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.
117 Comments
It is a long and vulnerable stretch of rail from south of the Kaikoura peninsula to Picton as was amply demonstrated by the recent EQ. Surely the question is whether or not that remains viable, and if trucking has now become the dominant transporter, that suggests that it isn’t. You could ask as well whether or not overnight ferries between Lyttelton and Wellington would relieve the traffic congestion, wear and tear, on SH1 Christchurch to Picton.
True but there is an inland route which was resorted to, but with quite some damage to the relative roading. A modern ferry from Lyttelton would not be much longer transit. Travelling overnight each way. That would reduce the dependence on both road and rail north of Christchurch. The greens should vote for that less trucks and trains less diesel emissions, assuming a modern ship is efficient in that regard?
I've done my bit I've made you a new pie and if you don't want to eat it it's on you ...
Yes I know the filling is a fresh steaming piece of dogshit...
Yes I know the pie I took off you and threw out the window was an award winning steak and cheese pie ...
but the point is I have made you a pie and it's cheaper so if you don't want it, that's on you.
Would you pay $800 for a Steak and Cheese Pie? Because that is the cost of IREX divided by the adult population of New Zealand.
Right now I could get a 40' container from anywhere in Auckland to anywhere in Christchurch for $3000. That includes hiring the container, trucking the container at both ends, sea freight and port charges. 70 cubic meters of capacity. Door to door in 4 days.
Kiwirail has approx 2000 employees earning over 120k per year.
The Interislander service earned Revenue (not profit) of 147 million in FY 2024.
Vessel maintenance eats 29 million a year.
324 staff earning lets guess 100k each average. 32 million
Whats the profit projected to be in the future ? Show us a business case for new ferries and what size/specification of ferries can be supported by the revenue.
How would you like to fund it -
Via increased ferry tickets for cars, individuals or just an increase in freight charge?
This would make travel prohibitive, so how about a subsidy?
Who are we subsidising? The freight users. Who are they? Some are corporates, but all pretty much business.
Are you happy for joe tax payer to subsidise business? What if it stifled blue ridge or new competitors that could be cheaper?
I don't know, but a question which is a struggle to answer.
Landlord tax cuts cost $3B. I would have happily given that to iRex. Especially when you consider the iRex investment is a capital investment that will produce a return.
Even if you take Willis’s numbers at face value (and I don’t trust them) you get $1.6B, plus $400M sunk costs on iRex, plus cancellation costs on the ferries ($300M?) = $2.3B.
So the difference is approx $1B.
Then consider that some of any money spent by government on infrastructure comes back in tax. The difference is immaterial.
This article neatly summarises the Coalitions internal conflict interpretation many commentators took from this weeks announcement. It's clear that they've come up with a face saving way forward.
"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."
Hence the Schedule 4A model to kill such blatant self interest. IIRC the profitable Cook Strait transit subsidies the rest of Kiwirails loss making anachronistic business.
In my mind there are 4 pillars to a functioning society
Health services, policing , defence, and infrastructure should be run by government
Anything else the private sector can run.
None of these pillars will ever make a profit, hence taxes are required to fund them and they can't be run to normal business models
The ferries are simply an extension of the road and rail network
Nact thinks business can do everything , but they view the working class people as consumables..
And labour / green view us as assets.
That depends on how many cows the farmer also has. What a farmer farms is a function of the land (and capital and labor) available to them and where they can make the best return. Hey - the farmer may forgo pigs if the return on cows will be higher. (And when the cost of energy finally reflects the true price to society - rail is gonna be a winner.)
I think Winnie is right to be a rail enthusiast. But other comments which point to the vulnerability of our network are correct too. The real issue is that rail in NZ has been neglected. It was privatised at extreme cost to the tax payer and the overall detriment to the country, and although brought back into the public owned infrastructure there remains an apparent governmental reluctance to properly support it. Road freight remains heavily subsidised while rail overs significant advantages.
I feel the government needs to do two things at a minimum; first make road trucking companies pay the full cost of the damage they cause to the roads, secondly ensure NZ Rail is capable of picking up freight at an affordable rate, This will likely require the tax payer to fund a one off complete rail network maintenance programme and if necessary, upgrade to put NZ Rail onto a level playing field.
The neglect of our rail system, as with any infrastructure, will cost significantly to bring it up to standard.
I feel the government needs to do two things at a minimum; first make road trucking companies pay the full cost of the damage they cause to the roads,
Are you delirious? National under Luxon and Simeon are literally banning council's from doing stuff that would even remotely balance transport investment in anything other than trucks and private ICE cars, while directing all of the tax-payer infrastructure fund into roads (not just at the expense of public transport, rail, walking and cycling, but at the expense of hospitals, schools and climate adaption infrastructure). It is criminally corrupt.
Just two of many examples to illustrate
A single road network in Northland will consume one dollar in every 10 spent by the Government on infrastructure over the next 25 years - excluding maintenance and renewals - the Infrastructure Commission says.
https://www.nzherald.co.nz/nz/politics/one-road-to-dominate-10-of-infra…
Additional hurdles have appeared for Tasman District Council as it continues to try and lower speed limits after being forced to restart the process by the Government.
https://www.stuff.co.nz/nz-news/360521407/entirely-stupid-speed-limit-s…
Not delirious at all. I'm talking about what I believe should be done, not what the government is actually doing.
what do you think the long term implications of the government's actions are going to be?
Luxon keeps talking about getting the economy back on track, but I suggest that the track has been neglected for so long it is no longer capable of supporting the train that is the economy, and Luxon and his advisors don't appear to understand that. They have talked about infrastructure being neglected and have piecemeal attempts at fixes in place, but their biggest priority is SAVING MONEY. How will that get the economy back on track?
I'm talking about what I believe should be done, not what the government is actually doing.
Sorry, I thought you were suggesting there was chance in hell of National doing what should be done.
I agree with everything you say but what needs to happen can never happen under a National Party led by Luxon and Simeon because they are ideologically opposed to the very things that need to happen.
Ideology and practicality tend to get in the road of each other too often.
My concern is that Luxon and his cohort cannot grasp that everything is connected and the country's economy cannot function effectively when it's 'bones' are broken. The analogy of a living thing is perhaps apt in this context in that for the country to function, the economy must function. For that to happen the skeleton of the country has to be robust. that's not the land, but the infrastructure, the laws, regulations, people - everything has to be healthy. That is clearly not the case.
Ideological fixes will focus on components and may or may not be successful in their microcosm, but everything is connected and other weakness's will become more significant to prevent the outcomes required or expected. Focus on the basics first, looking after the people and people supporting infrastructure first then build on that to create the functioning economic structures that make the country function and build resilience. Pretty much everything else will follow naturally. A lot of this can be done in parallel, but the people must come first.
I fear Luxon is thinking too big and too far beyond our borders to really see and understand the detail of what's really needed here in NZ.
I fear Luxon is thinking too big and too far beyond our borders to really see and understand the detail of what's really needed here in NZ.
Agree with almost everything you say apart from this bit, from what I can see Luxon has not seen the bigger global picture at all. He is energy blind.
The private consortium of companies that owned Marsden Point decided it was not economically viable to continue running as it was.
- Are you suggesting the Government should've meddled in with private business affairs and taken over?
- Would these private sector companies even entertain that idea?
- What sort of money would private enterprise demand from the taxpayer to give up their asset? It's effectively blank cheque sort of stuff, and then you'd be flailing your arms at the gross waste of taxpayer funds.
Considering the strategic importance of Marsden point as our ONLY refinery, they certainly should have considered it. Private company or not one should be asking whether in a small country like NZ weather such an installation should have ever been private? I am assuming it was built on public money and then sold to private interests? yet another example of how privatisation really is the worst thing a government can do to us.
I would suggest both. I don't believe fossil fuels will ever totally go. there will still be corners of the economy where there is no other viable alternative. But hydrogen and electric will take over most areas of transport. Fossil fuel for power generation is just idiotic, there are way better alternatives.
But ultimately i believe we must reduce our dependence on imported energy.
"The Refinery assets were transferred by the Government to the New Zealand Refining Company Limited, a consortium of the five major petrol retailers. BP, Mobil and Z Energy are currently major shareholders.[3] The Government injected $80 million to enable the company to adapt to the new environment. A major efficiency drive was launched to cut operating costs."
https://en.wikipedia.org/wiki/Marsden_Point_Oil_Refinery#:~:text=The%20….
They were paid to take it.....taking it back should have been a doddle.
How is that socialist? Idiotic name calling. Stop being an extremist BW.
Taking your perspective should the RBNZ be private? How about health, education, defense?
Strategically and economically strategic functions should be owned and controlled by the government on behalf of the people. That is neither capitalist nor socialist. it is just common sense?
The importance of the refinery to national resilience is too great to ignore. The cost of upgrading is due to private industry neglect.
The same type of black swan event could cripple supply of one of the various components that go into refining fuel.
That said, we source refined fuel from Australia, Singapore, Korea, Brunei, Japan. Taiwan is 6th on the list. A single supply disruption will not be catastrophic.
https://www.stats.govt.nz/news/petroleum-imports-fuel-large-deficit/
And if we've transition to a non-oil source of energy? What then? Are we left holding a white elephant?
We should be going hell for leather at renewals about now. We've basically no other options. Good thing too.
But no. The simian Brown wants a greater reliance on oil.
.... Remind me of who - and why they - voted for him again.
Baywatch you're losing credibility. You've taken an extremist perspective in this discussion and won't reply to questions, providing your reasoning and now you resort to snarky digs. Somewhat childish isn't it? If you cannot handle disagreement perhaps you should keep your opinions to yourself, especially where you chose to challenge others?
I feel the government needs to do two things at a minimum; first make road trucking companies pay the full cost of the damage they cause to the roads
This would instantly flow through to the cost of all transported goods, just as higher fuel prices did. The truckies will not lose a dime.
"... although brought back into the public owned infrastructure there remains an apparent governmental reluctance to properly support it."
Mainly because voters don't seem to realize that their roads are vastly over-engineered to support heavy vehicles carrying stuff that should be carried on rail.
For my two cents I don't understand why trains need to roll onto ferrys--instead can't it be simply intermodal. Trains arrive in Wellington or Picton, and the containers come off and onto trucks, and cross the channel as other trucks do and then the containers lifted back onto the trains at the other end. By the sound of it shippers just need to adjust their product to fit into either bulk or boxed containers and problem solved.
the difference is time, labour, and ultimately cost.
Consider how long it would take to roll a line of train wagons onto that new large ferry we cancelled. How many people would be required?
Now consider how long it would take to lift each individual container up off the train, transfer to a truck trailer, drive the trailer onto the ship, detach the trailer, drive back to the train, drive the next trailer up... and then repeat on the other side. How many people are required?
Yes, lifting each container off the train and onto a truck before and after the ferry journey completely devalues rails advantage compared to trucks. One truck and one driver can carry one or at best two containers. Whereas one train and one train driver can carry dozens of containers. If the train can rock up to a rail enabled ferry and simply roll in and out of the ferry, that advantage is maintained. But if rail has to load and unload onto trucks before and after the ferry journey that economic advantage is lost.
It's been tried Tommy.
Except for where it 'has to' work because there are no other viable options - it doesn't work.
Time is money and far too much time (and land and humans and damage and surplus machinery and energy and cash for additional insurance) needs to be consumed to unload / reload.
These two articles from Dec 2023 and Jul 2024 are still probably the best summary of the issue (some elements are obviously out of date but the main arguments for and against are very plainly laid out)
https://www.nzherald.co.nz/nz/why-nz-needs-to-invest-properly-in-rail-a…
https://www.nzherald.co.nz/business/why-regulation-is-the-real-problem-…
I love a high stakes battle. A healthier rail transport network just seems a no brainer to me. Not only the benefit of less trucks on the roads and hence lower FF use and lower road maintenance costs - but imagine if we could also have a world-leading tourism rail network. I'd see that as a major attraction - just like our great walks and national cycle network. Those attract younger visitors and rail travel would attract the retired generation.
Nothing like traveling by train if the journeys/schedules are planned with tourists in mind. I know it's a utopian-type of idea, but as we've found, all tourists self-driving on the opposite side of the road from where they come from has created many a nightmare tragedy. And the campervan issues with respect to 'freedom camping' are also a major detractor/problem for many local authorities.
Imagine pairing up with cruise ships to offer rail excursions as part of their packages - high end carefree travel where visitors can see not only our port cities but our amazing interior as well.
One would have thought Luxon of all people would be a bigger thinker where tourism was concerned. NZ's biggest asset is NZ.
You guys are so North Island-centric. We in the South Island take our lives in our hands every day driving on woeful roads overloaded with freight trucks. From Timaru to Dunedin, SH 1 is often just two narrow lanes and there is nowhere to pass for ages and you often end up in a convoy crawling along up steep hills. Someone inevitably gets impatient and overtakes on a double yellow line, sometimes on a corner. Well-meaning truckies pull over to the side and wave you to overtake, but sometimes misjudge how far away the car is on the other side. Lives are at stake, families impacted by a loved one's injuries. Rail may not make economic sense, but there are wider social and systemic issues involved.
Exactly, Nicola's decision will result in just one company adding 5700 additional truck and trailer journeys onto the road each year. Heck of a lot of maintenance impacts and social safety costs. And those costs are picked up by the taxpayer not the trucking companies/National Party donors.
Mainfreight chief executive Don Braid has said that if rail-enabled ferries aren’t purchased, then his own logistics company will be forced to stop using train transport so much, and he calculates that his company would add a further 5700 more truck and trailer journeys onto the road each year.
Ah. No.
NZ's terrain is so un-flat - and our rainfall and rivers are so abundant - that 350 kmph trains are a non-starter for just about everywhere - no matter much our population increases.
But a slower train - say 80-100 kmph - lets you soak up the scenery and basically re-connect. And that is priceless.
Great idea.
First step, upgrading over 4000km of track from 1067mm cape gauge to 1435mm standard across the whole country. Probably talking anywhere from $20b to $40b.
Next step, upgrading our ferries and portside infrastructure to cope with passenger trains across the Cook Strait. At an estimated $3b, this could be very difficult to get over the line.
$40b might be a bit low to widen the gauge.
Tunnels and bridges have been designed and built for narrow gauge, station platforms are positioned (set back) for narrow gauge and narrow gauge tracks can turn a tighter curve than standard gauge, so a fair bit of track realignment would be in order.
Not to mention the total cessation of rail transport while the project is carried out.
Reductio ad absurdum ... Seriously? You want to do the whole network in one go?
How about one-step-at-a-time?
Fair call, Whangarei to Invercargill tracks are 1911km on paper. So 40 - 50% of the network.
Could install gauge changing stations and variable gauge rolling stock if you want to do bits at a time, but then you wouldn't achieve 350km/h from Whangarei to Invercargill.
"Whangarei to Invercargill " ??? WTF ??? That's still a Reductio ad absurdum
How about focusing on the shorter p-2-p routes where there might actually be some benefit?
Or are you saying every other country that has made such a transition has got it wrong?
It's the context of this comment thread. The parent comment mentioned 350km/h passenger trains from Invercargill to Whangarei. That's where my absurdity stems from.
by LapisLazuli5297 | 13th Dec 24, 12:15pm
In terms of modern rail, 350km/h passenger trains from Invercargill to Whangarei are the way to go.
Apologies I didn't realize you thought I was actually arguing the merits of such infrastructure spend.
I didn't include /sarc tags on my original comment, I thought it were fairly obvious when I "had no issue" with the $20b to $40b for the network upgrades itself, but for the portside rail improvements was "At an estimated $3b, this could be very difficult to get over the line". It was a cheeky dig at the current fiasco with the ferries.
Poe's law in action.
Not only that, but those ports are (mostly) fully privatised now, so they can raise their own funds for expansion instead of the Govt. Shipping companies can provide the ships, instead of the Govt. Even if the Govt had to provide a subsidy to get things up and running (until economies of scale kicked in) it would be cheaper in the long run than having a Govt owned rail and ferry business.
Note that it is only freight that is the problem for the ferries - as there is already a private ferry operator (BlueBridge) taking passenger traffic across Cook Strait.
While I agree, how many container ships do you think kiwirail own? I think the answer is less than 1
Yes, we probably need a shipping fleet if we were to go down this route. Although since there is no business (that I know of, I could be wrong) that finds profit shipping containers around NZ, that's probably why we don't have one. As an export nation of mostly non-durable goods, we generally need to get goods from ports out to our international partners as fast as possible. Transporting stuff around NZ only likely has to be done as cheap as possible else its just not cost effective because of the low volumes. But yes, maybe we should look at smaller volume ships running more regularly. In those cases we would be doing Auckland -> Tauranga -> Wellington -> Lyttleton -> Dunedin and back within a week+ probably, so still not very fast.
If we were to look at this from carbon, energy, efficiency, roading and infrastructure maintenance - wouldn't it make more sense to freight as much as possible by train, remove heavy vehicles from the roads, and have distribution hubs in towns and cities?
The freight companies could co-operate to operate the rail network. The smaller distribution networks already exist.
We've gotta get over the competition model and the financial limitations. Money is free if we can get past the control and ownership thinking. The extractive and exploitation model. The more for me not for thee mentality. This is not human nature - it's a result of the environment we've inherited and continue to justify.
It's all a lack of foresight, illogical and irrational thinking, and conditioned beliefs about free market ideals, money, finance and wealth.
We've gotta somehow relearn human ideals and values, and replace all the superficial BS we've been taught.
Local Container ships have their place, but even a few hours longer transit time is too long for nz logistics.
It's setup for overnight delivery, and it has become that all freight moves this way, even if it does not need to be. Freight depots all work the same way, deliver in the morning, pickup in the afternoon. That is why road dominates, a few hours quicker fits this pattern. Auckland chch is longer than overnight, so the target is the morning after delivery. Kiwirail tried to compete in this market with a train service they called 24 south. Left Auckland about midday, caught the overnight freight only ferry, and got to Chch about mid to late morning next day . So it allowed pickup one day for delivery the next.
It didn't last long, they just couldn't get shippers to break the ship out in the evening, deliver on the morning pattern.
That is why the few hours to transload is critical, it effects the whole Auckland chch route.
It is also critical for a fast turnaround of the ferries to allow 4 round trips a days, vs 3 for slower loading. The shunters can unload and load the train deck faster than the truck and car deck, this would not be the case if every container had to be driven off and on by a truck.
It's still not clear to me what the situation was last Monday cabinet meeting.
Is it Willis and co have scoped out some ferries, avaliable for $ 900 million, and wanted to go ahead with them , but Peter's said no because they weren't rail enabled.?
Or, Willis and Co Just wanted to commit $900 million, go and find some ferries to fit, but Winston wanted to ensure they will be rail enabled?
The Stuff leak supports the former, and would mean the probable ferry would be the Stena roro Eflexer, the only supplier that would really be in a position to give a price estimate without detailed engineering.
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