Willis’s Bungling of the Kiwirail Interislander Cancellation

Written By: - Date published: 9:23 am, September 4th, 2024 - 26 comments
Categories: infrastructure, International, nicola willis, same old national - Tags: , , , ,

This article is a repost from the Mountain Tui substack.

Today, RNZ revealed that despite MFAT advice to Nicola Willis to be very “careful and deliberate” in her communications with the South Korean government, prior to any public announcement on cancelling Kiwirail’s i-Rex, Willis instead told South Korea 26 minutes before-hand

And by text.

That communication feels very unserious, and the approach is unbecoming for a senior NZ government Minister, and the National Party’s #2.

South Korea is New Zealand’s 6th largest trading partner, with $8.8bn of annual two-way trade. However, far more importantly, they are a significant strategic and security player in the region, and a relationship I would have thought New Zealand cared about. Especially at a time when Luxon claims our regional security is under threat and there is “no prosperity without security”.

‘Breaking up’ by text 26 minutes before telling the world of it is just not respectful, let alone feels clownish, at that level of international diplomacy.

Hyundai Mipo Dockyard is one of the largest shipmakers in the world and delivers ~70 ships a year, having delivered for countries including France, US, UK, and Norway. It had already built i-Rex’s hybrid engines by the time of the formal cancellation, and were part way through testing them.

The new ferries would have accommodated 40 rail wagons, 3000 lane metres for vehicles, and 1800 passengers for the projected volume increases across the Straits. As in all infrastructure programs, future proofing is essential. It is part of the cost-benefit consideration, as no country can afford to drop tens or hundreds millions of dollars regularly to upgrade capacity / operations / functionality.

Hyundai Mipo is now seeking cost recovery through a process called contract “repudiation” after the government forced Kiwirail to terminate its contract.

Bad faith contract termination is always going to open up parties to paying damages.

Now it’s also worth remembering that the i-Rex ferries would have been delivered in 2026 at 40% less than market price, and despite Luxon and Willis casting doubts on the timeline and suggesting their 2029 target would be better, there is just no evidence for their claims.

The government seems intent on procuring non-rail ferries (with transport advocates only yesterday accusing the government of trying to kill off rail).

But not having rail enabled ferries would by itself add millions on to freight costs every year.

Who will pay for those higher business costs?

Kiwis of course.

Nicola Willis’s bungling is not only detrimental in immediate costs, but ongoing ones.

Another point to note is just how darn expensive this un-serious handling of the Interislander saga has been on the ships alone.

So far, it has cost Kiwis $1bn and counting for 0 ferries – at this stage we might even get to the amount that Willis claims was unsustainable for our health system after National deliberately underfunded the health budget.

Nicola Willis’s bungling is emblematic of the Coalition Government’s modus operandi to date:

Much of what they do seems to be excuses for their real agenda – and this is why the government almost without fail acts, irrespective of evidence or official advice. (The latest example is Karen Chhour ignoring Ministerial advice that told her establishing youth offender categories would not be prudent.)

They also appear “laser focused”, not on the cost of living as Luxon and Willis promised us, but rewarding donors (mainly property developers, fossil fuel, fishing, tobacco, road contractors, global multinatonals) and move NZ towards privatisation

Their way of using “independent experts” to make decisions also deserves heavy scrutiny.

When this Government has $33bn to spend on roads over the next 3 years ($70bn over the next 10 years), $3bn on landlords, and a large portion of their $14bn tax cuts going to the well-to-do – but claims $1.4bn more for Interislander i-Rex is too expensive, and $1.4bn for our health care is “unsustainable,” you’ve got to see that the writing was always on the wall.

Only now it’s coming in plain sight.

26 comments on “Willis’s Bungling of the Kiwirail Interislander Cancellation ”

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  1. Reality 1
    4 September 2024 at 10:01 am

    Nicola Willis has a level of arrogant confidence that well outstrips her level of competence and experience. A new, inexperienced minister to make what appears a rushed decision like that without some idea of an alternative other than a "Corolla" version did not make sense.

    • Mountain Tui 1.1
      4 September 2024 at 10:07 am

      From what I have seen from them so far, "sense" isn’t part of their equation – it's all about controlling the narrative, spin, marketing, in order to enact their agenda (privatise, corporatise, reward donors)

      Credit where credit is due – they seem to be very effective at that game and are well supported by NZME and platforms like Plunkett.

      That all said, I agree Nicola Willis’s incompetence here seems overwhelming – even next to her colleagues.

      • Tiger Mountain 1.1.1
        4 September 2024 at 12:34 pm

        The Natzos have had a pathological attraction to road transport–i.e. trucking–since forever because it suits their ideological support base of owner drivers, SMEs to corporate scale truckers.

        We do not have rail in the Far North all the way to Kaitaia because of the trucking lobby in the 1920s/30s whose front person was tory MP “Colonel” Allen Bell. The economic development of our region would have been a different story if the main trunk line had kept on going past Okaihau–it barely goes beyond Whangārei now.

        My take is that the current Govt. actually want to sever the rail connection between the North and South Islands.

        • Mountain Tui 1.1.1.1
          4 September 2024 at 12:37 pm

          There is evidence that bears that out, Tiger Mountain. I have a table somewhere in my memory bank and possibly on my computer on that topic.

        • Rosalene Bradbury 1.1.1.2
          4 September 2024 at 3:15 pm

          Not ‘pathological’ in the sense of random craziness. No this is ‘pathological in the sense of DELIBERATE self serving on the part of National and its road transport sector backers.

        • PsyclingLeft.Always 1.1.1.3
          5 September 2024 at 8:41 am

          Hi Tiger Mountain. This on RNZ….

          Maritime Union 'disgusted and angry' ferry talks not on Christopher Luxon's agenda during South Korea trip

          A spokesperson for Christopher Luxon said he would not be meeting with South Korean company Hyundai Mipo Dockyard while abroad and did not consider the cancellation of its shipbuilding contract would feature during his two day visit to Seoul.

          https://www.rnz.co.nz/news/political/527022/maritime-union-disgusted-and-angry-ferry-talks-not-on-christopher-luxon-s-agenda-during-south-korea-trip

          I wonder if you ,with your Union background, might know if a possibility South Korean Workers might protest ? I know some of South Korean History, incl fascist/ww2 Japanese collaborator, General Park's government and the impact it had on freedom…..

          I did of course look up Unions..

          https://en.wikipedia.org/wiki/Korean_Confederation_of_Trade_Unions

          https://en.wikipedia.org/wiki/Trade_unions_in_South_Korea

          • Tiger Mountain 1.1.1.3.1
            5 September 2024 at 9:06 am

            Not sure Mr Luxon would be on anyone’s radar over there PLA, apart from the jobs lost of course for the workers involved in the original Ferry contract. The Korean unions are a mixed bag but have done some good stuff over the years in the car industry etc., they certainly enjoy their burning protests and such like.

            • PsyclingLeft.Always 1.1.1.3.1.1
              5 September 2024 at 9:28 am

              Thanks reply. I did think as much….Still there might at the least be some questioning. Or hopefully Left wing news/protestors.

        • Scud 1.1.1.4
          5 September 2024 at 11:54 am

          It was the Geology ie the unstable ground/ hills that actually stopped Rail from getting to Kaitaia. So the NZ Government of day decided to cut it losses in terms funding etc.

          Have to find the article from the NZ Rail Observer.

          • Scud 1.1.1.4.1
            5 September 2024 at 12:52 pm

            Just further to add,

            I have to find the article from the NZ Rail Observer.

            October – November 2021 edition, Rails to Rangiahua and work pretty much stop in Jan 1931. It also said that Kaitaia had only a population of 535 in 1930 & considering that the overall population in the area especially around Hokianga Harbour, it was unlikely the Railway would've been sustainable especially when Road Transport was being considered as an option.

            In the end Northland Rail stopped at Okaihua Station and Road Transport took up slack & only the Dargaville line was completed in March of 1937 which was the end of all Railway Construction in the Northland Area.

            • Ad 1.1.1.4.1.1
              5 September 2024 at 2:31 pm

              Thanks I never knew the answer to that.

              Unfortunately now you see piles and piles of fresh concrete sleepers ready to rebuild the line most of the way up to Kawakawa, but they've all got grass growing through them now. It's pretty much a ruin north of Whangarei.

              • Scud …
                5 September 2024 at 6:14 pm

                The current rebuild of the NAL has been good, but the weather of late hasn't help & this NZG is very anti rail.

                KiwiRail has suspended the NAL rebuild until the Marsden Pt branch line is built which will be a major game changer for Northland, but in saying that Nth of Whangarei. KiwiRail is encountering some problems with a local Iwi as part of the Right of Way ie the Rail corridor goes through their land and went compo even though the ToW Commission rule against the local Iwi.

                Again there is a lot of potential customers for KiwiRail, but their Customer Service & Management has put alot of them off from using KiwiRail.

                Again it's the same for Taranaki, Greater PoB West Coast & probably a good part of the Sth Is to come and think about now. Because Kiwi goes after the big customers instead of the SME business that would be more sustainable long than its biggest customers which are large exporters & at the mercy of the Global Economy etc expect for the Mainfreight.

                But in saying that the Muppets who run KiwiRail won't connect up the Mainfreight Depot at Gore to the main line because they don't want to place a Shunting staff in Gore FFS! But if they did that they may even pick up additional customers as well.

                There is alot to say about this current management of KiwiRail who under their watch have actually seen Rail Freight Volumes fall off cliff despite the record amount of investment by any NZG since post privatisation let alone the choice of 2 new mega Ferries instead of say 4 new medium size Ferries which would've given them a bit more redundancy & flexibility than 2 Mega Ferries.

            • Tiger Mountain 1.1.1.4.1.2
              7 September 2024 at 5:55 am

              Long time Far Northerners know exactly where the line ended, and it is a great shame with todays crap roads and significant road outages like Mangamuka.

              I looked up the Northland Age archives a few years back–including copies of the paper at that time, and it is clear that road transport did not just “take up the slack”–there was an active anti rail campaign by the trucking lobby. MP Allen Bell held farm shed and hall meetings around the district to gain support for the line not proceeding to Kaitaia.

              A rail connection would be so valuable now for passengers and freight with Air NZ cutting its service to Kaitaia airport–Barrier Air has put in useful daily flights but they are small planes.

              One good thing the Provincial Growth Fund did in a budget way was re-engineer bridges by lowering the track so containers could travel underneath, presumably in anticipation of the Marsden Pt/North Port connection.

    • Ngungukai 1.2
      4 September 2024 at 10:21 am

      This Ferry Debarcale looks like a right royal F**k Up IMHO ???

    • georgecom 1.3
      5 September 2024 at 12:46 pm

      quite true Reality, probably the most inept nz minister of finance so far this century. 'Rock solid' on her financial figures pre election and then borrows billions of $$ for tax cuts and delivers record govt debt levels.

  2. Reality 2
    4 September 2024 at 10:30 am

    Agree, the confidence to "talk big" and "we know best" is well ensconced among these ministers and Luxon.

  3. joe 3
    4 September 2024 at 11:26 am

    Could the ferry contract ever be resurrected, I wonder?

  4. BK 4
    4 September 2024 at 12:03 pm

    All from a govt whom claim to be business savvy! I'm in construction and I can only imagine how my company would be seen if I cancelled a contract via text, what are they 14 years old! At the very least Luxon should have got on the phone and said what I'm clearly saying to you blah blah we are open for business blah blah

  5. Mike the Lefty 5
    4 September 2024 at 1:19 pm

    I don't think the loss of business trust from South Korea would worry National particularly.

    In any case it would be a good excuse to do what they have wanted to all along: get cheap replacement ferries built in China for a third of the cost of the Korean-built boats and lasting a quarter as long.

    But as long as they are CHEAP and make the books LOOK good, that's what important to National.

    • Tony Veitch 5.1
      4 September 2024 at 3:28 pm

      Thom Hartmann sums up the USA neoliberal approach very well, and much of what he says can be applied to NZ!

      The neoliberals know the cost of everything, and the value of nothing!

      10 minutes long.

  7. Ad 7
    5 September 2024 at 2:27 pm

    National need to actually set out their plan for Kiwirail.

    By end of next year we will be close to operating City Rail Link which is by a very long way the most expensive rail set we've ever formed in NZ, and its implications are huge for rail passenger use.

    Also there's a big feeder to the Panmure rail station preparing to open in 2026 which is the Eastern Busway.

    So rail is strengthening in Auckland.

    And yet it's hard to see the Te Huia line Hamilton-Auckland continuing too much longer.

    And there's other big routes ready to fully close, such as the Dargaville and Nightcaps lines.

    And the unfulfilled Whangarei-Marsden Point line after 15 years of designation and stuff all else.

    And the question over the line Gisborne-Wairoa and Wairoa-Napier in the reduced TREC funding t hat will run out in a year.

    The Cook Strait ferries is one thing, but the whole rail system is really at risk under this government.

    • Graeme 7.1
      5 September 2024 at 8:57 pm

      National need to actually set out their plan for Kiwirail.

      I'd like to see National set out their plan for the country, not just Kiwirail.

      All we are seeing so far is ad-hock cancelling of existing programs with nothing to replace them, and announcements of work programs are reheats of work that has been in train for years, and operational expenditure dressed up as capital works.

      The only 'plan' I can see is to move as much funding as possible to Auckland. Looks like Dunedin Hospital is goneburger too, Wayne Brown wants that money spent in his patch.

  8. Ngungukai 8
    6 September 2024 at 6:40 am

    NACTACTNZF probably want to operate the North Island and South Island as two separate entities.

  9. Ffloyd 9
    7 September 2024 at 10:35 am

    It’s a pity that they didn’t take Luxon on a ferry ride to show him the ferries we will no longer be getting. Pretty sure he’d love to have a guided tour of the ship building yards.

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