Treasury advised against rail ferries before Government’s purchase

Minister for Rail Winston Peters announcing the Cook Strait ferry replacement plan back in March. Photo / RNZ / Reece Baker

By Nick James of RNZ

Treasury advised the Government not to buy rail-enabled Cook Strait ferries three weeks before it announced it would.

On March 31, the Government announced it would buy two new Interislander ferries to be delivered by 2029 to replace the current ageing fleet.

It came after Finance Minister Nicola Willis had pulled the plug on the previous Government’s Cook Strait mega ferry plan named iReX in 2023.

The ships announced in March would be 200m long and rail-enabled, which meant rail freight could be rolled on and off them.

New documents revealed under the Official Information Act show just 20 days earlier on March 10, Treasury recommended the Government buy non-rail enabled ships.

The agency said the option would be cheaper while achieving the aim of the project.

“There are operational advantages from rail-enablement, but these do not fully offset the increased capital cost.”

The Ministry of Transport also cast doubt on the move, and last year a Ministerial Advisory Group recommended the Government buy two non-rail enabled ferries.

Meanwhile, the Ferry Holdings Company which was set up in March to lead contractual negotiations with shipyards and ports, supported a decision to buy rail-enabled ferries.

“The simplest and most efficient method of moving freight across Cook Strait is by rail-enabled ferries.”

In a statement to RNZ, Rail Minister Winston Peters said that officials took a narrow approach on the consideration of the ferry options.

“They were effectively on autopilot, believing the Government would agree to end 60 years of Interislander connecting road and rail.”

Peters said he did not agree with the advice Treasury provided.

“Their advice was so blinkered that it consistently presented its recommended solution as ‘cheaper’ even when their own analysis showed the option we selected had the lowest overall cost and the highest economic value.”

Treasury declined to comment on Peters’ statements.

– RNZ