Has Winston Peters got a ferries deal for you! (Buyer caution advised.) Unfortunately, the vision that Peters has been busily peddling for the past 24 hours – of several shipyards bidding down the price of us getting smaller, narrower, rail-enabled ferries – looks more like a science fiction fantasy. One of those bidders...namely, South Korea’s vast Hyundai-Mipo Dockyard (HMD) held the initial contract for Labour’s iRex ferries, and this has to give HDM a unique ability to dictate the terms of where we go from here.

Basically, HMD can wield the iRex contract breakage fee to its advantage – i.e we’ll waive or reduce it if we get the contract for these new ships, but we’ll rark it up if we don’t. This trade-off was probably discussed when Peters visited the HMD facilities in South Korea cap in hand earlier this year, and marvelled at their size. Love the work you guys do.

Theoretically I suppose, some other shipyard could bid so low that New Zealand could then use the left-over to pay off HMD. Given the realities of ship construction though, a cost difference of that size seems unlikely. Point being: New Zealand is not orchestrating a truly competitive tender process. Thanks to the reckless decision of Finance Minister Nicola Willis, HDM has us over a barrel.

We will be largely reliant on HDM’s tender mercies for any savings on the ship construction costs for these smaller, narrower vessels. Thankfully, at least they will be rail-enabled, so there will be none of the expensive double handling of freight that the cheaper, “rail compatible”ferries advocated by Willis last year would have imposed on business, and that would have been passed on to New Zealand consumers. Not her concern.

Peters is giving the tendering shipyards cost “parameters” within which they have to work, but the size of this fiscal envelope is being kept secret from the public. Peters has been invoking reasons of commercial sensitivity to justify the secrecy – but the real reason is that the cost of these smaller, less capable ferries will almost certainly match or exceed the bargain deal that New Zealand got on the iRex ferries build. Is Peters promising to build the new ships for much, much less than the iRex ferries? No, he isn’t. That’s because in all likelihood, we will be paying nearly as much for lesser ships, which will be in service three years later than the iRex ferries. Have we been given a cost estimate for this avoidable delay? No, we have not.

Onshore, Downsized

It was the construction costs for the portside turnaround facilities and the new terminals that caused the cost escalation on the iRex project... much of which occurred amidst a worldwide increase in construction costs, post-Covid. How much of this increase was due to extravagance, and how much was due to a global trend in construction costs in the wake of the pandemic? We’ll never know.

So where is Peters going to be making his alleged “billions” of savings? Mainly by (a) kicking Wellington’s port-side terminal renewal and turnaround costs into the misty future, and (b) off-loading the adjacent roading upgrades associated with the turnaround onto local councils and onto motorists in the form of rate increases and higher ticket prices for the journey across Cook Strait. Whatever savings the public make as taxpayers, is going to be offset by the higher costs they will now be facing as ratepayers, and as travellers.

Once again, people are getting a shoddier version of an essential public service while being told...ooooh, but look at the revenue being saved! Not that they stand to benefit. Constantly, the public is being told it deserves to receive less for the taxes it pays, and shouldn’t expect anything better for its children – who, one day, will have to foot the bill for the deferred renewal of those already shabby port facilities.

In that respect, the ferries debacle is a prime example of the downward spiral in the quality of public services that this government is prepared to fund. Wellingtonians – and the foreign tourists using the ferries- are being told to put up with the rundown Wellington ferry terminal in perpetuity because hey...only losers use the ferry terminal, and no-one in the Beehive thinks that Auckland voters give a toss about the ferries, anyway.

For now, we simply have to take Peters’ word for it that the eventual price for the project will be cheaper in the short term. Likewise, we have to take him on faith when he claims that the alternative would have cost more than $4 billion. Well, he would say that, wouldn’t he?

To repeat: one of the “known unknowns” about the ferries cancellation has been the negotiated cost of the breakage fee. Obviously, this breakage fee will be reduced if HMD “wins” the new contract. At the very least, Peters should be acknowledging the fact that (thanks entirely to Willis) HMD has the inside running for that reason alone.

Talking of unicorns

St Vincent is occupying an odd space on the spectrum these days – too pop to have much in the way of auteur cachet, but too spikily challenging for widespread pop acceptance. This new single “DOA” comes from the soundtrack of the Paul Rudd horror comedy Death of a Unicorn that likewise, is either too cerebral for the splatter crowd, while possibly being too gruesome for Rudd’s usual fan base. The single features St Vincent in cruise mode, but still interesting:

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