It has become clear over the past 24 hours that Minster for Rail Winston Peters is the sole reason a replacement plan for Interislander ferries wasn’t announced on Wednesday.
Finance Minister Nicola Willis seems to have lined up a pair of medium-sized ferries which could be delivered for a ballpark price of $1.6 billion, with minimal infrastructure upgrades.
But, because they aren’t rail-enabled, Peters won’t sign off. He seems worried that doing so could risk the viability of the South Island rail network, which has been losing market share to roads for years.
Most of the island's freight moves by truck, with railways playing an important—but supporting—role transporting bulk goods over long distances. Key users of the rail network include coal mining company Bathurst Resources, dairy giant Fonterra, and various log exporters.
KiwiRail, a state-owned enterprise, wants to win market share back from road transport and thought buying ferries big enough to carry trains would help it achieve that. In fact, it told officials it wouldn’t be willing to buy any new ferries at all, unless they could take trains.
“The new, large rail-enabled ferries have a 300% increased rail capacity. KiwiRail believes the new ferries will be highly efficient and beneficial to customers so that freight traffic will move from road to rail for inter-island transport,” the Ministry of Transport wrote in a memo.
But it was important to remember, the officials added, that investment along the entire corridor, Auckland to Christchurch, would be needed to encourage freight to move from road to rail.
This was in the context of the Ministry advising Transport Minister Simeon Brown to pull the plug on the iRex project and ask KiwiRail to come up with a commercially viable alternative.
You could read that paragraph as a warning that expensive ferries would not be the last investment required to boost the competitiveness of the rail network, particularly in the South Island.
When Interest.co.nz asked Willis whether significant upgrades to the wider rail network would be necessary to make rail-enabled ferries worthwhile, her reply was short.
“That, my friend, is a question for the Minster for Rail,” she said. Any collegial goodwill she had for Peters appears to have evaporated since Wednesday’s joint press conference.
“I’ve done my bit. I’ve come up with a plan that is deliverable, that is costed, that Cabinet has agreed to, and now the Minister for Rail is going to test that plan and come up with his option”.
If he fails to come up with a better solution, Willis said, there was a plan ready to go which would ensure safe, reliable ferries. She invited reporters to direct all further questions to Peters.
You often hear murmurings about ministers butting heads behind the scenes, but this week it has really spilled out into the open.
Act Party leader David Seymour hinted the Cabinet approved budget was roughly $1.6 billion—not enough for rail-enabled ferries—and that privatisation was probable.
“The Schedule 4A model announced today allows for private investment, with the Crown able to sell up to 49% of its shareholding. Private investment will bring private market discipline which will lead to a better and more cost-effective service in years to come,” he said.
In an interview with RNZ, Peters shot back saying Seymour was “wrong on the question of privatisation and he's wrong on the question of what it's going to cost”.
"You're talking to the Minister in charge now, not the one that's not in charge," he said.
The rail network was briefly and unsuccessfully privatised from 1993 until 2008, when all remaining assets were bought back by the Government and combined into KiwiRail.
Re-privatisation of Kiwirail is off the table, but just as Peters has been given a chance to find rail ferries, Seymour has been allowed to open up the ferry service to private bidders.
It's a high stakes drama between a pair of uneasy allies with widely differing ideologies.
Peters’ vision is for a strong, nationwide rail network but many fiscal conservatives might prefer to concentrate investment only in the lines which make the most commercial sense.
Roughly half of all New Zealand’s rail freight is carried between Tauranga, Hamilton, and Auckland. Some want rail investment focused there, instead of spread thinly across the sparsely populated country.
Michael van Drogenbroek, a public transport consultant, believes an old plan to keep only the so-called Golden Triangle network, and sell the rest off, may be being defrosted. Something he doesn't support.
“Make no mistake, the knives are not only out for rail in New Zealand—they are being sharpened. I can almost hear the spinning stone wheel grind against the metal of the knives as I write this,” he wrote, in a 2023 blogpost.
If Peters also sees his quest for an affordable ferry alternative as a critical battle to preserve the railways, then the coalition will face a severe stress test should he fail.
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