Fire crews battle to contain a large fire in Canterbury's West Melton overnight and Syria celebrates the end of the Assad family's 50-year regime. Video / NZ Herald
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.
It’s been a year since Finance Minister Nicola Willis revealed ministers were effectively pulling the plug ontwo new mega ferries to replace KiwiRail’s ageing fleet of three ships.
The cost had almost quadrupled since 2018 to about $3 billion and the Government refused to fund the latest blowout.
Peters, the Deputy Prime Minister and NZ First leader, has said the Government will decide on the ferries by December 11 - this Wednesday.
It’s expected Cabinet will meet today - one of the final meetings of the year.
Deputy Prime Minister and NZ First leader Winston Peters has said the Government will decide on the future of the ferries by Wednesday. Photo / Mike Scott
Transport Minister Simeon Brown has told the Herald: “The Deputy Prime Minister has made clear there’s a timeframe we’re working towards.”
Asked whether that meant the ferry decision would go to Cabinet today, Brown said: “It’s a timeframe we’re working towards and obviously it’s being led by the shareholding ministers.”
Brown confirmed the public could expect an announcement by Wednesday.
“We’re working through that at pace.”
Why did the Government cancel the mega ferries?
The mega ferry plan, known as Project iRex, was the subject of several cost blowouts - the most recent being $1.47b.
Only a fifth of the total cost, about $3b, was associated with the building of the new ferries.
The cost escalation was driven by the portside infrastructure needed to accommodate the larger ships.
”Ministers do not have confidence that there will not be further increases and are concerned about the continued significant cost blowouts and the changing nature of the investment they are being asked to make," Willis said.
“Furthermore, agreeing to KiwiRail’s request would reduce the Government’s ability to address the cost pressures that are impacting on New Zealanders, fund other essential projects and get the Crown’s books back in order.”
At the end of last year, Willis said she had received advice that made her confident there was a range of alternative options that would deliver value for money as well as a reliant and resilient service.
The group was chaired by Mark Thompson who has a 30-year career in logistics and transport operations with senior executive roles in Australasia, the United States, China and the Philippines, leading public and private service-focused organisations.
“The alternative is that we continue to rely only on KiwiRail for information and advice and our concern as a Government was, given KiwiRail got us into this mess, it wasn’t appropriate to simply rely on their advice.”
“We recognise, rightly or wrongly, that there is a limited level of confidence and trust in us as an organisation. That is our reality which we need to manage through an open, transparent process that you and your colleagues are comfortable with,” McLean wrote.
The Ministry of Transport was also asked to lead an assessment of the long-term requirements for a resilient connection across Cook Strait.
Interislander's ageing fleet of three ferries needs to be replaced. Photo / Mark Mitchell
Reports from the ministerial advisory group and the ministry were delivered to the Government in June.
There have also been numerous meetings with stakeholders like Wellington’s CentrePort and Port Marlborough.
CentrePort has stressed it cannot continue operating as a 24/7 first responder to ferry breakdowns. Chairman Lachie Johnstone has said the port was looking forward to the Government deciding on a new plan for Interislander so they could “get on with it”.
What was the political risk for Nicola Willis?
Willis’ decision to cancel the mega ferries sent a sharp warning to the public sector that this Government is not afraid to shake up projects that may have previously been presented as a fait accompli.
Willis has pointed out the mega ferries were not due to arrive until 2026 anyway so, they would not have prevented the Aratere from grounding nor any other incident that could happen between now and then.
She has also cast doubt over whether the portside infrastructure would have been completed in time for their arrival.
How long can the existing ferries continue to operate?
Brown said the Government was committed to a resilient Cook Strait service but ministers also wanted to see KiwiRail maintain its existing ships to the appropriate standards.
“[This] has been a significant issue that we’ve been highly unimpressed with coming into Government,” he said.
KiwiRail chief executive Peter Reidy said in June the organisation had “really stepped up” its approach to safety and maintenance since his return in 2022.
They have gone through 10,000 items in its asset-management system. Reidy said KiwiRail could now look at a critical part of the ferries right down to valves and rubber seals.
“Five or six years ago, we probably didn’t have that detail. We’ve got granular detail now,” he said.
KiwiRail chief executive Peter Reidy. Photo /Tim Cuff
Asked if the problem was therefore that KiwiRail had historically inadequately maintained its ferries, Reidy said plenty of money had been spent but the strategy needed to change to be more proactive as ships got older.
The peer-reviewed advice suggested there were no systemic issues that would prevent the life of the ships from being extended subject to investment and enhanced maintenance, Reidy said.
“If the Government says to us: ‘We want you to run these until 2029′, we’ve got the plan, we’ve got the people, we’ve got the detailed information, we’ve got the experts that can be next to us if that’s the mission,” Reidy said.
Why did KiwiRail’s chairman retire early?
Willis told McLean a week before announcing his early retirement that the state-owned enterprise had spent an “excessive and not justifiable” amount on consultants.
One week after Willis made her views known to McLean, he advised ministers of his intention to retire early as KiwiRail chairman at the end of July. His term on the board was due to finish at the end of October.
Willis said McLean’s reasons for his early retirement were “as he has outlined in his own statement”.
In that statement, McLean said he was stepping aside from the start of the new financial year because that was best for KiwiRail as it entered a new phase of its development.
“I understand the Government intends to announce my retirement today, so I have brought my announcement forward.”
Rob Jager, who was an existing director on the board, accepted the position as acting chairman. His career includes more than 43 years with Shell in various executive roles, including chairman and vice-president of the Shell companies in New Zealand.
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.
