Interislander – Debacle
We have seen the reports and pictures of the Interislander ferry Aratere aground in the sounds, just outside of Picton harbour.
The mainstream media seem to be having a fielday with their reporting around the incident and the associated information regards the replacement or otherwise, of the current ferries which are rapidly approaching the end of their designed life.
The decision was made by the previous Labour government to replace the ferries.
An indicative business case in November 2018 estimated the total project cost, including landside infrastructure, would come in at $775m.
In early November 2023, KiwiRail advised the incoming Government of the most recent cost escalation with total project costs at that time of approximately $3b.
The current estimates of cost are now up to approximately $3.5b.
“The Government remains committed to a resilient safe and reliable Cook Strait connection, but the cost of this project has almost quadrupled since 2018,” Willis says.
“It is also now the case that only 21 per cent of these costs are associated with the core project of replacing ageing ferries.”
In July 2021, KiwiRail announced it had formally signed a NZ$551 million contract with Korea’s Hyundai Mipo Dockyard to build two new Interislander ferries.
The first of the two new Cook Strait ferries were originally expected to arrive in 2025 and the second in 2026.
The only rail-enabled ferry currently is the Aratere which can carry a maximum of 27 sixty-foot equivalent wagons per sailing. The two new rail-enabled ships were expected to carry 40 sixty-foot equivalent wagons per vessel on up to three return sailings each per day –a 300% increase in capacity at peak.
KiwiRail operates around 3800 services a year, transporting about 850,000 passengers, 250,000 cars. Around $15-$20 billion worth of freight travels the Cook Strait each year, with significant growth predicted.
I December 2023 the new Government stopped the Interislander ferry replacement project due to cost blowouts and declined a KiwiRail request to contribute an additional $1.47 billion towards the upgrade.
Finance Minister Nicola Willis said at that time, cost escalations were not related to the ferries themselves but to associated harbour side infrastructure. She also said the decision was not a reflection on shipbuilder Hyundai Mipo Dockyard which was awarded the contracts to build the two rail-enabled ferries.
New ferry terminals in Picton and Wellington were needed to accommodate the proposed two larger rail-enabled ferries which were set to replace Interislander’s three aging vessels.
In my opinion this stoppage, was the only sensible decision that could be made given the current costings and taking into account the likelihood of further blowouts in these costs.
Realistically what we should have been looking at was new ferries that were capable of being put into service using the existing harbour side infrastructure which would have allowed for the planned upgrading of the infrastructure to accommodate future expansion.
In the current economic situation that the Labour government has left us, to spend such a huge investment on just this infrastructure upgrade is neither feasible nor sensible.
In fact in my opinion the decision to go with larger vessels which required such an upgrade of the harbour side infrastructure was quite possibly the worst decision that could have been made given the current economic situation the country is in. It makes me wonder if it was not somehow designed to lock the government into providing new infrastructure come what may.
If nothing else it certainly further confirmed the Labour government’s poor record of fiscal management.
The media seem to be quite happy to beat up on the current coalition government regards this mechanical failure of the Aratere and its subsequent grounding, yet the current government has only been in power for just over six months.
The issue around the ferries and their end of design life and replacement is something which has a very long lead time from making the decision; to building the ships and getting them into service.
The previous Labour government had been in power for six years and it wasn’t until near the end of their term that they allowed KiwiRail to make a decision to replace the existing ferries with two larger vessels, without taking into account the need to provide seriously up-graded harbour side infrastructure which had a price tag which we cannot afford in the current economic situation that Labour have left us in.
The fact that we are now facing a dire situation where we have a fleet of ferries which are vital to our transport connections between both North and South Islands, which are at the end of their design life and continually suffering mechanical issues, is a result of the failure to address the replacement issue in an appropriate timeframe and exacerbated by the poor decision to order replacement ferries which cannot use the current harbour side infrastructure.
The responsibility for this current situation should be equally shared by KiwiRail (for their decision to order much larger vessels) and the previous Labour government (for their failure to identify the need for serious expansion of the harbour side infrastructure at a huge cost to the taxpayers and for their rubber stamping of KiwiRail’s decision).