The construction of a South Island ferry terminal at Clifford Bay, south of Blenheim, that would cut journey times moved a step closer with the Government yesterday announcing further work on the proposal.

However, the estimated cost of the project, which may be funded through a public private partnership, has doubled to more than $400 million.

An initial investigation into the viability of the project was launched a year ago and yesterday - in an update on its infrastructure investment programme - Transport Minister Gerry Brownlee said the Government wanted to pursue the idea further.

"Cabinet believes the business case we've been presented is strong enough to justify further testing the viability of this major change to New Zealand's transport infrastructure," he said.


The terminal would reduce the ferry/road journey time between Wellington and Christchurch by 80 minutes and shorten the ferry/rail journey by 110 minutes. It would also effectively bypass Picton and Blenheim and Mr Brownlee acknowledged the effect that would have on businesses in those towns.

But although the cost of building a terminal at Clifford Bay was estimated at $200 million a year ago when it was suggested a public private partnership might be formed to build it, Mr Brownlee said estimates now put the price tag at $422 million.

A group of officials and private sector experts would continue working on the business case for the new port and report back to the Government by April.

KiwiRail chief executive Jim Quinn said a decision on Clifford Bay would help his company plan the future shape of its fleet and the way it structured its business to manage expected growth in freight.

"The important thing from Interislander's point of view is that a decision is made sooner rather than later so that we can plan for the future and that if that decision is to go ahead with the new terminal, that Interislander, as a cornerstone customer, is involved in the functional design and commercial negotiations from an early stage."

Mr Quinn said KiwiRail was unlikely to be the port's owner or builder.

Labour's transport spokesman, Phil Twyford, backed the decision to continue work towards the terminal.

"On the face of it you'd think this would have a pretty impressive cost-to-benefit ratio.

"When you compare to the huge amounts of money being spent on projects of much lower value in terms of the Roads of National Significance, Clifford Bay deserves a serious look."