Ferries blowout ‘ cheap politics’
Labour finance spokesman Grant Robertson has accused the new Finance Minister Nicola Willis of playing cheap politics over the escalating cost of portside infrastructure needed for KiwiRail’s new Cook Strait mega- ferries.
Willis has revealed the potential cost to the taxpayer i s now many times what the Government initially signed up to and said the situation was “deeply troubling”.
“I am concerned that this blowout reflects casual incompetence by the outgoing Government in its approach to the scoping, management and delivery of major infrastructure projects,” Willis told the Herald. “Our Government will be much more careful stewards of taxpayers’ money.”
Yesterday, Robertson said Willis was wrong and it was KiwiRail that owned and managed the project.
As a state- owned enterprise, KiwiRail had an independent board that had made decisions about the project, he said.
“The previous Government acknowledged the commercial sensitivity around this project and has not sought to speak publicly about these matters. Ms Willis knows all of this and has instead chosen to play cheap politics with this important national infrastructure project.”
KiwiRail i s replacing its increasingly unreliable and ageing Interislander fleet with two new railenabled ferries under the Inter- island Resilience Connection project ( iReX).
A $ 551 million contract was signed with a South Korean shipyard in 2021 for the new rail- enabled ferries but it’s not the ferries that are the problem, it’s the portside infrastructure, including new terminals.
The extent of the budget blowout for this part of the project has not been disclosed. The last publicly available cost estimate for the new ferries and the landside costs was $ 1.45 billion.
In light of Willis’ public comments, Robertson confirmed KiwiRail had asked ministers in the previous Government for more money over the past couple of years.
Ministers regularly raised concerns about the project directly with KiwiRail and worked to limit the impact of cost escalations that were outside their control, Robertson said.
iRex was funded after Labour and NZ First formed a coalition Government in 2017. Robertson said advice from officials at that time was the project could be largely debt- funded, given the Cook Strait route was a profitable part of KiwiRail’s business.
The Government contributed $ 435m for initial scoping work and to help secure the shipbuilding contract.
“As with all infrastructure projects in a time of high inflation, there have been cost escalations,” Robertson said.
There were ongoing discussions between Treasury and KiwiRail this year about what the Government should do to continue to support the project, Robertson said. The situation remained unresolved at the time of the election.
Infrastructure NZ chief executive Nick Leggett said a strong and reliable Cook Strait ferry service was vital to New Zealand’s supply chain.
“It’s very concerning that the previous Government did not budget for this significant capital investment, but sadly that is indicative of the way infrastructure has been treated in New Zealand.”
iReX programme director David Warburton said the new purposebuilt ferries would cater for 30 years of tourism and trade growth, increase passenger capacity by 50 per cent, carry 40 per cent more trucks, and increase rail capacity by 300 per cent.