more expensive than the ferries they cancelled,” he said.
“Nicola Willis also isn’t being upfront with Kiwis about who’s ultimately going to end up paying for the wharf and terminal upgrades that are still going to be required.”
Seymour might have given away the cost, putting out a press release that said the indicative cost for the new plan was “approximately half the at least $3 billion cost of iReX, of which the Crown was asked to fund approximately $2.2 billion”.
Act leader David Seymour is open to who eventually owns the ferries. Photo / Mark Mitchell
This could mean a new plan costing about $1.5b and perhaps a Crown contribution closer to $1.1b.
Peters dismissed the press release, saying: “I’m in charge of the thing now. That’s not my view and that’s the end of it.”
“It’s not helpful because it’s not accurate,” he said.
Peters said to make a “wild guess” about the cost of the project now would be “totally wrong”.
Prime Minister Christopher Luxon told the House the final cost would be lower than the $3b iRex figure.
Rail capability and portside infrastructure
Rail-enablement was responsible for much of the cost of iRex. Linking portside rail with tracks on a ship requires a greater degree of precision than linking a road up with the ferry, because the tracks on the port and the ferry must line up almost exactly for the system to work at all. In a seismically active region, this also requires far more resilience, as a relatively small earthquake could render the rail-enablement redundant by moving the rail on the port and the ferry out of alignment even slightly.
Luxon described the “core proposal” as “rail-capable ferries”, citing the current Cook Strait ferries, which were rail-capable in the sense that rail freight could be put on the boats on trucks. Only one of the ferries is rail-enabled, allowing trains to shunt wagons and locomotives directly on to the train.
“If there is more opportunity to find a way for us to do rail-enabled, we’ll look at that but it’s got to be sorted out by the end of March,” Luxon said.
Maritime Union of New Zealand National Secretary Carl Findlay said the Government had “doubled down on the terrible decision they made a year ago”.
He said there was “no certainty for workers working on the ferries”.
Findlay said the ferries “first and foremost ... absolutely have to be rail-enabled ... otherwise, the rail network between the North and the South Island is absolutely destroyed”.
In select committee last week, KiwiRail sounded a more agnostic tone on rail-enablement than it had done in the past.
Interislander general manager Duncan Roy told the Transport and Infrastructure Select Committee that most rail freight transported across the Cook Strait was moved via the Aratere, the one rail-enabled ferry in the existing three-strong fleet, which would appear to undermine Luxon’s argument that rail-enablement is less significant because four of the five ferries working on the strait are not currently rail-enabled.
Greater Wellington Regional Council chair Daran Ponter wants the Government to consider vessel recovery options. Photo / Mark Mitchell
KiwiRail also told the committee that locomotives could be transferred from one island to the other without rail-enablement, preserving the integrity of the national rail network. Some locomotives could be put on ferries, although this would be challenging. Coastal shipping could also be used.
The new ferry procurement company will engage with Centreport in Wellington and the Port of Marlborough in Picton about the portside investments needed to host the new ferries.
Daran Ponter, chair of Wellington Regional Council – the owner of CentrePort – wanted more detail about the future of the portside infrastructure at the port.
“[There’s] probably not enough communication to us yet as as port owner and as CentrePort around how they envisage things working in terms of portside operations – who’s going to redevelop the ports, cater for the new ferries, who’s going to operate the new facilities on both sides ... and who’s gonna pay for those facilities,” Ponter said.
He said what type of ferry the Government ended up choosing would “have a significant influence on what is actually required on the portside”.
Ponter said the Government might have to “lean on” things like the new fast-track legislation to get the infrastructure consented and built in time.
Currently, vessels that get into trouble in the Cook Strait are essentially left to fend for themselves, because Wellington’s tug boats are only designed for work in the harbour and not the open water. This is a particular concern as the Interislanders age and breakdowns become more frequent.
“I will be looking for the Government to make a solid announcement about what vessel recovery looks like like in the Cook Strait area. It’s possible that we may need that more than ever over the next five years to 2029,” Ponter said.
“As I’ve said in the past, we have escaped by the skin of our teeth. Over the last three years, there’s just been incident after incident on the Cook Strait and the fact that a ship, a ferry or a container ship or an oil tanker hasn’t actually found itself on the rocks is really just a matter of ... good luck to date.”
Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.
