The New Zealand government has forced KiwiRail to abandon plans to replace its ageing fleet of ferries, which carry freight and passengers across Cook Strait.
The fleet is prone to regular breakdowns, frustrating the transport sector: Freightways, for instance, moves over 25 trucks a day each way on Cook Strait ferries, and chief executive Mark Troughear says cancellations “play absolute havoc” with logistics.
The freight industry says more than NZ$15 billion (US$9 billion) worth of freight crosses Cook Strait on KiwiRail and BlueBridge ferries every year, but one in every five sailings was cancelled in the 2022 financial year.
Power Failure Exposes Ferry Issue
The issue came to public attention in January of this year, when a ferry lost power mid-voyage in bad weather, stranding 864 passengers and 80 crew and forcing the captain to issue a mayday call.A passenger on board at the time said “it became clear that had the ferry drifted any closer to the rocks, the tug boats weren’t strong enough to hold it and we were in trouble.”
KiwiRail, a state-owned company with an independent board of directors, had ordered two much larger, hybrid diesel-electric ferries in 2021 but the government baulked at the increasing costs not just of the purchase but also the port-side infrastructure needed to handle them.
The most recent request, for an additional $1.47 billion for port works, triggered a review of the project and a government decision not to proceed.
Finance Minister Nicola Willis said she feared she would be effectively agreeing to a “completely open chequebook” if she had agreed.
The new ferries accounted for just 21 percent of the initial budget of $3 billion, with the remainder needed to fund extensive port redevelopment in both Wellington and Picton.
KiwiRail says it cannot proceed without further government funding and its board will now begin to wind down the project and review plans for its ferry services.
Road freight moved 92.8 percent of New Zealand’s freight on a tonnage basis, and 75.1 percent on a tonne-km basis.
Nick Leggett, CEO of Infrastructure NZ, told the NZ Herald that a strong and reliable ferry service was vital to the country’s supply chain.
“Thought needs to be given around the expectation that KiwiRail must fund port-side infrastructure. We don’t ask Air New Zealand to fund airports.
“It’s very concerning that the previous government did not appear to budget for this significant capital investment, but sadly that is indicative of the way infrastructure has been treated in New Zealand—unfunded with no clear pipeline or certainty.”
The National Road Carriers Association (NRC) said it “hopes that KiwiRail, like any other commercial business that has had their preferred funder decline their request, will look to seek alternative funding.
“Just because KiwiRail is state-owned doesn’t mean it gets a hall pass in terms of seeking alternative funding. There are plenty of global infrastructure funders who would likely be very open to a significant infrastructure investment with a 60-year life and a stable user profile.”
Jon Reeves from the Public Transport Users Association said that the decision could damage New Zealand’s public image.“This is a warning for all international companies that tender large projects in New Zealand—you cannot trust the New Zealand government because the state-owned enterprise will or could pull out after signing contracts,” Mr. Reeves said.
