In January 2024 the Finance Minister, Nicola Willis, cancelled the iReX ship building contract with Hyundai Mipo. This project was to replace New Zealand’s ageing, and increasingly unreliable, ferry fleet with two new purpose built ferries by 2026 and had been six years in the making.
The contract for this build was struck in 2021 at a price that was considered by those in the industry to be very good. Since then the price of building ships has soared.
Many months later, the negotiations for the cancellation have not concluded but the final cost is expected to be upward of $300m and as high as half a billion dollars. This comes on top of a half a billion dollars of public money that has already been spent on the project to date.
The government has not proposed an alternative plan to replace the current fleet which is expected to last another five years maximum and only with greater maintenance costs and worse reliability. It is likely that the Finance Minister’s preferred plan is to build new ferries using a part privatisation model (similar to the one used for electricity companies) and for these ferries to not be able to carry roll-on roll-off rail.
Both of these decisions carry enormous risk to freight customers and Aotearoa New Zealand’s economy.
The interislander service is infrastructure. It acts as both state highway one and the main trunk line. Putting a private, for-profit gatekeeper at the heart of our national freight system will increase costs to freight customers, see profits go offshore, and cost more than spending the money on publicly owned rail-capable ferries upfront.
Eliminating rail-enabled ferries on the strait would sever the rail link between the North and South Islands and effectively price the Christchurch to Auckland rail freight route out of the market. Without that route, rail freight will not be viable in the South Island, and most likely nationally. Taking rail off the strait risks closing down rail in Aotearoa New Zealand altogether.
There is still time to make this expensive and damaging mistake right. The government still has the option to commit to publicly owned and operated rail-capable ferries that will support our businesses and our economy for years to come.
It will probably cost more than it would have before Nicola Willis cancelled the iReX project but the cost to Aotearoa New Zealand will be much much greater and will last a generation if they keep getting this wrong.
More information:
https://www.nzherald.co.nz/nz/ferries/DB2JFF76NVA3PNAXAYNBZ2FIUY