New Interislander ferries and portside infrastructure will cost $1.86 billion, in addition to the half-billion spent on the cancelled iRex project, the Government has revealed.
The long-awaited cost estimates come after years of political wrangling over the delayed replacement vessels — one of the coalition’s first political headaches in office.
Rail Minister Winston Peters said the new “no nonsense” infrastructure programme was helping save the taxpayer money when the two ships enter service in 2029.
“Next week we will travel to Guangzhou with the Ferry Holdings chairperson and ships programme director to acknowledge the significant agreement, not just between the shipyard and Ferry Holdings but also as a contribution to economic relations with China.”
Watch Winston Peters speak to media about today’s costings announcement here
Last month, Peters announced Chinese state-backed shipbuilder Guangzhou Shipyard International would complete the new Cook Strait ferries.
The overall cost of the programme was currently estimated at $1.86 billion with the total taxpayer contribution being less than that, according to the Government.
“The total programme will cost less than $2 billion, with the taxpayer contribution coming in under the $1.7 billion allocated at the start of this year,” Peters said.
About $596 million would be for a contract with the shipbuilder to build the new ferries, while $531 million would go towards infrastructure works in Picton, $325 million to be spent in Wellington, and $415 million in management and continengency costs.
“Funding spent on infrastructure will be recovered over the life of the new Interislander ferries and infrastructure through port fees paid from Interislander revenue, and Interislander will be expected to build sufficient reserves to buy new ferries again in 30 years — or put simply, structured like a normal business,” Peters said.
“Ferry Holdings will be in the driving seat for the infrastructure, ably and contractually backed by CentrePort, Port Marlborough and KiwiRail, and accommodations will be made to minimise disruption to Interislander and Bluebridge.”
The notion that the Government’s approach to upgrading the Cook Strait ferries would be cheaper than the previous iRex programme has been repeatedly disputed by Labour.
How does this compare to iRex?
The overall figure released today does not include the costs of breaking iRex related contracts or the amounts already spent on the programme.
In August, KiwiRail said the final cost for the entire cancelled iRex project was $671 million, which included $222 million paid to Hyundai Mipo Dockyard.
The iRex scheme, launched by a Labour-led government and cancelled by a National-led one, cost $671 million. (Source: 1News)
Peters boasted today that the new ships had saved “billions” versus the previous Labour government’s iRex project, which the coalition cancelled shortly after being elected.
The iRex project, which included substantial costs for landside infrastructure, had ballooned to approximately $3 billion at the time of its cancellation. The Crown was asked to fund approximately $2.2 billion of that total cost.
In 2023, a ballpark estimate by Treasury officials suggested costs could approach $4 billion when benchmarked against over average cost overruns in other similar projects.
Ministers have been handed a report laying out options for the specifications of the new ferries and when they could arrive. (Source: 1News)
The figure has been seized upon by the Government to claim its programme has “saved $2.3 billion” versus iRex.
Over the past two years, Labour has slammed Finance Minister Nicola Willis’ move to cancel the iRex programme after KiwiRail requested more money in December 2023.
It has argued that delays caused by the process have now added extra costs and that the new programme wouldn’t end up being cheaper than iRex.
Govt bringing in smaller, worse ferries – Labour
The Government has failed to deliver a better ferry deal for New Zealand, Labour’s transport spokesperson Tangi Utikere said.
“Smaller and more expensive ferries are set to land in New Zealand after much delay because Nicola Willis botched the Interislander ferry deal,” he said.
“We planned to pay $551 million for bigger and better, rail-enabled ferries. Winston Peters has agreed to pay $596 million for smaller ships of lower standard.
“Winston Peters seems to have swept the $671 million Nicola Willis spent in cancelling the ferries under the rug. We’ve long said the Government won’t deliver a better deal than what was underway under Labour, and today we have been proven right,” Utikere said.
The party did not address the overall costs of the iReX project, including estimates for port infrastructure required for the previous replacement ferries.
Ports welcome announcement
Both Port Marlborough and Wellington’s CentrePort welcomed the Government’s disclosure of more information into the new ferries.
New Interislander ferries will have capacity for 1500 passengers, and 2.4km of lanes for cars, trucks, and 40 rail wagons. (Source: 1News)
CentrePort board chairperson Lachie Johnstone said today was a positive milestone that “heralds more clarity about what will be delivered”.
“The design specification requires that the connections to the new ferries from the port will meet an operational lifespan of 30 years. CentrePort can meet this requirement while focusing on reusing what works and only upgrading the essentials.”
CentrePort will upgrade its current wharf and berthing pockets while building a new dual-level linkspan, approach structure and passenger walkway, after initial plans to reuse existing structures proved technically infeasible.
He said a “minimum viable and maximum reuse approach to the project’s maritime infrastructure will still offer long-term benefits and allows for the region’s longer-term aspirations for a multi-user ferry terminal located at Kaiwharawhara”.
Port Marlborough chief executive Rhys Welbourn said construction works would be “carefully staged” to maintain business continuity. “The ministerial announcement today on funding and procurement gives us a clear pathway forward.”
In Picton, end-of-life infrastructure will be worked on including a new wharf, linkspan, vehicle access bridge and passenger walkway, with temporary infrastructure during construction to keep the Interislander and other port activities running.
