Two new ferries for the Cook Strait are expected to begin operation in 2029, the Government has announced.
The price of the new ferries was not revealed, however, with Finance Minister Nicola Willis saying it was commercially confidential until procurement and negotiations for landside infrastructure were completed.
“However, a funding envelope has been established and the costs are expected to be much less than would have been the case with Project iRex – even once break fees are included.”
Winston Peters was appointed Minister for Rail today.
In 2018, the coalition between Labour and New Zealand First struck a deal for two mega rail-enabled ferries to be built in Korea at a cost of $551 million. They were due for delivery in 2026.
But in December last year, the current Government declined further funding for the project, and said the price tag had blown out largely due to the upgrades required to hold the mega ferries at both ports in Wellington and Picton.
According to Finance Minister Nicola Willis, accounting for the upgrades to the port terminals, the price of the project had gone from $700 million to $3 billion, and only 21% of that cost was associated with the “core project of replacing ageing ferries”.
Today Willis said there was still a chance the two new ferries could be rail-enabled, meaning roll-on, roll-off.
Currently, there were three Interislander ferries, which would eventually be replaced by the two announced today. No decisions have been made on who would build the ferries.
On the announcement, Finance Minister Nicola Willis said: “This decision will ensure New Zealand has a safe, reliable and resilient service to move people and freight between the North and South Islands.”
Labour Finance spokesperson Barbara Edmonds said the new ferries will “cost the country more in the long run”.
A new company would be established to carry out the procurement process and then support officials to work with ports, KiwiRail and other stakeholders.
Peters’ Minister for Rail appointment meant he would help spearhead the delivery of the new ferries.
On Peters’ appointment, Prime Minister Christopher Luxon said he would take on responsibility of the new schedule 4a company which was being set up to deliver the new ferries, with Willis continuing as a shareholding minister.
“The ferries are critical national infrastructure and important to ensuring New Zealand has a safe, reliable and resilient service to move both people and freight between the North and South Islands,” Luxon said.
“Dedicated ministerial oversight of this critical project and portfolio is necessary, and that is why I have asked Mr Peters to lead it.
“Given Mr Peters’ experience and expertise, I am confident he will ensure this project delivers in full, on time and under budget.”
Willis added the Government aimed to leverage existing infrastructure “to the maximum extent”.
“Whatever the preferred solution, rail freight will continue to be able to be transported between the North and South islands.”
Shareholding Ministers of the new company would be the Minister for Rail and the Ministers of Finance and Transport.
Peters would also take on the responsibility formerly held by the Minister of SOEs for KiwiRail and NZ Railways Corporation.
Ferries will be ‘more expensive’ and ‘take longer’, Labour says
Edmonds said the new ferries will “cost the country more in the long run”.
“The portside infrastructure will still have to be built, she’s just burdening future New Zealanders with the cost.
“Nicola Willis came into Government and immediately rolled back the ferries deal with no plan B. It was a knee-jerk reaction and Kiwi companies and taxpayers will pay the price.”
Edmonds said 2026 “should have been” the delivery year for the new ferries.
“Instead, this government’s deal making means we will have no ferries, just a big bill for the cancellation costs.
“Cancelling the order for two rail-enabled Cook Strait ferries has already cost KiwiRail half a billion dollars in sunk costs and it will likely be hundreds of millions more to break the contract.”
Meanwhile, Willis said the “quadrupling of the cost” of the 2018 ferry project “from $775 million to more than $3 billion and possibly as much as $4 billion, is testament to what happens when a project is mismanaged”.
KiwiRail welcomes announcement
KiwiRail chief executive Peter Reidy sad it is “pleasing” the Government has “chosen to invest in the future of Cook Strait ferry services”.
“The specifications that the Government has indicated mean the ships will be larger than the current ships, so there will be room for future growth.”
He said while rail-enabled ships are still an option, if the new ships are not rail-enabled, KiwiRail will be able to “continue to efficiently move rail freight across Cook Strait in the same way we do now when our only rail-enabled ship, Aratere, is unavailable”.
“Between now and the new ships arriving, KiwiRail will work with all parties to support the procurement and smooth introduction of the new ferries when they are ready to enter service for our customers.”
Marlborough Mayor Nadine Taylor said “we look forward to working with the new Schedule 4A company, Government, Port Marlborough and NZTA to understand the new port infrastructure and roading requirements and associated costs”.
“Council and Port Marlborough can now begin investigative work on portside infrastructure design and costings and commence negotiations again on its commercial viability.”
ACT, Greens react
ACT leader David Seymour said “taxpayers are the winner from today’s Cook Strait Ferry announcement”.
“Indicative costings for the two new ferries and landside development are approximately half the at least $3 billion cost of iReX, of which the Crown was asked to fund approximately $2.2 billion.
“The Schedule 4A model announced today allows for private investment, with the Crown able to sell up to 49% of its shareholding. Private investment will bring private market discipline which will lead to a better and more cost-effective service in years to come.”
Meanwhile, Green Party transport spokesperson Julie Anne Genter said the announcement “throws more uncertainty” on the future of the country’s rail network.
“We could have had ferries by 2026, not 2029, if it wasn’t for this reckless Government.
“The Hyundai order for two new rail-enabled ferries for $550m was one of the best deals the country ever signed up to.
“Rail enablement is necessary to maintain and enhance the connection we have between the North and South islands, and to ensure the safe and efficient passage of people and goods over the Cook Strait.
“The Government must commit to rail-enabled ferries. Anything less will sever the South Island rail network from the North Island.”
