The scorned iRex option would have entered service in 2026. Thanks to Finance Minister Nicola Willis, there will now be a three year delay until 2029 at the earliest. Instead of fit-for-purpose iRex ferries, Willis is likely by then to have saddled us with smaller, less capable, more weather vulnerable ferries able to carry only a bit more freight and a few more passengers than the Interislander.
In the meantime, the advent of Winston Peters as the newly-minted Minister of Rail has exposed the deep rifts around the coalition Cabinet table. All year, Peters’ preference has been for ferries with a “roll on, roll off” capability. He has now been given until the end of March to (somehow) find smaller, rail-enabled ferries and deliver port upgrades at a cheaper overall cost than the iRex project.
Unless Peters can turn his preferences into reality by late March, Willis (and the bean counters in the limited liability company now vested with managing the ferries) will be back in control of the wheelhouse. Good luck, Winston!
Fussing and fighting
Despite the sensitivity around the negotiations for the replacement vessels – including the price tag for the ferries themselves, the construction costs for the onshore facilities, the contract breakage fee – ACT leader David Seymour has been happy to toss around alleged cost numbers, and brag about his success in privatising the Cook Strait ferry service. On RNZ, Peters openly ridiculed Seymour’s claims:
Pressed by [RNZ presenter Ingrid]Hipkiss on whether Seymour’s $2.2 billion sum was incorrect, [Peters] said: “Of course he’s wrong on it. He’s wrong on the figures that he’s used, he’s wrong on the question of privatisation, and he’s wrong on the question of what it is going to cost.”
Peters added for good measure: “Some of the comments I’ve heard about privatisation…are just ridiculous. New Zealand has been through that twice [with Fay-Richwhite and Toll.] It got run-down twice in the past. This is not new.”
Indeed, New Zealand did end up having to buy back its rail service. Similarly, we also had to bail out the BNZ twice, spend $900 million to buy back a majority share in Air New Zealand – and we seem to feel obliged to subsidise an aluminum smelter for all eternity. When it comes to this country’s key national assets, privatisation has been a synonym for waste, for incompetence, and for systematic failures to invest and innovate.
Selling No- Brainers to the brain challenged
Peters’ coalition conflicts go beyond Seymour. On Wednesday, Finance Minister Nicola Willis was still talking up the virtues of “rail-compatible” ferries. In doing so, Willis minimised the “bridging” costs to business (and ultimately to the consumer) that are inevitably created by the double handling of freight on “rail compatible” ferries. Christopher Luxon backed Willis on this folly.
Peters however, has rejected “rail compatibility” as false economies, and has hung his hat on being able to deliver “rail-enabled” ferries and related port upgrades at a cheaper price. On that point, Peters has given himself some headroom by inflating the alleged iRex project costs to $4 billion.
More credibly, Peters explained to RNZ that ferries able to carry trains are always cheaper in the long run, because those inherent bridging costs – moving freight off a train onto a ferry and back off again on the other side – must to be taken into consideration in any genuine evaluation. Willis and Luxon have chosen not to do so. Peters again, regardless:
“The overall cost in my view will be much less if it’s rail enabled… and that’s a no-brainer,” he said.
No doubt, If Peters hadn’t stalled the process, the government would have signed us up already to those inferior vessels able to handle only smaller volumes of freight, less able to serve the needs of passengers, and less able to endure the frequently harsh weather conditions in Cook Strait. Travellers would also be forced to make do forever with the decrepit state of the ferry terminals on our main tourism link between the islands. (The only thing this government seems to know how to do is to reduce the quality and range of public services.)
Peters on a time test
Peters has been given a three months ultimatum. Many of the factors that drove up the onshore port upgrade costs of the iRex project ferries will recur – the extra land, the turnaround capability – even if the rail-enabled vessels themselves are smaller. How willing and capable will our construction industry be to deliver the port upgrades on time, and at a lower cost than was being estimated back in 2021? Surely (gasp) there will not be under-tendering, and subsequent cost overruns?
Public opinion would widely support Peters’ quest to achieve new ferries that are rail-enabled. We can but dream…but having rail-enabled ferries would increase the cost-competitiveness of rail versus roading. By doing so, rail-enabled ferries would offer a precious opportunity to get more trucks off New Zealand roads- thereby increasing road safety, reducing road repairs, and delivering further savings on our transport-generated climate change emissions.
As Peters says, it really is a no-brainer.
Footnote One: Peters looks like he is being set up to fail. There’s an obvious worst case scenario here, come March. Would an unresolvable conflict over the ferries trigger a Peters walkout, even before he is due to hand over the deputy PM post to David Seymour ?
The ferries conflict does offer Peters a splendidly principled, publicly popular exit option, 18 months before the next election on an issue that’s consistent with New Zealand First’s core values and regional development goals. Put it this way: is Peters ever going to get New Zealand First a better launchpad for the 2026 elections? Alas, he has once again offered his wisdom and experience to a bunch of amateurs, but once again, they have chosen to spurn it.
Footnote Two: If Peters is going to (somehow) successfully deliver rail-enabled ferries by March, they will look good on the government books only if there is (a) more of the privatisation that Peters professes to abhor, or if (b) a significant chunk of the upgrade costs are off-loaded onto local authorities and ratepayers. This would be outrageous, given that the ferries form a key part of the national transport infrastructure.
This government however, is not averse to making local government and local communities pay the price for central government shirking on its responsibilities. See: water reform. See: Dunedin hospital.
Footnote Three : Taking the ferries management off Kiwirail – who will retain the onerous operational duties – and giving them to a limited liability company does put the ferry service on a path to eventual privatisation. Looking ahead, one can therefore expect: higher ticket prices, fewer ferry workers, greater job insecurity for the remaining staff, the outsourcing of maintenance, and the usual shoddier service delivered by a private sector fixated on enhancing its profit margins.
Footnote Four: Finally, the ferries debate has been quite a good example of the cost concertina at work. Meaning: if you want to portray your predecessors as hopeless spendthrifts, expansively include all the downstream and related costs imaginable. Conversely, if you want to portray yourself as prudent, thrifty stewards of the taxpayer dollar, be contractionary and exclude all those same downstream/related factors when calculating the cost of your own efforts. Come March, we can expect a virtuoso performance of the cost concertina.
Fear of Trains
Given the stance of the current government, this seems apt: a song that links the fear of trains to the lingering effects of colonisation on indigenous families. The Magnetic Fields original is great, but so is this version:
Talking of Magnetic Fields, here’s Stephin Merritt’s soppiest/most popular song: