KiwiRail's Interislander ferry Aratere approaches the entrance to Wellington Harbour. Photo / Mark Mitchell
KiwiRail's Interislander ferry Aratere approaches the entrance to Wellington Harbour. Photo / Mark Mitchell
New Zealand’s infrastructure decisions are “overly politicised” costing the country billions in efficiency and certainty, says a sector specialist, as an alarmed freight industry weighs up the risk from the Cook Strait ferry project collapse.
The freight industry says more than $15 billion worth of freight crosses CookStrait on ferries a year.
Infrastructure NZ chief executive Nick Leggett told the Herald a strong and reliable Cook Strait ferry service was “vital” to the country’s supply chain.
“Thought needs to be given around the expectation that KiwiRail must fund port-side infrastructure. We don’t ask Air New Zealand to fund airports for instance.
“It’s very concerning that the previous Government did not appear to budget for this significant capital investment, but sadly that is indicative of the way infrastructure has been treated in New Zealand — unfunded with no clear pipeline or certainty.
“We don’t face up to our responsibilities as a nation and our infrastructure deficit continues to grow as a result. New Zealand needs to build bi-partisan consensus on its infrastructure pipeline. That will help avoid these boom/bust events when government’s change. We have overly politicised infrastructure decisions and it costs us billions in a lack of efficiency and certainty that fundamentally doesn’t allow the industry confidence to grow its capability or plan in advance,” Leggett said.
Infrastructure NZ chief executive Nick Leggett.
The freight trucking sector continues to call for improvements to the Cook Strait ferry services.
Road freight body Ia Ara Aotearoa Transporting NZ said the decision not to fund the $1.47b was “a good call but substantial service improvements are still required”.
Interim chief executive Dom Kalasih said, “it’s good KiwiRail is being held to account”.
“Improving the resilience and capacity of the ferry service is important, but we also believe there is a lot of scope for all the stakeholders affected, including freight operators, to work with KiwiRail to find a workable, more affordable alternative.
“Substantial improvements are essential — our current ageing ferries cannot operate reliably. There have been too many breakdowns and disruptions to services which are enormously damaging to the freight sector.
“Between $15 billion and $20 billion in freight travels across Cook Strait each year, so it’s important to put the cost increase in that context. With freight predicted to grow 1.4 per cent per year, it’s not an issue that can be put off,” Kalasih said.
He noted the cost blowout was primarily due to the development of the port facilities in Picton and Wellington, rather than the two ships that are being built in South Korea for delivery in 2026.
“It’s really important that KiwiRail and the Government provide clarity about how a safe and resilient Cook Strait service is going to be achieved.”
Kalasih said road freight was 92.8 per cent of New Zealand’s freight task on a tonnage basis, and 75.1 per cent on a tonne-km basis. The road freight transport industry employed more than 34,000 people across more than 4700 businesses, and had an annual turnover of $6b, he said.
Another road transport body, the National Road Carriers Association (NRC) said the Government’s decision was a blow for the national infrastructure network.
“While NRC sympathises with the Government’s need to balance the books, the reality remains that the Wellington and Picton port infrastructure is dated and needs significant investment to carry it through,” said general manager policy and advocacy James Smith.
“A lot of the conversation has been focused on the ‘mega ferries’ but as we learnt ... the ferry costs account for just 21 per cent of the investment required to upgrade the infrastructure. [Finance] Minister [Nicola] Willis is correct, there are options in terms of boats, what we don’t have an option on is to do nothing with the dated port infrastructure. We only have to look at the recent chaos that ensued every time one of the old ferries was taken out of commission with a breakdown or maintenance,” Smith said.
“NRC hopes that KiwiRail, like any other commercial business that has had their preferred funder decline their request, will look to seek alternative funding. Just because Kiwirail is state-owned doesn’t mean it gets a hall pass in terms of seeking alternative funding.
“There are plenty of global infrastructure funders who would likely be very open to a significant infrastructure investment with a 60-year life and a stable user profile.”
New Zealand Council of Cargo Owners chairman Mike Knowles said the project canning was “an extremely concerning development for New Zealand’s supply chain”.
“The Interislander service is effectively SH1 infrastructure and is critical to the efficient, reliable movement of freight so it is deeply alarming that planning for the future of this infrastructure has gone so far off the rails.
“We would expect the Government and KiwiRail to come up with a ‘Plan B’ very quickly to ensure this critical link between the two islands is maintained.”
Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.
