Government between Sunday politics

There is sometimes a thin line between frugal and short-sighted, and the Government’s decision to cancel the Interislander ferry project has fallen on the wrong side of it. On the surface, Cabinet’s decision to pull the plug on the Inter-island Resilience Connection project (iRex) was exactly what you might expect in straitened times when debt must be managed carefully.

The cost has soared since it was first mooted, much of that increase in the past year or so, reaching $2.8 billion to $3b. Given the recent experience with other big projects – think Transmission Gully and Dunedin Hospital – further serial price rises were inevitable.

The Hipkins government was already jaundiced about the project’s cost blowouts, but they have worsened since.

Killing iRex off was a politically easy call. Finance Minister Nicola Willis and her colleagues are determined to paint the previous government as fiscally irresponsible and incapable of delivering on key promises.

Amid the Government’s repeal-athon, from fair pay agreements to smoke-free laws, iRex had the advantage of being clear-cut, not a decision driven by ideology that would bring protesters onto the streets. There was also no doubt KiwiRail was guilty of over-ambitious plans, specifically for the onshore upgrades.

One source close to the project said KiwiRail at one stage wanted to build wharves that could withstand a ferry collision at full speed – which seems a vanishingly unlikely event in Wellington and Picton harbours.

It did agree to revise its plans for something cheaper (without much enthusiasm) at the previous government’s request. But that was wiped out by more cost rises.