Claims new ferry project will hit iRex price, for much less ship

Wednesday, 26 June 2024

Warnings are being sounded that the Government’s rejuvenated desire for new-built Cook Strait ferries could see it reach the $3 billion of the cancelled iRex project but we will get much less for it.

Labour Transport spokesman Tangi Utikere on Tuesday said there was a “real possibility” the cost for the new ferries plus associated spending would hit the $3b the Labour government’s iRex project blew out to, before National ditched it.

National ministers would not comment on Tuesday on the claimed costs, which include $300 million to cancel the old contract for ferries plus a sharply inflated cost of $900m for two ships, while KiwiRail said it was too early to speculate.

Green transport spokesperson Julie Anne Genter said the final cost for ferries would be “well in excess of any purported savings”.

“National’s decision to cancel that contract will go down in history as one of the most rash and self-destructive ever made by a New Zealand government,” she said.

Maritime Union national secretary Carl Findlay said industry sources had confirmed that the $551m locked in for two new rail-enabled ferries under iRex was now unrealistic. He said the cost for two new ferries, not equipped for rail, would now be closer to $900m.

The National-led Government ditched the previous government’s $3b iRex programme – which included two new rail-enabled ferries and massive rebuild of Picton and Wellington ports – in December with Finance Minister Nicola Willis blaming the “quadrupling cost”.

After the Interislander ferry Aratere had a steering issue and grounded on a Marlborough Sounds beach on Friday night, Willis committed to new ferries and Prime Minister Christopher Luxon said they would arrive by 2029 – three years after the iRex ferries had been due.

Findlay on Tuesday alleged the Government would have to pay $300m for cancelling the previous ferries, which would have been under construction now.

Added to that was the previously reported $424m that KiwiRail said it had spent on the iRex project before it was ditched.

Then came the cost of keeping the old ferries running, which Findlay said had climbed to $65m a year, or $325m over the five years the Government had committed to getting new ferries in.

That took the cost to nearly $2b. For that, the country would get one less ferry than it currently had, neither would be able to take trains, and no work would be done to the tired ports at Marlborough and Wellington. One of the current three Interislander ferries can take trains.

Transport Minister Simeon Brown on Tuesday was asked about the alleged $300m cancellation costs and $900m for two new ferries but referred questions to shareholding ministers. Asked to confirm whether the iRex contracts had been cancelled, he would only say a process was “underway”.

State Owned Enterprises Minister Paul Goldsmith, one of the shareholding ministers, refused to discuss the cost to cancel the contract and would only say the Government was “working our way through” cancelling the iRex contracts.

“We inherited a scheme that was $3b and rising,” Goldsmith said.

“So we are back to the drawing board and working through all our options.”

The figures were put to KiwiRail which, in a written statement, said it was too early to speculate on costs for new ferries, or how much it would cost to cancel the last contract.

“The $65 million forecast annual spend on maintenance of the existing Interislander fleet was a broad estimate made in 2021,” it said.

“Since then we have done a lot more detailed work and do not expect the actual ongoing maintenance spend each year to be that high.”

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