Ferry debacle shows Labour costings all at sea

Now the hard part: Deciding what comes next for Cook Strait project

Ihate to be the party- pooper so close to Christmas, but surely enough of us remember the 1968 Wahine disaster that we feel some concern over the state of KiwiRail’s rapidly ageing Cook Strait ferries. Fifty- one people lost their lives when the ferry Wahine ran aground on rocks at the Wellington Harbour entrance.

It’s early days yet when it comes to assessing whether Cabinet’s decision to refuse to fund the escalating cost of KiwiRail’s ferry replacements and associated harbourside infrastructure is the optimal call. At the very least, the project will need to be rescoped at pace to ensure decent ferries are working Cook Strait as soon as possible.

Finance Minister Nicola Willis this week publicly declined KiwiRail’s request for an additional $ 1.47 billion — on top of previous estimates of $ 1.45b for the project — due mainly to cost escalations in harbourside infrastructure. This would have topped $ 3b — but would hardly be a deal- breaker if funded from a longterm infrastructure fund.

Willis — who studied journalism early in her career — is a clear communicator.

But we are fast getting to the point where this country needs a great deal more than the “Janet and John” explanations Willis tendered this week for Cabinet’s refusal to bank the project. ( For those unfamiliar with this reference, it means “childishly simple or obvious, resembling something found in a book for very young children” — the Janet and John books were staples for generations of 5- year- olds ahead of the iPad era.)

Willis said KiwiRail was effectively paying for a “Ferrari and now we’re going to go off and see whether there are any good reliable Toyota Corollas available”, to cut costs.

But the crucial point is that KiwiRail’s ferries are no longer reliable. They may have been “good reliable Toyota Corollas” in their day. But like any vehicle that has gone too many times around the clock, they are now a clear and present danger.

Given recent incidents — particularly the one where the Kaitaki ferry lost power in all four engines last January — the replacements can’t come too soon, in my view.

There needs to be more urgency communicated by Government that it will address those replacements at pace — not simply leave this to KiwiRail while the Government polishes its brand as careful stewards of public finances and scores points off its predecessor ( deservedly so, it seems, when it comes to their handling of many infrastructure projects).

Cook Strait is a treacherous piece of water.

On January 28, the Kaitaki was driven towards the coast by high winds before anchors managed to

The failure to get the KiwiRail ferry project wrapped up ahead of a change of Government lies at Labour’s feet.

stop it. A Mayday call was made. Passengers put on lifejackets. It was a desperate time with Wellington Hospital on standby for mass casualties.

These ferries are essentially an extension of State Highway One connecting the North and South Islands. They are vital for passenger traffic, cars and of course rail freight. They need to be replaced sooner, not later.

Christmas is fast approaching. Willis aims to take a week off with her family, then hit the ground running in the New Year ahead of the first Cabinet meeting on Monday, January 15.

By that time, surely, National ministers will be able to spell out exactly what they plan to do to replace all those Labour signature infrastructure projects they are canning and put more meat on the bones of their decisions.

The failure to get the KiwiRail ferry project wrapped up ahead of a change of Government lies at Labour’s feet.

Apparently, $ 435.1 million of Crown funding had been assigned for the Inter- Island Resilient Connection ( iReX) project, of which about $ 63m remains. KiwiRail also signed a $ 551m contract with a South Korean shipyard back in 2021 to build the new ferries. KiwiRail has confirmed this contract will be terminated.

KiwiRail’s board and chief executive say they now plan to negotiate with Hyundai, the Korean shipbuilder, to make a call on whether to complete what Willis terms the “Ferraris” now on the drawing board, sell them on, or what?

The option has been raised of leasing ferries in the meantime.

But there are substantial sunk costs which also have to be worn — a problem which is writ large across government with various Labour infrastructure projects.

The Auckland Light Rail scheme has stopped work. It is too early to say whether some elements will survive.

Labour’s second harbour crossing project has been abandoned. It was substantially unfunded and undeliverable, officials warned.

What started out as Labour’s Three Waters initiative will also be canned via legislation in the New Year. Some executives on five- year contracts for the new water entities stand to get substantial payouts.

This failure to appropriately cost, fund and implement major infrastructure projects is a damning epitaph for the Labour Government.

To cap it all, Auditor- General John Ryan has said the previous Government should have ensured better transparency and value for money for the bunch of infrastructure projects it commissioned during the Covid- 19 pandemic.

Among them were the $ 12b New Zealand Upgrade Programme and the $ 3b Shovel- Ready Programme, which was promoted as a mechanism to stimulate the economy in the face of the pandemic.

He found full business cases were not always available or up to date, even when a project’s planning was more advanced. “A lack of transparency and documentation about how and why decision- makers made significant decisions can also create the perception that processes lack integrity,” he said

Ministers often ignored advice, and in some cases critical records are missing to show how decisions were made.

Ryan noted he had made similar observations about aspects of the Strategic Tourism Assets Protection Programme, the Cost of Living Payment, the Provincial Growth Fund and — most recently — the reprioritisation of the Provincial Growth Fund. “It concerns me that significant spending of public money continues to occur without appropriate processes for ensuring value for money and transparent decision- making.”

Ryan’s report ought to strengthen Willis’ resolve for a much more aggressive approach to infrastructure financing and delivery.