Ports on either side of Cook Strait were reluctant to work with KiwiRail after their experience with the failed mega-ferry project.
The issue was raised in proactively released reports by the ministerial advisory group (MAG) tasked with finding a solution to replace KiwiRail’s ageingInterislander fleet.
“We note that the ports have deferred infrastructure investment for coming close to a decade due to the fact KiwiRail has been working on new ships since 2015 and that both CentrePort and Port of Marlborough depend on the ferry operators’ revenues for financial viability,” MAG chairman Mark Thompson said in June last year.
“The likely investment required and level of commercial charging by the ports is critical and has a material impact on future costs for both operators and ultimately their customers.”
In December 2023, the Government announced it was axing KiwiRail’s plan to replace the Interislander fleet with two rail-enabled mega-ferries after the cost of associated portside infrastructure increased exponentially. The forecast project cost increased from $775 million to at least $3 billion despite the mega-ferries costing just $551m.
KiwiRail chief executive Peter Reidy and acting chairman Rob Jager. Photo / Mark Mitchell
Port companies indicated a reluctance to work with KiwiRail on a new solution because of their experience with KiwiRail and the mega-ferry project, Thompson said.
This was identified as a significant risk that could hinder ministers' ability to make decisions regarding potential replacement ferries.
Thompson recommended ministers decide on an entity to procure new ships and engage with ports to “provide a pathway for a trusted approach to commercial negotiations”.
Ministers should also “recognise that the Crown may need to facilitate land swaps and contribute funding toward infrastructure to create a level playing field for operators”, Thompson said.
Since receiving this advice, the Government has established a Schedule 4A Company to procure new ferries and support officials to work with the ports and other stakeholders on the required landside infrastructure. The company is called Ferry Holdings.
The Government has yet to confirm the type of ships it wants to procure.
Minister for Rail Winston Peters is now in charge of delivering the new ferries and is on the hunt for a better option than the one Finance Minister Nicola Willis has put on the table.
Minister for Rail Winston Peters is now in charge of delivering new ferries. Photo / Mark Mitchell
A spokesman for Peters said since returning to the portfolio, the Minister for Rail has observed KiwiRail and the two ports have shown a “great willingness to work together on a cost-effective solution”.
A proactively released Cabinet paper from the end of last year said the necessary landside infrastructure could not be costed with confidence until design work was completed.
However, indicative costings, which were redacted, compared “favourably” to the approximately $2 billion in landside development required to support the mega-ferries.
Peters, who is also the Deputy Prime Minister and the leader of New Zealand First, asked Willis during question time last week: “Is the Finance Minister confident that when this is all resolved, the savings to the New Zealand taxpayer, based on Treasury’s latest prediction, will be in excess of $2 billion?”
Willis said she was delighted to hear that Peters had these matters in hand.
Labour finance spokeswoman Barbara Edmonds asked Willis whether she agreed and could confirm that the new ferry option would save $2b.
“Well, as I’ve just said, I find it’s always wise to agree with the Minister for Rail,” Willis replied.
We’re meeting with the key people face-to-face as Minister for Rail to deliver affordable, reliable inter-island ferries.
We met this week with CentrePort to inspect the Interislander ferry infrastructure with the goal of maximising re-use potential for the new ferry solution. pic.twitter.com/yWw7PxsY46
The Cabinet paper clearly stated the ports are expected to fund as much of the landside development as possible.
“The ports will, where possible, pass these costs on to operators in user charges, which in turn will likely be passed on to ferry customers.
“Maintaining private sector discipline and competition on the Strait maximises the likelihood that development will be funded at a level the market [operators and customers] can bear.”
Peters and Ferry Holdings chairman Chris Mackenzie visited CentrePort in Wellington on Thursday.
“We met this week with CentrePort to inspect the Interislander ferry infrastructure with the goal of maximising reuse potential for the new ferry solution,” Peters posted on social media.
CentrePort chief executive Anthony Delaney said they showed Peters marine assets used by Interislander.
“We received feedback from the minister that he found it valuable to see these assets in person and that he appreciated the opportunity to ask questions.”
Georgina Campbell is a Wellington-based reporter who has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working as a broadcast journalist.
