Prime Minister Christopher Luxon fields question from media over today's Cook Strait ferries announcement.
Analysis by Georgina Campbell
Georgina Campbell is a Wellington-based reporter who has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working as a broadcast journalist.
The Government has begun hinting at potential privatisation, raising the question of whether KiwiRail’s Cook Strait Interislander business could be on the chopping block.
Act leader David Seymour has put privatisation in the spotlight using his State of the Nation speech to say NewZealand needed to move past a “squeamishness” about privatisation.
Prime Minister Christopher Luxon has suggested National may take asset sales to the next election but denies there are any immediate plans for a sell-off.
Interislander's fleet of three ferries is ageing and needs to be replaced. Photo / Mark Mitchell
The Herald asked Peters' office whether he, as the Minister for Rail, had ruled out privatisation of the new ferries or the running of them.
A spokesman for the minister said: “This government is committed to no asset sales”.
“The issue of privatisation of state assets, as the Prime Minister has said, will be one for the public to decide at the next election.”
New Zealand First’s position was long-standing and clear, the spokesman said.
“Government assets stay in possession of the Government.”
It is extremely unlikely Interislander would be privatised on Peters' watch.
However, whatever ferries are agreed to in the coming months will take years to procure and build.
Under Willis' plan, two new ferries, larger than Interislander’s current ones but smaller than the cancelled mega-ferries, would only begin operating in 2029.
That gives plenty of opportunity for a future Government to privatise those assets if it wanted to.
Act leader David Seymour says the party's long-standing policy is to add KiwiRail to a mixed-ownership model. Photo / George Heard
Privatisation could come in various shapes and forms.
A government could lease the new ships to a private operator to run.
It could establish a new entity to operate the Interislander business like a Schedule 4A company.
The government can sell some of its shares under a Schedule 4A framework but it must retain a majority shareholding in the company.
It could sell the entire Interislander business or just leave the ferries with KiwiRail to operate.
As far as Seymour is concerned, the current Government has already opened the door to privatisation in this space.
This is because when the Government was forced to front on the future of Cook Strait at the end of last year, it announced a Schedule 4A Company would be established to procure the new ferries.
“Act’s long-standing policy is to add KiwiRail to the mixed-ownership model (MOM). With partially private ownership KiwiRail would have to make decisions based on economics and shareholder returns rather than politics,” Seymour said at the time.
“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.”
The future of Interislander’s ageing fleet hangs in the balance as Winston Peters, the new Minister for Rail who is now in charge of delivering the new replacement ferries, is on the hunt for a better option than the one Finance Minister Nicola Willis has put on the table. Photo / Mark Mitchell
Ministers also revealed at that time they were inviting the private sector to put forward alternative proposals for a ferry service.
In a question-and-answer document attached to a Beehive press release, the issue of privatisation is addressed.
One of the questions in the document was whether the Government was planning to privatise or part-privatise the new ferries.
“Our working assumption is that ferries purchased by the Crown would be transferred to, and operated by, KiwiRail, on terms to be determined,” the answer said.
“The Government has not taken any decision on private sector involvement but is open to proposals to involve private sector capital or expertise.”
A similar answer was provided to the question of whether KiwiRail will operate the new ferries.
However, in addition, the answer also said: “If we receive a compelling market proposal for alternative arrangements that are a good deal for New Zealand, that will be considered”.
In the background, Ministry of Transport officials have been investigating whether KiwiRail is best placed to provide a Cook Strait ferry service.
They have considered how the market might respond to the hypothetical exit of KiwiRail, including whether rival operator Bluebridge could provide more capacity across Cook Strait.
The final report has not been made public.
Georgina Campbell is a Wellington-based reporter who has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working as a broadcast journalist.
