Mountain Tui: The Kiwirail Interislander saga continues

Written By: - Date published: 7:57 am, July 11th, 2024 - 40 comments
Categories: infrastructure, nicola willis, Politics, public transport, transport - Tags: ,

Cross posted from Mountain Tui‘s substack post.

This morning, 1 News is reporting that the cancellation of the i-Rex ferries has so far cost taxpayers $484 million.

That’s almost half a billion dollars.

That could probably fund thousands of new doctors, maybe complete a few hospital rebuilds, or how about money for our experienced police so they don’t have to go to Australia or get advice on picking up side hustles to make ends meet?

“As at September 2023, the Infrastructure and Investment Group (IIG) within Health New Zealand was responsible for over 110 health infrastructure projects worth a total of $7.7 billion. These projects are in various phases of completion and included the new Dunedin Hospital. Large hospital rebuilds were planned for Nelson and Whangarei.

The Government set aside $103 million in the budget to cover all capital cost pressures across multiple projects.”

Note, the $484 mn doesn’t capture the full costs. I’ll elaborate more later.

As a refresher, Nicola Willis cancelled the ferries as one of her first major decisions as Finance Minister.

At the time she made a big deal about the 200% cost increase from the 2021 detailed business case, which she labelled as a “blowout” (for maximum emotional impact, I imagine)

Never mind that it was due to seismic upgrades after stakeholders had agreed on the Wellington terminal location, and detailed seismic evaluation work took place.

I don’t know about you, but seismic fortification for a Wellington port seems like a good investment. And compared to 2021, costs had gone up.

That cost increase would mean that the Government would need to stump up $1.4bn extra to secure our North South link. Kiwrail’s i-Rex plus terminals bill was about $3bn.

To give you a sense of scale,

  • National intends to spend $70bn over the next 10 years to build roads, one of which will be the most expensive in the world.
  • National’s road budget from 2023 blew out by 200-300% almost as soon as they got into Government.
  • National and ACT secured $2.9 billion for landlord tax cuts before the election.
  • Simeon Brown allocated $4bn over three years for pothole remediation.

At the time, Willis went on morning TV to do the rounds about how Kiwirail was reckless to try to buy Ferraris when we only needed Toyotas – giving an impression that she was looking after taxpayers money.

In my opinion, that’s a bit cheeky.

She must have know that Kiwirail’s board and executive team had secured the future proof boats at a fixed price of 40% less than market price. Hyundai had already built and tested the engines when she wrote a letter directing the contract cancellation.

The i-Rex ferries would have accommodated 40 rail wagons, 3000 lane metres for vehicles, and 1800 passengers accommodating the projected volume increases across the Straits.

She must have been aware, if she had listened to advice, that there was a risk Kiwirail would have failed in its obligation of care to South Korean shipmaker Hyundai-Mipo.

Now back to cost.

While 1News says $484 million has been flushed down the toilet because of Willis’s decision to cancel without a back up plan, the truth is they haven’t factored in the penalty clause.

Recent reports estimate that to cost upwards of $300mn. Then there is the price tag when we really have to buy the ferries again.

The analogy that comes to mind is we returned a Tesla Model Y that we secured for about half price, and now we’ll find something on the level of a second hand Toyota Corolla. And pay more than a Tesla.

We could soon be in the $1,000,000,000 loss category.

Change, anyone?

40 comments on “Mountain Tui: The Kiwirail Interislander saga continues ”

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  1. PsyclingLeft.Always 1
    11 July 2024 at 8:30 am

    Nice work and great summation. Needs to be more visible and the Nats incl Willis put under hard questioning….

    FYI lots of Rail associated links

    https://info.scoop.co.nz/The_Rail_Advocacy_Collective__

  2. Macro 2
    11 July 2024 at 9:26 am

    But Nicola will be enjoying an ice cream and watching Despicable Me with her kids right now so no worries.

    Typical of all purchases by Tory Govts. Bye cheap and ignore the consequences. Second hand Corolla ferries will never have been built to handle the sea state of Cook Strait, and so will be unsuitable for a good part of their commission.

    • Rosalene Bradbury 2.1
      11 July 2024 at 12:41 pm

      Actually second hand corollas are FAR better than the ships. They don't break down, they look great, and the autopilot works!

      • Macro 2.1.1
        11 July 2024 at 4:55 pm

        Don't get me wrong – I'm not running down Toyota Corolla Cars in any way – I have one myself and can strongly vouch for their reliability. What I am speaking about (with some authority on the matter)* is that vessels bought from overseas for specific NZ sea condition do not necessarily suit our waters. NZ is an Island state at the bottom of the Pacific Ocean, and as such the wave lengths around NZ are not the same as those of the North Atlantic. Vessels need to be the right length for the sea in which they operate.

        In the early 70's NZ replaced the RNZN's fisheries patrol motor launches with new Brooke Marine Patrol Craft – as used by the RN, but strongly resisted by the RNZN, because we knew that there was no way they were suited to NZ conditions. They happened to be the cheapest on offer, so that's what we got. Nothing changes. They were very nice to look at but our personnel serving in them suffered badly because they pitched and rolled and many suffered broken limbs and sprains as a result. We applied for a hard living allowance for those serving on the vessels with no result. That was until the Admiral had the idea of showing them off to Govt and inviting them to have a sail. The rip in the Strait was compliant with our cause, and the Craft bounced around throwing the guests onboard sufficiently for them to realise that we had a problem. I was serving on the Naval Staff at the time, and another hastily drafted submission for Hard Living allowance winged its way to the PM for it to be signed that evening.

        The canned Interislander Ferries had been specifically designed not only for a specific purpose, but also to be suitable for operation in the Cook Strait, one of the most difficult stretches of water in the world. Exceeded probably only by the Bass and Magellan – all in the southern ocean. Seas rolling across the Tasman, are forced to funnel through a narrow strait. The result is obvious when you think about it.

        * Lt Cdr RNZN (Rtd)

      • Mountain Tui 2.1.2
        11 July 2024 at 5:03 pm

        The new ships Kiwirail had already purchased for 40% less than market price (signed during Covid) would have been superior. Hybrid engines no less built and tested – perfect for the Strait.

        Also, the investigation on Aratere hasn't been completed. Repeating innuendo spread by NZ First (perhaps to get in front of the Casey Costello breaking the law story) is inappropriate. Let alone, when the Government had been briefed by Kiwirail early on that more issues could be expected with this aging fleet.

  3. bwaghorn 3
    11 July 2024 at 10:10 am

    Thanks for ruining my day by clearly laying out what morons we have running the country!

  4. Anne 4
    11 July 2024 at 10:13 am

    Excellent summation Mountain Tui. Congratulations. I agree with PL.A, this post should be widely disseminated.

    A more general response:

    There are four main reasons why National led governments get into so much shit:

    1) They don't do their homework properly. I'm not sure they know how to, but that is another story.

    2) Their memory banks have almost as short a lifespan as the humble amoeba. [Okay, for the more pedantic among us that is quite an exaggeration.]

    3) They don't learn from history and therefore are destined to repeat the same mistakes again and again.

    4) They don't actually care too much because its not their money [which is locked away in investments and trusts and largely untouchable] and are happy to lie their way out of culpability by blaming other people.

    Unfortunately the memory banks of a large section of voters also have a very short lifespan so they end up getting away with it.

    Edit: Oops, there’s a 5th reason. They’re naturally spiteful – most of them.

  5. Tiger Mountain 5
    11 July 2024 at 10:19 am

    The weird thing is even if these dickheads want to end “roll on roll off” rail freight between North and South Islands, and destroy rail in favour of their trucking mates–guess what–new vessels will still be required to enable their double and triple handling road transport regime to operate.

    Or are these CoC Govt. vandals on the verge of ending viable mass maritime connections between our two Islands?

    Labour’s Micheal Wood had an ignominious exit due to some personal problem it seemed, but he had put good work into reinvigoration of NZ Coastal shipping–no doubt CoC will halt that too.

    • Anne 5.1
      11 July 2024 at 10:41 am

      …these dickheads want to end “roll on roll off” rail freight between North and South Islands, and destroy rail in favour of their trucking mates–guess what–new vessels will still be required to enable their double and triple handling…

      As I said above: these twats never do their homework and never learn from the past.

  6. tc 6
    11 July 2024 at 10:20 am

    Good to see someone doing the job our useless media are incapable of.

  7. Rodel 7
    11 July 2024 at 10:38 am

    Ugh! Why have an interislander ferry when you can fly everywhere at the taxpayer's expense ? These politiians are just not in touch with ordinary people.

    • Anne 7.1
      11 July 2024 at 10:46 am

      They are only in touch with themselves.

      I note Luxon only discovered overnight (our time) at the NATO summit that the West is opposed to Russia’s war with Ukraine and he announced that NZ supports Ukraine – as if the previous government didn’t take a stand on Ukraine. 🙄

    • lprent 7.2
      11 July 2024 at 12:48 pm

      You are kind of stupid (and completely out of touch) if you think that the primary use of the inter-islander ferries is to move people or even cars.

      Aircraft have limited capacity to shift hundreds of tonnes of goods around the country on a daily basis. That happens on rail and trucks.

      If you want to connect freight between the North and South islands, then there needs to be a heavy freight connection between the islands.

      Have I belaboured the point enough so that you and other similar dimwits now understand that?

      • dv 7.2.1
        11 July 2024 at 12:51 pm

        AND ANIMALS!!!

      • Anne 7.2.2
        11 July 2024 at 4:03 pm

        Given his last sentence, I took it that Rodel was being sarcastic about the NAct pollies. It does not follow that he/she thinks people and cars are more important than the freight carried.

        • Grey Area 7.2.2.1
          11 July 2024 at 7:23 pm

          I thought Rodel's whole post was sarcasm. Many people today, especially on Facepalm, no longer seem to recognise it.

          With his usual heavy (abusive) tone of "kind of stupid (and completely out of touch)" and "similar dimwits" lprent seems to be be one of those.

          • Anne 7.2.2.1.1
            11 July 2024 at 11:30 pm

            No he's good value Grey Area. Nearly always right with his synopsis. Its not for the faint hearted I know but you get used to his style of language.

          • SPC 7.2.2.1.2
            11 July 2024 at 11:42 pm

            Yeah, but not everyone uses an emoji – that would be like explaining a joke that goes over someones head.

          • lprent 7.2.2.1.3
            12 July 2024 at 11:57 am

            Yep, but after 35 years writing and moderating on internet forums (I started with BBS, usenet), I have found that making things 'subtle' is mainly effective at starting some really tedious flame discussions. Clarity about what you're trying to say, and what your opinions actually are , make for a cleaner and clearer discussion that help robust debate.

            I will usually abbreviate potential misinterpretations by taking them at face value, then going to extreme in response, complete with the opining about the personal issues that caused the commenter to use that approach.

            Also if a commenter starts using classic flame/troll comment patterns against post or comments by others. Then then I will sometimes intervene following the same style, but several orders of magnitude more extreme and far more personal.

            If people persist in those kinds of tactics, then I just ramp the style up. Having had a lot of experience at it, I can usually ramp to recipient apoplexy within a very short time.

            It is usually far more effective than straight moderation, which usually just triggers passive aggressive seething. Certainly helps to encourage clarity in what is written to prevent any possible misinterpretation of what is read, and I try to make them educational. That is why I often link to source materials while doing the reponses .

            Besides which, I find it to be fun to exercise these skills occasionally. I am fundamentally not interested in being a nice person. I’m interested in not getting bored reading unclear discussions with clear social clambering and one-up annoyances. I want to hear what people can actually contribute to debate.

            And in any case it is part of my role on this site to act as the ogre. BOFH

  8. Ad 8
    11 July 2024 at 10:59 am

    Nice work Mountain Tui.

    A very very big can to kick down the road. They've just made cost and national impact much worse.

  9. Adrian 9
    11 July 2024 at 1:01 pm

    The latest rumour I heard is that they are going to get China to build them. Lets just ponder a little on the outcome of the last time NZR bought cheap shit from China.

  10. Kat 10
    11 July 2024 at 1:12 pm

    Well, for the millionth time….we need a 21st Century Ministry of Works owned 100% by the govt, run 100% by the govt with an elected govt minister held to account.

    Its all just a political decision, the very notion to scrap engineering know how, give up the number 8 wire approach, and that somehow New Zealanders no longer needed to know how to fix things or how to keep things going needs to be revisited.

    We also need Labour to admit they got it wrong in the 1980's and commit to putting back what was sold off or destroyed.

  11. ianmac 11
    11 July 2024 at 3:57 pm

    Well done Tui. Thanks.

  12. Bearded Git 12
    11 July 2024 at 4:23 pm

    Nice work Tui….but the public will move on by the next election unless this chronically incompetent decision is rammed down their throats at every opportunity. Labour/Greens /TPM take note.

  13. gsays 13
    12 July 2024 at 9:23 am

    Full disclosure, I have an Act voting, flat-earther for a brother.

    I am patient and try to engage with him on this and other matters. He often uses 'whataboutism' and other ZB Hoskinesque tropes which is like trying to hold down an octopus…

    The reason for that above is he reminds me of the 'fiscally responsible' cheerleaders of this regime that comment here. (Alwyn et al).

    They defend the costly (and on going costs) of scrapping the ferry build but have no comments contrasting it with the billions they want to spend on roads…

    Indefensible without considering CC, pollution and congestion. Clearly the wishes of the trucking lobby.

    C'mon Labour, TPM, take the gloves off, get the nostrils flaring and get stuck in to them.

    Give us some hope at least.

    • Mountain Tui 13.1
      12 July 2024 at 10:27 am

      I think the idea is just to get people in a non-thinking frame of mind. When Luxon agreed to let go of his $52K accommodation allowance, he only did so after Newstalk listeners were upset. Before that, he was sticking to his "I am entitled to it" guns.

  14. Andrew R 14
    12 July 2024 at 3:23 pm

    Brendon Harre reported in an article on interest.co.nz that the Wellington shore facilities included better facilities for BlueBridge – but that seems to be missing from most reports and from the government's press releases.