‘Bullish’ threats alleged as KiwiRail pursued ferry dream

Monday, 5 February 2024

Just-released documents show the alarm sounding about KiwiRail’s “bullish” threats as it went it alone on the doomed Interislander upgrade, which allegedly would have threatened Wellington’s port and thousands of jobs with it.

The claims are outlined in information supplied by the Greater Wellington Regional Council, after an official information request about the now-axed IRex project.

Finance Minister Nicola Willis in December pulled the pin on the IRex project, for two new Cook Strait ferries and connecting infrastructure in Picton and Wellington, after state-owned enterprise KiwiRail asked for a $1.47 billion funding boost to take the cost to nearly $3b — almost four times the original 2018 budgeted cost of $775 million.

In May 2020, nearly four years before the project was cancelled, regional council chairperson Daran Ponter wrote to then-Finance Minister Grant Robertson about KiwiRail’s “bullish and unsubstantiated” proposals.

This was after KiwiRail pulled out of a “multi-party” group — made up of Wellington’s city and regional councils, Waka Kotahi, CentrePort, KiwiRail and Bluebridge — to “unilaterally pursue” its preferred option to build a new Wellington terminal on CentrePort land at Kings Wharf, nearer the city, rather than at the existing Kaiwharawhara Interislander depot.

Information from the regional council shows that KiwiRail had been on board with the Kaiwharawhara site until April 2020.

The CentrePort option, the lowest-ranked by the multi-party group, would have involved “compulsory acquisition” of CentrePort land, meaning the likely loss of container operations.

This could affect the 26,000 direct and indirect jobs created by Wellington’s port, which contributed $2.5b gross domestic profit to the community, Ponter warned.

The CentrePort option, which had no seismic benefits, would cost “$100s of millions more” than rebuilding at Kaiwharawhara. Ponter also sounded the alarm about the extra cost associated with KiwiRail’s “insistence“ on significantly larger ferries and ones that would take trains.

Two months earlier, Ponter wrote to then-KiwiRail chief executive Greg Miller confirming that the ferry operator did not support the Kaiwharawhara site, that it did not want to share its terminal with others, and it was pulling out of the joint process.

“One of the key issues you brought up was … this was likely to mean that locomotives may no longer be provided to support the movement of containers via CentreRail and log freight trains,” Ponter wrote. Last week he confirmed this was seen as a threat by KiwiRail to pull service from CentrePort.

But, by December, 2020 — with fewer than four years until the new ferries were due to arrive — Ponter wrote to government ministers about a “significant change of direction” after KiwRail agreed to the Kaiwharawhara site, which could eventually be shared.

KiwiRail was asked about the “bullish and unsubstantiated claim”, about its talk of compulsorily acquiring CentrePort land, as well as threats to deny service to the port.

In a statement on Sunday, KiwiRail chief executive Peter Reidy, who was not in the role at the time in question, did not address the allegations other than saying there was a “long standing” and recently renewed relationship between KiwiRail and the port for moving freight.

He understood Kings Wharf was preferred due to “new seismic information” and discussions around the site delayed planing by six to nine months.

“In the end Kaiwharawhara was chosen as the site for the Wellington ferry terminal and the final design allowed for it to be expanded into a multi-user terminal precinct,” Reidy said.

KiwiRail preferred rail ferries as they were more efficient for moving freight between the islands, he said.