Rt Hon Winston Peters
Minister for Rail

Welcome.

First, can we acknowledge Chris Mackenzie, the Chair of Ferry Holdings who is here today, and directors Heather Simpson, Greg Lowe, Katherine Rich and Captain Iain Macleod.

They have worked hard, but they have not worked alone. Sensible people from across Port Marlborough, CentrePort and KiwiRail have come to the fore and we thank them all.

On the 11th of December, we resumed responsibility for the Rail portfolio and with it the leadership of the Cook Strait ferry replacement programme.

We said then that we would outline the key ship and infrastructure decisions by the end of March.

Today is the 31st of March.

The programme we cancelled

The iReX programme, which our Government cancelled in December 2023, should be studied by members of the public who want to see their tax dollars respected.

It is a cautionary tale.

In 2020, when we were responsible for KiwiRail, we committed $400.1 million as a taxpayer contribution to buying two new ferries and readying the infrastructure for them.

Back then, the total cost of that programme was supposed to be $1.4 billion, with most costs financed by KiwiRail and the ports.

This arrangement placed the commercial incentive on the companies to keep the costs low.

What happened between 2021, when the ship contract was signed, and 2023 when the truth came out about this project is as follows:

The project leaders approached this task as though they were pricing the job, not delivering it.

They did so because the previous Government gave them every reason to believe they would get their way.

The only method to stop behaviour like that is to do exactly as the Minister of Finance did in December 2023.

Today, we have vindicated the decision of the Minister of Finance to stop the project.

Project iReX was said to cost $3.1 billion according to KiwiRail, while officials warned the previous Government it would approach $4 billion.

Taking a charitable view of the world by accepting KiwiRail’s estimate, that meant the infrastructure costs alone would be $2.6 billion.

The vast bulk of this cost was expected from you, the taxpayer.

We said no. We could do better. So here is what we will do.

What we will deliver on ferries

By Christmas 2029, two new Interislander ferries will enter service on the Strait. They will get you, your family, the caravan, the dog and all the rest across the Strait.

New ferries mean we are buying for a full-service life of 30 years. We are looking to the long term.

These ferries will be about 200 metres in length, and about 28 metres in width. That is longer and wider than the current Interislander fleet of three, meaning it has capacity to serve current and future demand.

Both ferries will have capacity for 1,500 passengers.

Crucially, these ferries will be smaller than what the previous Government contracted in 2021. That saves us materially on infrastructure.

The Cook Strait is also an essential connection for the movement of our goods and services. It has a freight task to serve, and these ferries will do exactly that.

Trucks will drive onto these ferries.

Rail will shunt onto these ferries.

Both ferries will have 2.4 kilometres of lanes for trucks and cars, with space for 40 rail wagons.

We serve both, because they serve every business stretching across our provinces and our cities in New Zealand.

The reason for this is just plain common sense. Road-only ferries would require us to reconfigure the whole operation, at considerable costs.

Road and rail ferries mean we shunt large freight volumes in single movements. That saves time, and time is money.

This is not the Ministerial Advisory Group’s plan

The Ministerial Advisory Group proposed the Government buy two road-only ferries, said it would be cheaper overall, and that we should approach just one shipyard to do a deal.

We did not accept that advice. We believe in competitive tenders, and a full appreciation of what best serves our country.

And road-only ferries came out as more expensive than buying road and rail ferries.

What we will deliver on infrastructure

The surest way to keep infrastructure costs low is to use what you’ve already got.

The marine infrastructure in Picton requires replacement, so it will be replaced. The marine infrastructure in Wellington has life left in it, so we will modify and keep using it.

This level of pragmatism was completely absent under iReX.

The road and rail marshalling yards will be modestly modified, but not completely renewed like under iReX. These yards were built by our forebears. They knew what they were doing. We know it because these yards have served us well for decades.

The road connections in Wellington and Picton will also be improved, in discussion with those councils.

The terminal buildings in Wellington and Picton will remain as they are today. While some may regret the absence of a Taj Mahal in Picton and the Sydney Opera House in Wellington, the people paying their taxes will not.

And need we remind you that the main experience people have when they wait to board the ship is not the terminal building, it’s their own vehicle. For those walking on, it’s the ship that gives the experience, not the walkway.

The time will come when new terminal buildings will be needed, and space is allocated for when the ports are ready. But they are not needed now, and not at your expense.

Our new wharf in Picton is looking to the future. It will have a dual-level linkspan and double lanes. That means unloading and offloading will be faster in Picton than it is today.

While Wellington remains single lane, as this saves the taxpayer considerable money, the time will come when the port companies invest in double-lane infrastructure.

The door to the port’s long-term aspirations remains open, but we are focused on what’s needed right here, right now.

The next steps

So, today our Government has agreed to buy two new ferries to serve our people, cars, trucks and rail.

Our Government has agreed to a pragmatic infrastructure solution that focused on minimum viable, maximum reuse.

We have said yes to affordability, and no to extravagance.

This gives the small Ferry Holdings team the mandate they need to negotiate a good ship contract with commercial shipyards.

Ferry Holdings now has key ship decisions, which enables them to finalise the ship specifications and invite a shortlist of shipyards into a closed tender process.

These shipyards won’t know who each other are, and they will compete on price and quality.

Ferry Holdings also has key infrastructure decisions, and a firm budget to live within. This enables them to progress the engineering and construction programme with both ports and KiwiRail.

They will keep a firm hand on the tiller to keep scope and costs under control. And the ports will share this view, as their dollars are on the line too.

We received alternative proposals from all manner of people and companies, with many insightful ideas. They formed part of our decision.

We have decided in the national interest to directly purchase ships and proceed with an infrastructure plan that meets our needs.

We’re buying ships and sorting infrastructure, and what must follow is a commercially disciplined business to safely, reliably and affordably serve our people and their goods.

Programme cost

And for those in the media who want to know, ‘how much will this cost,’ let us say this: we will not approach this like Wellington Water, by which we mean revealing our budget while negotiating the price. That turns a buyers’ market into a sellers’ market.

When the ship and port agreements are signed later this year, you will know the total cost and the shares between the Government and the ports.

In the meantime, it should be patently obvious to even the most casual observer that an infrastructure programme that makes use of what is already there will be markedly cheaper than the iReX programme which sought to knock everything down and build utopia in its place.

Port Marlborough, CentrePort and KiwiRail have approached this with a focus on pragmatism, cost-effectiveness, and a heavy dose of reality. Together with Ferry Holdings, they have a single plan to concentrate on now, and to deliver on.

And we will back them all the way.

Thank you very much.

[Speech delivered in the Legislative Council Chamber, Parliament, to media at the announcement of the decision on the future of the interisland ferries]

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