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.
57 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.
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.
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.
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?
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.
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.
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