All at sea: The whirlpool of unanswered questions around new ferry plan

Sunday, 20 July 2025

Bluebridge’s new ferry, Livia sailing into Wellington harbour escorted by tugs.

Andrea Vance is National Affairs Editor for The Post and Sunday Star-Times.

OPINION: Out of the mist and rain, the Livia appeared, gliding smoothly past Wellington’s Oriental Bay as a small but loyal crowd of ship-spotters huddled under umbrellas to catch a glimpse.

The new ferry had sailed halfway around the world from Denmark, via Portsmouth and the Panama Canal, to join Bluebridge’s fleet.

The privately-owned vessel will expand freight and passenger capacity across Cook Strait. Bluebridge now carries 50% of the freight market and nearly 40% of passengers.

A ship bought, paid for, and on the water.

Meanwhile, its rival — the state-owned Interislander — is stuck in a fog of uncertainty.

This year, KiwiRail will retire the Aratere, its only rail-enabled ferry.

The 25-year-old vessel (best known recently for running aground near Picton) will be decommissioned to make way for new port infrastructure.

In 2018, Winston Peters began the process of replacing Interislander’s three ferries, which were “nearing the end of their lives”.

Until the replacement ships’ anticipated arrival in 2029, KiwiRail will rely on two ferries and a stopgap road-bridging system to keep goods moving.

Rail Minister Winston Peters defends the move, dismissing the $120 million needed to keep the Aratere running as a waste of taxpayer money.

But the decision lays bare the fragile state of the Interislander’s operations: a shrinking fleet, ageing terminals, and a replacement years off.

The Government cancelled the iReX mega-project, begun in 2018 under the Labour/New Zealand First/Greens government, when cost blew out to an estimated $3-4b.

While the costs of the ferries had been locked in (around 21% of the total bill), the size of the new ferries prevented the use of existing docks and linkspans (the drive on/drive off bridges). Upgrading that infrastructure on both sides of Cook Strait drove up the price.

While Finance Minister Nicola Willis cast about looking for cheaper replacements, Labour needled NZ First leader Winston Peters, who had begun the project.

Reports suggest Willis landed on a pair of medium-sized ferries with a $1.6b price tag. They would have required minimal shore-side redevelopment.

But Peters wouldn’t sign off the deal because they weren’t rail enabled. So Prime Minister Christopher Luxon handed him the mess and gave him a few months to fix it.

In late March, Peters announced two new ships, arriving by Christmas 2029. He says its a leaner, cheaper solution which comes in at even less than the $900 million Cabinet agreed to in December.

But what exactly that solution costs remains something of a mystery.

At every turn, Peters deflects questions about the bill, citing commercial sensitivity and ongoing negotiations.

Voters, beware a press release that contains no costings.

Picton still needs significant upgrades, including a new wharf, to handle the larger ferries. That includes a new linkspan and other connecting infrastructure, a new overbridge and the relocation of an existing passenger walkway.

(The old terminal was demolished in preparation for a new complex. The Government now says a temporary prefab, opened in June 2023, should last another 60 years, give or take a new roof.)

Wellington’s infrastructure will be patched and modified, although a new linkspan and other connecting bits and bobs is required.

Yet no one will say what taxpayers or ratepayers are expected to pay.

Port Marlborough is a subsidiary of the district council, which had agreed to on-lend it $110 million.

The council admits it doesn’t know its contribution yet, but is negotiating with Ferry Holdings Ltd (created by the government to lead contractual negotiations with shipyards and ports) behind closed doors.

The Interislander Aratere foundering on rocks near Picton in June 2024.

MDC frames the loan as risk-free for the council, but any financial pressure on the port ultimately flows back to the council (and therefore ratepayers), as the sole shareholder.

The borrowing itself increases overall council group debt, even if structured as on-lending, and if the costs blow-out or the port under-performs ratepayers could end up indirectly covering the shortfall.

In 2020, the then Labour-led Government committed $400 million from the Crown towards the iReX project (on top of $35m allocated in Budget 2019).

At the time, the total iReX programme was projected to cost around $1.45b , with KiwiRail expected to cover much of the remaining cost through debt and port contributions.

The $400m was essentially seed funding to get the project under way, underpinned by the argument that modern ferries were critical national infrastructure.

After cancelling iReX, the current Government kept $400m on the table but reallocated it under the new Ferry Holdings Ltd structure.

In 2023, the Guardians of the Marlborough Sounds raised concerns about the planned new ‘mega-ferries’ using the narrow Tory channel.

It’s now earmarked for the re-scoped, supposedly cheaper project Peters is pursuing.

But it’s now buried in Ferry Holdings’ budget, with only opaque accounting of how it’s being allocated and no clear public breakdown of how or where it’s being spent.

Peters promises transparency after contracts are signed. By then, it will be too late.

At the centre of the rebooted plan are two 200-metre-long ferries.

They’ll be rail-enabled, even though the Ministry of Transport forecasts rail freight on the route will decline. Peters says: “The Ministry of Transport generally takes a very dim view on rail, in every sense.”

He believes the Auckland-Christchurch corridor is a critical route for domestic freight and a major target market for KiwiRail and rail is “energy and labour efficient”.

Since 2008, successive governments have had a target to increase rail’s share of domestic freight to 25% of tonne kilometres by 2040, part of emissions-reduction strategies.

It has failed: rail’s share of freight has been declining since about 2011.

Peter’s argument is that rail across the Cook Strait is essential for “an island nation”.

Actually, it didn’t exist until 1962. And following the 2016 Kaikoura quake, the Picton to Christchurch spine was severed. Trucks kept freight moving.

Another critical point has also been overlooked. If rail freight were to increase, ageing sections of the South Island trunk line would require upgrades and increased ongoing maintenance. This public investment isn’t included in the ferries ticket price.

There are also serious, unanswered questions about safety.

These new ferries will be expected to navigate the tight confines of Tory Channel, yet neither Maritime New Zealand nor the Harbourmaster have officially approved the designs. Final simulations haven’t even been completed.

Environmental risks are similarly waved away. As residents of the Marlborough Sounds have previously endured, larger ships mean larger wake, sediment disturbance, and potential shoreline erosion.

Peters notes the Bluebridge ferries already have a 25.6 metre width. (They are, however, 15m shorter than the proposed Interislanders.) He also promises wave energy modelling, but only once procurement advances.

Resource consents are an afterthought, although I suppose the government will just fast-track that hurdle away.

The Minister for Rail has made much political capital from his assertions that he has pulled Interislander back from the brink.

But the project is a patchwork of assumptions, deferrals, and political spin. Another bold promise sailing straight into uncertainty.

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