That project started life as a $775 million project, according to a 2018 business case to purchase two rail-enabled large ferries and to upgrade the port infrastructure in Wellington and Picton.
Blowouts to the infrastructure side of the project meant that by the time Willis declined a further funding injection, the total cost of the project was about $3 billion.
Peters said the ships the Government was looking for would be “approximately 200m long - longer and wider than the current fleet”, however they would be shorter than the ferries ordered under Labour in 2021.
The size of these ferries was one of the reasons why costs blew out, because they required much larger portside investment.
Peters said the Government would replace infrastructure in Picton, which was old and needed replacing. The infrastructure in Wellington “has life left in it”, Peters said, “so it will be modified and re-used”.
“Our analysis showed this to be the most cost-effective option, and contrasts sharply with the wanton demolition and extravagant specification under the cancelled project, where they assumed almost all costs would be at the taxpayers’ expense,” Peters said.
Labour, KiwiRail, and councils respond
The Labour Party attacked the coalition for cancelling the ferry contract.
Leader Chris Hipkins defended Labour’s handling of the ferry replacement project, but said there were things that could be learned in hindsight.
One lesson, Hipkins said, was that Cabinet perhaps should have thought twice when Peters brought the original proposal to the table in the Labour-NZ First coalition years.
KiwiRail began work on replacing the ferries in 2015. In November 2018, an indicative business case for replacing the ferries found the “best solution was to replace the existing three ferries with two significantly larger rail-enabled ferries,” according to a later Treasury Paper. These were developed in a detailed business case which landed in 2021, after Peters had left the Government.
The 2018 proposal, partly funded in the 2019 and 2020 Budgets, committed the Government to the cost of the two large ferries, which was $551m - as well as the cost of replacing infrastructure at ports in Wellington and Picton, which increased in cost considerably, in part because of the ferries’ size.
“With the benefit of 2020 hindsight, accepting Winston Peters’ recommendation that we should go for two mega ferries in the first place probably wasn’t the wisest decision. Two smaller ferries, which is where the Government has landed now, might have been better from the outset - that wasn’t what Winston Peters recommended,” Hipkins said.
Hipkins hinted that, in hindsight, it would have been preferable if Peters had brought the current option to the table back in 2019.
“If this is what Winston Peters proposed the first time round, we might not be having this conversation,” he said.
KiwiRail Chief Executive Peter Reidy said the decision to go with rail-enabled ferries was “great news for the public, international visitors and the entire freight market”.
“As New Zealand’s only company moving freight by rail, KiwiRail is particularly happy to see that specifications are for rail-enabled ferries which will ensure the lowest operating cost for rail freight and increased capacity for road transport operators,” Reidy said.
The Government enlisted Det Norske Veritas to assess the remaining life of the existing fleet of ferries. Their conclusion was that, while the ferries’ hulls are in good condition, other factors such as increasingly obsolete systems, mean the ferries will reach the end of their economic lives by 2029.
Reidy said KiwiRail would be able to maintain the existing fleet until new ships were ready to take over.
“Until the new ships arrive, Interislander will continue providing a reliable and safe Cook Strait service with our current ferries. They are the workhorses of Cook Strait, together carrying more than 620,000 passengers, 230,000 cars and 73,000 commercial vehicles a year, along with rail freight,” he said.
Marlborough Mayor Nadine Taylor said the decision was “welcome news”.
“Council and its subsidiary Port Marlborough New Zealand will work closely with Government and KiwiRail on the portside infrastructure design and associated costings to ensure the commercial viability of the project,” Taylor said.
Key specifications of the new ferries
- The new ferries will be about 200m in length and 28m wide.
- They will each have capacity for 1500 passengers, and 2.4km of lanes for cars, trucks, and 40 rail wagons.
- They will be designed to ensure they can operate through the Tory Channel, at a speed of 20 knots, and be highly manoeuvrable.
- They will be designed with modern system redundancies and future proofing solutions to reduce carbon emissions.
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.
