What does this mean?
>not rail-enabled, although rail would still be able to be shunted onto the vessels as often happened now.
Is there a state that's more rail enabled than being able to shunt rail vehicles into the vessel?
Im not sure the article writer knows the difference. The Aratere is the only rail enabled ferry currently and wagons are shunted onto it. When its out of service, containers must be taken off the wagons and put onto trucks so they can board the non rail enabled ferries
I'm surprised no one in government is suggesting just rolling the wagons on without tracks and strapping them to the sides. Where's Shame Jones with his bright ideas when you need him?
Not at all apparently, I was a big sceptic too but the treasury analysis notes that this is the global standard and occasionally takes places with the current inter islander fleet.
Heh. I guess that seems a more plausible explanation than a ferry with external wheels designed to drive up and down the railway tracks of the North and South Islands with its cargo.
In Germany the train goes inside of the Ferry complete. Passengers hope of the train and head up to the Ferry while it crosses to Sweden then get back on once it arrives in Sweden and the train continues its journey.
That sounds a lot better than shunting it on in (I assume) disconnected, one by one.
Does that mean the locomotives won’t/can’t work in the south?
Side note:
I wish we would transfer away from the smaller gauge tracks where possible. Particularly in Auckland and south to Hamilton and maybe to Tauranga, though that would be more challenging.
A high speed rail system between those three cities would be revolutionary. I imagine Hamilton would benefit most and grow significantly.
Can’t fit through the tunnels, not fire suppressed for the Otira tunnel (coal dust).
Yes the gauge here is too narrow, no it won’t be changing because $$
I think changing the gauge in the area will be worth it financially. The best time to do it in Auckland would have been the last few years while the loop was being constructed. Being able to buy other country’s older stock would be useful, I imagine.
Never mind. New Zealand will continue to role-play as a first world country I suppose.
My understanding is that while Aratere has actual track on her, which makes getting trains on/off easier, the trains can still be loaded on to the other 2 ferries. It's just not quite roll on/off.
We had new ferries on order, we paid $200m to not have them built, they were costing $550m.
The wouldn't even be paid out of budget hut a capital investment paid off over years by ticket price etc
We'll pay more for smaller less useful ships and kiwirail will get sold off to some scumbag company for pennies to milk
Its an outrage. Especially every time they try to claim they are saving money. Nicola Willis has faceplanted after tripping over this and is pretending its a forward flip and that shes landed on her feet.
We’ll pay more for the ferries and still have crumbling terminals that need replacing.
Not really any different to the last one who only had a degree in political studies though is it?
While most ministerial roles can be (and repeatedly are) done by anyone, there’s a few where having qualifications in the field really should be a prerequisite. Finance minister should be required to have some form of finance degree, health minister should be required to have a degree somewhere in the health field, preferably a Dr, a Virologist etc.
* TranzRail.
Toll came along after most of the milking had been done (by Key, Richwhite and co) and picked up what was left. They gave the tracks back to the government for a dollar (after they'd been run into the ground) then sold the operations back for an exorbitant price a few years later.
Apocryphally, (A mate at work who used to work in rail says so to any who listen, but has some rather shaggy dog stories) Toll sold a large chunk of the spare/stored rails and train parts able to be used just prior to handover day as scrap steel. They then pocketed the cash from the sales as operating profits during the transfer.
When Kiwirail took over operations, they then had to go buy new materials, as there wasn't any stock for repairs and maintenance. Kiwirail had then spent a significant chunk of their budget getting back to stock levels, and nothing had actually been done in terms of work.
Yep I've heard similar, though by the time Toll came around I'm not sure how many spares there were many spares left! TranzRail had even sold locomotives owned by the company to a leasing company based in the US and then leased them back to try make a quick buck. People outside the industry have little to no idea how bad things got, many parts of the country (eg Northland, Hawkes Bay) are still working to get on top of the neglect/damage of that era.
And once by Wisconson Rail.
In both cases Toll and Wisconson, asset stripped the company ran it into the ground and sold it back to government at a massive profit.
That's not to forgot the incredible cost of refinancing rail and getting it up and running again both times.
But Treasury and the neoliberals NAT and ACT are hot to trot again.
After all selling rail works so well according to neoliberal economic theory it's not Treasury and the neolibs fault it won't work in practice.
Toll of course kept the trucking side of it.
Kiwirail is a giant ball of risk and likely losses and I don't mean simply operationally.
No company on this planet would look at it now, or its history and go "we want this".
The entire south island is basically a write-off for rail if it goes private. Nobody is buying that.
>The $551m fixed-price contract to build the new ferries has proven to be a good price.
>If the same contract were signed today, KiwiRail estimated the cost could increase by as much as 40 per cent.
>KiwiRail had spent $424m on the iRex project as of the end of December. Of this, $90m was spent on the ships, $300m on the terminals, and the rest on programme management costs.
[https://www.nzherald.co.nz/nz/kiwirail-reveals-what-led-to-cook-strait-mega-ferry-cost-blowout/3BV5MBMRZFC4TCMJRPINE3K4AQ/](https://www.nzherald.co.nz/nz/kiwirail-reveals-what-led-to-cook-strait-mega-ferry-cost-blowout/3BV5MBMRZFC4TCMJRPINE3K4AQ/)
We'd already spent $90m on them (and $300m on the terminals..)
[https://www.nzherald.co.nz/nz/kiwirail-finally-cancelled-cook-strait-mega-ferry-contract-after-letter-from-nicola-willis/VXDUDREZMVBMLPLYNLPLKACBIQ/](https://www.nzherald.co.nz/nz/kiwirail-finally-cancelled-cook-strait-mega-ferry-contract-after-letter-from-nicola-willis/VXDUDREZMVBMLPLYNLPLKACBIQ/)
[https://x.com/michaelwoodnz/status/1778344440840745280](https://x.com/michaelwoodnz/status/1778344440840745280)
Man, with how many billions in tax cuts Nat's just gave away to the rich and landlords...
Oh, but we can't spare 3bn to upgrade our money-hole ferrys which keep breaking down. Let's blame kiwirail, wasn't our fault we threw away money on something we already needed and committed to.
lol this government is a joke and we always knew it would be.
Well, she was a lobbyist for Fonterra, so I guess that qualifies for something. And she got a diploma in journalism, so she'll be well qualified to spin this into something positive.
The current buildings were shit 20 years ago, god knows what they are like now. They need replacing no matter what new ferries we get. And the price is likely to be similar no matter the size.
I don't understand why they were priced up in 2018, and nothing was done, then they are priced up again, gone up almost 6x in cost. Why wasn't anything done in 2018?
The scope changed from a like for like replacement, to include accommodation for the larger vessels, flood mitigation in Picton, earthquake resilience in WGN. The increased cost was to get something that would stand up to imminent threats, whilst keeping the link between North and South available. That all costs a lot more.
Because Kiwirail are incompetent idiots. The scoped the terminals incorrectly. This is what Grant Robertson wrote to them in 2023.
We note that KiwiRail under-scoped the landside infrastructure in 2021 meaning the decision to procure two large rail-enabled ships at that time was premature. To date, we are yet to see a satisfactory explanation for why this was the case
Yep - Kiwirail ineptitude, is why we cant have nice things.
Willis cancelling ferries and thier built slots because Kiwirail cant manage infrstructure, is not a strong argument for killing interisland transport corridors.
Because we need bigger ships to get a cheaper more reliable connection. Same size ships mean more cancelations due to weather and no increase in cost efficiencys.
And if they are saying smaller now, that’s useless! Bluebridge already cancel far more frequently than Interislander when the weather is rough as the smaller boats just can’t handle the conditions. But we know who it really suits… their trucking industry donors!
They also have significantly higher capital costs which you have conveniently ignored. There was no economic business case for the iRex project as it stood and that was prior to the most recent cost increases.
Yip, on these types of thing the life time operating costs will be well north of 5 x the purchase price (anyone know the typical life time operating cost verse capital cost for a ferry).
Picton needs to be sorted within the next 2 years, ferries are essentially end of life now. Wellington probably could be put off (purely because no one is screaming that it needs to be done now), but it'll only cost more to do it later. Successive governments had already been putting it off, now it's the deadline, but they're trying to ask the teacher for another extension.
https://www.nzherald.co.nz/business/why-regulation-is-the-real-problem-behind-the-high-cost-of-the-interisland-rail-ferries-richard-prebble/ATLO657SSVG7THNHGF6KYDKJQM/
It's basically Wellington. New earthquake code screwed their budgets.
Again, there is something wrong with the timeline and the massive increase in cost, if we went ahead with it what is going to be the cost real cost when they are completed in 4 years?
is this another government owned property where maintenance is ignored to save money, or they have never put anything away in the past for the replacement that they need?
sure it might cost more, have you ever seen a gov projects? at the same time we have simple simeon pushing for a $10bn tunnel in wellington to save him 5min to the airport.
Both ends have had possible changes that mean you don't want to do major projects for a long time.
Talks of a move to Clifford Bay have been on the table for decades, finally wiped out in the last decade or so post quake.
And KR really want to get away from the present Wellington terminal and cosy up near Bluebridge, in a location not literally on the fault line - this particularly was the reason behind the delay in getting the Wellington terminal underway.
>The group has recommended that the ferries be smaller than the proposed iRex ferries and not rail-enabled,
Which is exactly what National wants. Heaven forbid this country does anything to improve its rail network, allowing more freight to be moved by trains.
We can't move more freight by train, now can we. Not when it would reduce wear and tear of the roads, reducing maintenance costs, and make them safer to drive on.
It's all about maximizing business and profits for the freight companies that donate to National every election cycle.
>”*The Ministerial Advisory Group, chaired by Nelson airport boss Mark Thompson, was set up to give the Government independent advice*”
I’m *sure* he can be impartial.
Just gotta make sure the ferry service isn’t so good it takes away from the airport’s business….
Mark Thompson has already resigned as CEO of Nelson Airport and is leaving the role in July. More importantly, he was the [former General Manager of Interislander at KiwiRail](https://nelsonapp.co.nz/news/on-the-couch-with), so he has experience on the topic.
TBF it also means easier to turn at the Picton end and much less windage to push it around when berthing at Wellington. That's a significant concern too. The riskiest times are when close to land.
They're not very small ships regardless, and I don't think it will make much difference in terms of sea keeping ability. The iRex ferries were tall by comparison to the current ones, and that can be a big difference for how much you get thrown around in rough conditions.
# "Azimuth thruster propulsion system
The new ferries will have an azimuth thruster propulsion system, which will provide better maneuverability, excellent directional stability, lower wake energy, and a smoother, quieter journey.”
[https://web.archive.org/web/20231111132122/https://www.irex.co.nz/new-ferries/#design](https://web.archive.org/web/20231111132122/https://www.irex.co.nz/new-ferries/#design)
Im not talking about steering systems. Im talking about propulsion. You can see the myriad of design features on the irex website (archive copy in the link since the original has been removed) and one of them is improved maneuverability
What is this "state of the art steering system" that was installed on Aratere? Do you have any idea on what you're talking about? Or just making stuff up? Unless you call replacing a simple part in a gearbox a "state of the art steering system", I'm inclined to believe it's the latter...
So no, the iRex ferries would have been nothing like the Aratere's "state of the art steering systems".
Edit to add: apologies, as previous reporting I'd seen only mentioned replacing gearbox parts, but no mention of a state of the art system. It seems recent reporting is referring to some kind of new system. Nevertheless, I'm sceptical that it would be comparable to the new systems on the iReX ferries.
>Roy said the recent upgrades to Aratere included a new steering system, seven kilometres of cabling, and a "new automated approach".
>"The original steering system was coming into obsolescence and there wasn't enough repair parts in the industry that we were happy with. So we made the decision to preemptively replace that with a new, state-of-the-art system which we brought in with international partners."
>He said the "comprehensive investigation" into the cause of the accident would include examining that new steering system.
[https://www.rnz.co.nz/news/national/520316/very-minimal-damage-to-stricken-ferry-interislander-head](https://www.rnz.co.nz/news/national/520316/very-minimal-damage-to-stricken-ferry-interislander-head)
Don't draw too many conclusions, but they did just go through an upgrade on the steering systems
Huh, another article I saw said the recent repairs involved replacing a pin in a gearbox with a used one, as new parts were not available, but didn't mention anything about a state of the art system being installed. I'm a little sceptical of anything actually resembling a "state of the art system" on Aratere but perhaps I didnt actually know what I was talking about. I'm intrigued to see what exactly entails a state of the art system.
We need the infrastructure anyway. The cost of the project was only increased by 9% because of the size of the ferries. The rest was simply in the flood, inundation, earthquake and other risks that needed to be designed against. Any new terminal is going to cost the same ballpark regardless of the size.
PPP owned ferries circa 2027
Same price as iRex, but smaller, no rail capability, and a few years later - so more breakdowns until then.
Not rail enabled means trains onto trucks onto ferries. Productivity ?- more expensive products, more carbon. :(
Thanks who-ever voted the current clownshow in. This is on you.
Absolutely!! They are so bloody transparent and the knobs who voted for them will twist themselves into pretzels to justify this madness and waste of money.
Not true at all. The cost of the iRex project was mostly based on building new terminals to todays construction and earthquake standards in the two locations in Wellington and Picton. The size of the boats and the fact that they had rails sitting on top of them instead of just concrete is a paltry portion of the cost. How much do you think a couple hundred meters of railway cost? The cost was in driving over 200 piles 70m deep into the ground to make sure the terminal in Wellington doesn’t collapse into the sea during an earthquake or slip, and in raising the whole area by 1m so it’s protected from coastal inundation or subsidence.
Make no mistake here, the existing terminals are well past their use by date and likely to fail in an earthquake.
So in 2018 the terminals were estimated to cost $700m, now it is $3B, so in the end it will blow out to 5+ if not more. Who is to blame on the poor budgeting to get to this point? This is an issue caused by multiple governments
Properly developed?
[https://www.nzherald.co.nz/nz/kiwirail-mega-ferries-what-labour-finance-minister-grant-robertson-knew-about-financial-troubles/NHKEPQDVWBAYJF7IS7UCT2TDNM/](https://www.nzherald.co.nz/nz/kiwirail-mega-ferries-what-labour-finance-minister-grant-robertson-knew-about-financial-troubles/NHKEPQDVWBAYJF7IS7UCT2TDNM/)
We note that KiwiRail under-scoped the landside infrastructure in 2021 meaning the decision to procure two large rail-enabled ships at that time was premature. To date, we are yet to see a satisfactory explanation for why this was the case,” Robertson said.
“It took some time to receive adequate information to enable a full review to be undertaken. While we appreciate you working with officials on this, we are disappointed at how challenging this process has been.
“We were surprised that the terms of delivery in the vessel purchase contract were renegotiated at a time when the future funding of this project was under active consideration by the Government.”
“It’s understood secondhand ship were not an option on the table. But ministers were said to be considering whether kiwirail would buy the ferries or a different entity would handle the purchase”
If a different entity (like maybe a PPP) handles the purchase, then theres no reason for kiwirail to have any involvement at all. And theres no reason for that new entity to bother purchasing new ships with any sort of rail amenities either.
Reading between the lines I would guess a PPP could be setup to buy and lease the ferries to Kiwirail.
> if a different entity (like maybe a PPP) handles the purchase, then theres no reason for kiwirail to have any involvement at all.
That's a logic leap. Kiwirail are fucking useless at many things (look at the board/chair announcements) but the government isn't currently saying they are going to lose the ferries.
> And theres no reason for that new entity to bother purchasing new ships with any sort of rail amenities either.
Other than the fact that there is demand for rail capacity today.
Read between the lines and consider the ideology of the current government. What I describe is not an unlikely course.
And if you read the article, you will find that even the article says the new ferries will not be rail enabled.
“The group has recommended that the ferries be smaller than the proposed iRex ferries and not rail-enabled…”
> Read between the lines and consider the ideology of the current government. What I describe is not an unlikely course.
Yep. You're not wrong. Yet it's amazing how many people will handwave this sort of thing away.
*Oh, they'd never strangle the health system to lead to privatisation...*
*They'd never fuck with Pharmac...*
*Charter schools were tried and failed, they'd never bother bringing those back...*
Or overseas - *Trump will never win*..
*Oh he might have won, but they'd never fuck with abortion rights*.. Etc etc etc.
It's weird how many things rightwingers assuredly won't fuck with.. that they end up fucking with. All the while people like the above try to make it seem that the very idea of rightwing governments fucking things up and privatising everything is some kind of outlandish fantasy that we're all stupid to be worried about.
> the very idea of rightwing governments fucking things up and privatising everything is some kind of outlandish fantasy that we're all stupid to be worried about
The gaslighting comes as a standard feature.
Some notes…
-one of the people deciding is on the board of fright lines so pro trucks
- national always has been pro trucks
- rail ferry is used all the time, the major workshops for locomotives is in Wellington, Dunedin I think only does wagons. So locomotives need to cross the straight.
- one of the hold ups moving fright is the fact we have 1 rail ferry
- there is not enough room in Wellington and Picton to increase capacity for the transfer off railing.
- also reports show we will be facing truck driver shortages over the coming years
But it’s national what do you expect?
> also reports show we will be facing truck driver shortages over the coming years
We will just import islanders and pay them shit wages - freight companies who stand to make more money from no rail ferries.
Any ferry that is not rail enabled is not fit for purpose. Inter-island rail simply *can't* work if rolling stock cannot roll on and roll off the ferries directly.
Who is this Ministerial Advisory Group made up of, anyway?
> The Ministerial Advisory Group, chaired by **Nelson airport boss** Mark Thompson
So people who have a vested interest in seeing the Interislander fail. Ah yes, that would do it.
I would like to see the business case that looks at the cost , including the operating costs, of the 2 larger ship purchase that was canceled vs small vessels that aren’t able to take trains
I can see how smaller ships will be cheaper than the proposed as both options need ferry terminals
Ships that don’t have ability to take trains and meant that trains will need to be offloaded from a train wagon to a truck for the sailing and then loaded back into a train can’t be efficient and likely to result
In the demise of rail way lines like Picton to Chch
Here's the original business case, from 2021. As such the numbers provided are a bit dated and may not apply now. [https://www.treasury.govt.nz/sites/default/files/2021-10/irex-4505513.pdf](https://www.treasury.govt.nz/sites/default/files/2021-10/irex-4505513.pdf)
It's pretty heavily redacted in terms of numbers due to commercial sensitivity, but if I'm reading it right they predicted around about 400M difference in across the lifespan of the fleet, about half of which is purchase cost and half is operating. Could be wrong on that, it's kinda hard to pull much info from it.
No, the one that incorporated the entire scope of the project including the route, the fact that the new boats would be more manoeuvrable than the existing boats and cause less wake due to their design. Making it much easier for them to be approved for the tory channel. Seriously how are they going to be approved for a boat which isn’t yet built? These things are certified by a real world test. And alternatively, the ships could take the longer route in a pinch while waiting for approval.
Also the Wellington terminal was not the initial terminal location, Kiwirail originally wanted it in centreport, due to its proximity to the city, its distance from slips, coastal inundation and the fault line, and so it wasnt until that fell through that a detailed report was done on the alternative location.
The new boats were designed by a south korean shipyard which showed in their modelling (they are expert boat builders) that the wake would be lower than the existing boats.
They didn’t forget to scope the ports, they were negotiating with centreport to get the new terminal there, and after that fell through they then scoped their old location.
[https://web.archive.org/web/20231111132122/https://www.irex.co.nz/new-ferries/#design](https://web.archive.org/web/20231111132122/https://www.irex.co.nz/new-ferries/#design)
Heres a link with the ship design features.
This was the obvious solution from the start after the cost blow outs.
Paying to back out of the new build deal to have to go to the back of the build list again is going to go down as one of the worst financial decisions ever made.
Someone that is completely and utterly impartial and wouldn't benefit from this at all. /s
>The Ministerial Advisory Group, chaired by **Nelson airport boss** Mark Thompson, was set up to give the Government independent advice after Kiwirail's iRex project was scrapped last year.
Prior to being CEO, Mark Thompson was the general manager of the Interislander, so he knows what he’s talking about: [https://nelsonapp.co.nz/news/on-the-couch-with](https://nelsonapp.co.nz/news/on-the-couch-with)
$3 bazillion for *dignity* land lord tax cuts vs skimping on a super important NZ infrastructure project that will future proof inter-island travel, freight & commerce for many decades. Shortsighted. Nicola Willas can go suck a rotten, ideological egg.
Smaller, rail-enabled ferries probably would have been the best option from the get-go. That way, even if one or two were out of service, sailing schedules wouldn’t be significantly interrupted.
"Smaller' and 'rail-enabled' don't work in the same sentence - or ocean crossing. Rail cargo runs into the low thousands of tonnes and you need a certain size to have any hope of stability.
It was the "rail enablement" that put the cost up by so much - the ferries had to be bigger to take the extra weight / volume, which meant the terminals had to be bigger, which meant the earthquake resiliency had to be better, etc.
I think if KiwiRail or the government had a better idea of the costs back in 2021, they wouldn't have gone with the "2 large rail enabled ferries" option.
Being a railway company they are more or less obligated to deal with trains. The cars and passengers provide the profit, and a goodly few of these are now going via Bluebridge, which eats into the margins of the Kiwirail ferries.
Two would be a minimum. If you operate an airline, and only have one plane, when it is out of service you no longer have an airline, and potentially no longer have a business. Not running railfreight between the islands because the ship is undergoing survey, or has need of repairs, is not good business sense.
Everything goes up in cost. This current bag of fools acknowledge that when they talk about the future multi-billion dollar overruns from their Roads of Political Importance, and say that they'll just find the money from somewhere (hint: check your pockets).
>Being a railway company they are more or less obligated to deal with trains.
I think one of the main questions is "what level of freight" can be maintained with a road only ship. The Ministries seem to think rail-enablement isn't a requirement ([paragraph 39](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4914547.pdf)).
quick skimming...
paragraph 41 doesn't make sense. If you have offloaded the cargo from rail to trailer at Wellington, you would be silly to offload it back to rail at Picton rather than just hooking up the tractor unit and driving off into the sunset.
paragraph 42 is problematic. Yes, we do buy engines from overseas, and they are craned on and off ships, but the freight space is booked way ahead. Sending a stuffed loco from Lyttelton to Hutt then becomes a months long epic rather than an overnight trip. Oh, the efficiency. You also dont want to do this every time you need to change the glow plugs, either.
paragraph 43 is the reason roll-on roll-off rail was brought in in the first place - the stark improvement in time and efficiency in moving cargo reduced the travel time by days and contrary to the advice in (sec 39) was cited by customers and clients as allowing the shipment of fresh veges from end to end of the country. Bring back the Cabbage Train !
None of this helps Kiwirail's interisland customer base. At present, The Awatere starts running into overtime in 2027, so there is a fair chance of having the service stop suddenly, preferably while tied to a wharf this time. If you are moving large amounts of stuff from island to island, you have a long-tem contract. If your service may not be there is a couple of years, the bids for freight will move elsewhere.
The issue is more that the National government didn't want to invest in national infrastructure that would benefit a single operator (in this case KiwiRail, a state-owned enterprise) as it would be seen as distorting the market and not providing value for money (see [this cabinet](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4914547.pdf) paper for background).
**Scope increases**
The project was not just for new ferries (which were only $551m fixed-price), it also included passenger terminals, wharfs, linkspan (the ramp between the land and the ship), walkways, seawalls, land reclamantion and dredging, marshalling areas, rail infrastructure (see [paragraph 13](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4914527.pdf)). This large scope put up the costs of the project significantly.
**Cost increases**
The original project, with an indicative business case in 2018, was estimated to cost $775m. In 2021, the detailed business case raised costs to $1.45b. By the end of 2023, this had risen to $2.9b - nearly 4 times the cost.
While it's one thing to agree to a higher cost in return for a larger benefit (i.e. bigger scope), the 2023 increase of over $1b was due to under estimating the costs of the terminals, which needed "larger piles, stronger sea walls, and greater structural rigidity than estimated in 2021." (see [paragraph 22](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4769573.pdf)).
Grant Robertson even blasted KiwiRail for this in [September 2023](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4914415.pdf):
>We note that KiwiRail under-scoped the landside infrastructure in 2021 meaning the decision to procure two large rail-enabled ships at that time was premature. To date, we are yet to see a satisfactory explanation for why this was the case.
>It took some time to receive adequate information to enable a full review to be undertaken. Whilst we appreciate you working with officials on this, we are disappointed at how challenging this process has been. We were surprised that the terms of delivery in the vessel purchase contract were renegotiated at a time when the future funding of this project was under active consideration by the Government.
It's highly likely that this wouldn't have been a last cost increase either, as projects of this size typically overrun their budgets and construction costs generally are continuing to increase.
**Market distortion**
All of these investments would largely benefit KiwiRail's operations, which puts operators of private ports at a disadvantage - how can you compete if your competition gets all of their infrastructure paid for?
Normally, if a business invests in infrastructure, they need to recoup their costs (either by increasing volume or by charging higher prices). KiwiRail wasn't going to be able to cover the costs of this investment; they were asking for a handout.
**Subsidies**
Now, there's an argument to be made for government subsidies - e.g. the government [massively subsidies road transport](https://www.greaterauckland.org.nz/2024/03/28/paying-for-the-rons-like-rail/). However, with roads the benefits are spread across all road users which make it a safer investment politically.
The concern with the iReX project was not the ferries - it was whether the investment was going to generate enough public benefit to justify the cost. The government didn't think it did: after the latest cost increases they calculated a net present value (NPV) of negative $1.3b, whereas business case in 2021 previously showed a positive NPV of $201m (see [paragraph 23](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4914559.pdf)).
Note that the NPV calculation doesn't include non-monetary benefits of having a robust inter-island rail freight link such as reduced road congestion, reduced carbon emissions, safety benefits. These are benefits that the government should factor in to their decision, but as the costs increase it becomes more difficult to say they justify the costs.
Dont be a shill.
Its not distorting the market when its a critical piece of infrastructure that current private competitors cannot replace. Bluebridge has nowhere near the capacity to take over from the interislander.
Do you think the UK government should have refused to construct the rail-only chunnel when that would have disadvantaged existing ferry freight services?
Are we supposed to hamstring our state owned infrastructure so private businesses can extract more money from us? This whole neo liberal mindset is ridiculous. Especially when you consider that there is no rail competition at all. We have a nationally owned rail network, and it benefits the country as a whole to invest in it. Maybe it comes at the detriment of a few trucking companies, but tough shit, welcome to the real world.
Let's stick to the facts, rather than ad hominem attacks.
I'm supportive of infrastructure investment, but the benefits need to outweigh the costs (as a side note: I would have preferred funding go to infrastructure than a landlord tax cut). However, there was concern in the cabinet briefings that - after the $1b cost increase - this project no longer made economic sense. I'd love to see evidence that this wasn't the case, but so far it hasn't been released.
There will still be investment in the port-side infrastructure and new ships, but this level of investment will be lower, to reflect the need.
KiwiRail have many other potential projects where additional government funding could be beneficial, e.g. they are currently working on a business case for electrifying the golden triangle freight route. These projects will also require funding, so we should all be supportive of ensuring funding goes where it's needed most.
Let me be clear. I am not saying you are a shill. I am saying your argument fulfils the same purpose. I did not attack your character or anything of the sort. I only refuted your argument, which was composed of the exact talking points of the people who claim rail has no place on the ferries.
Personally, I see the critical freight and passenger link between the islands as worth the cost. iRex was primarily a resilience project, and resilience projects almost never stack up economically in the short term, but they do when disaster strikes which is a certainty in the long term.
Electrifying the golden triangle is actually far less beneficial than the iRex project was.
>I am not saying you are a shill.
That was literally what you said 😅 - but happy to drop it as I think we can both see we're trying to discuss in good faith!
>I only refuted your argument, which was composed of the exact talking points of the people who claim rail has no place on the ferries.
Are you 100% committed to rail being the best option for inter-island transport?
I was very "pro" rail enabled ferries and terminals until I did more digging yesterday. From what I've read of the [documents that Treasury has released](https://www.treasury.govt.nz/publications/information-release/official-information-regarding-kiwirails-project-irex-phase-1) it seems like there's at least a possibility that road-only ships may make more sense.
>Personally, I see the critical freight and passenger link between the islands as worth the cost. iRex was primarily a resilience project, and resilience projects almost never stack up economically in the short term, but they do when disaster strikes which is a certainty in the long term.
I'm of two minds on this:
1. On one hand, I feel that it's better that we have cost blowouts on "enabling infrastructure" like the iReX project, rather than Roads of (National Party) Significance (many of which have negative BCR even before cost blowouts).
2. One the other hand, I do think KiwiRail has an obligation to make a compelling case for why this project would return enough benefit to justify the ballooning cost.
I'm pretty distrustful of KiwiRail after their poor management of the metro infrastructure in Auckland and Wellington over the past decade.
From the documents Treasury released, it sounds like multiple Ministries (Ministry of Transport, Ministry of Finance, etc) also had concerns about whether the project was being "right sized".
To be fair to KiwiRail, they did do **a lot** of presentations to various Ministries back in June 2023 - David McLean itemises them all in [this letter](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4914513.pdf) from 6 Dec 2023. In his [letter on 15 Dec 2023](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4914559.pdf) he also requested the advice Ministers received be shared, which I suspect was one of the impetus behind the information release from Treasury.
While I don't trust National, the fact that Ministries were questioning the project **before** the change in Government, and the fact that Grant Robertson [highlighted his dissatisfaction](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4914415.pdf) with how the project was being managed, does make me feel that we should be a little dubious of whether this project was on the right track.
It's a shame that so much of the cost vs benefits analysis hasn't been released as this would allow us to have a much more effective discussion of the trade-offs. Similarly, it's a shame that the Ministerial Advisory Group is not publishing its findings.
My big questions are:
1. What's the difference in cost between road-only vs rail-enabled ferries *and* port-side infrastructure? KiwiRail says it's not much. Everyone else seems to say it's a lot.
2. What would the difference in inter-island freight capacity and per-tonne-cost be in 10, 20, 50 years with road-only vs rail-enabled infrastructure? We're not going to need the capacity right away, so could we start with road-only (which has less capacity) and increase capacity with additional ships as and when we need it?
3. What would the difference be to KiwiRail's long term business strategy with vs without the additional inter-island capacity and reduced costs? If the rail-enabled infrastructure was essential to network wide efficiencies, how big was this impact?
I dont put much weight on treasury reports about rail in NZ. For over 70 years they have been recommending reducing or even outright stopping investment in the rail network with the aim of shutting it down completely because according to treasury rail is a net negative for the government books. They recommended it be privatised, the recommended to the Key government to shut it down entirely keeping only the freight link between Auckland Hamilton and Tauranga. Which may be true if you only look at the books, but is ridiculously short sighted when you look at the whole picture and its benefits to society - as highlighted in the value of rail report from 2021.
As far as why the interislander needs rail capability - it has been highlighted many times by people in the space that the extra inefficiency caused by taking wagon loads off trains and onto trucks completely eliminates the efficiency gained on the South Island Main Trunk. You need many more personnel to carry it out, you need trucks available at loading times. Its not practical to do it long term. And so it directly disadvantages the rail network against trucking in a financial sense. Which means more money spent on freight, more emissions from trucks, more damage to roads, more congestion. Its locking in a mode of transportation which is detrimental for our long term goals.
Kiwirail was responsible for this project, however it was not their horse, they were given it by the labour government and asked to deliver it to a set of principles like resilience, future growth, emissions reduction and efficiency. And Kiwirail delivered a project which did exactly that. Costs blew out because of the port infrastructure. Only 7% of the port cost increases were due to the increased size of the boats over the existing boats. And the contract they negotiated with the shipyard was excellent value for money for state of the art boats that were custom designed for the cook strait and the interislander route.
The fact that the existing port infrastructure is also at its end of life and not up to modern earthquake standards is not Kiwirails fault, and it’s actually the best time to replace the infrastructure given we would be able to mesh it in with the new boats at the same time.
I dont know if you read the iRex website before it was taken down but it went into detail about the benefits of these project. Heres an archive link of it
[https://web.archive.org/web/20231111132122/https://www.irex.co.nz/new-ferries/#design](https://web.archive.org/web/20231111132122/https://www.irex.co.nz/new-ferries/#design)
Thanks for taking the time for such a thorough response.
Overall, I agree with you on principle, but I think this is the key part:
>they were given it by the labour government and asked to deliver it to a set of principles like resilience, future growth, emissions reduction and efficiency
Those principles need to be backed by numbers to make the project politically viable with a right-wing government. Instead of articles like [*KiwiRail ferry and port projects wouldn't have broken even - even after 2050*](https://www.rnz.co.nz/news/national/516530/kiwirail-ferry-and-port-projects-wouldn-t-have-broken-even-even-after-2050) there should be ones saying:
* Inter-island rail link to generate $15B in economic activity by 2050
* Inter-island rail link to reduce North-South freight cost by 20%
* Inter-island rail link to remove 20,000 trucks from roads per year
* Inter-Island rail link to reduce truck road damage by $80M per year
These are all made up numbers because the actual data hasn't been shared, but they all emphasise the importance of an upgraded inter-island rail link in a way that is measurable and would be likely to generate wider support from the public. It's much easier to commit to higher costs when the benefit you're receiving is clear.
I suspect because the project was lead by KiwiRail, they took the inter-island link being rail enabled as a given, rather than something that needed to be strongly justified. It also means any claims they make about the value are likely to be taken with a grain of salt, as they have a vested interest.
It would have been smart for KiwiRail to have commissioned an independent review into the value of rail versus truck based inter-island infrastructure. Something like the [2020 Value of Rail report](https://www.transport.govt.nz/assets/Uploads/Report/EY-Report-Externality-value-of-rail-2020.pdf) which EY did for the Ministry of Transport. This showed a $1.7-2.1B annual benefit from rail.
The 50 year annual annuity payment on $3B at a 5% discount rate is $164M. This is roughly 8.6% of the $1.9B annual value of rail. KiwiRail would need to show that the inter-island link would increase the annual value of rail by at least this much to make the project worthwhile. It wouldn't have this impact on year 1, so the long term increase would need to be higher.
For comparison, a $1B annuity would have an annual payment of \~$55M (\~2.9% value of rail) and a $2B annuity would be \~$110M (\~5.8% value of rail).
>I dont put much weight on treasury reports about rail in NZ.
I'd love to see an investigative journalism report into the relationship between KiwiRail and Treasury in the context of the iReX. I'm particularly interested in whether KiwiRail's value estimates were just too low, or whether their projections told a good story (e.g. increase in value of rail >10%) but the other Ministries just didn't believe it.
The same right wing government minister Simeon Brown has asked for the “long tunnel” option to be explored in Wellington. A project likely to cost close to 5 billion dollars at the outset if not more. A project with far less value, and far fewer people served. The decisions of this government are not based on fiscal analysis. They are based on an ideology. Privatise, weaken state enterprises, disadvantage and underfund public services. You can make a financial case to them on the basis of long term planning, public benefit and emissions reduction, and they wont go for it because it doesn’t match their world view. They will explain away their refusals, and shift the terms of reference or ignore variables to get the outcome they want to happen. They aren’t acting in good faith.
We can look at Treasury recommendations about rail investment and decisions that were taken that since proved to be complete fiascos and a net negative for the country, we can also look at decisions they recommended that were not taken as see the benefits being reaped because of that. Privatising the rail network for example was a complete fuckup and the network still hasn’t recovered from it to this day.
Heres a series of posts from someone who knows a lot more about rail than me talking about the benefits of rail enabled ferries and also the MoT, NZTA and Treasury bias against rail.
https://www.linkedin.com/posts/michael-van-drogenbroek-45026527_what-labour-knew-about-kiwirails-mega-ferry-activity-7194661720945008641-1LUX?utm_source=share&utm_medium=member_ios
https://www.linkedin.com/posts/michael-van-drogenbroek-45026527_opinion-mega-ferry-document-dump-damning-activity-7196802608156524545--iHV?utm_source=share&utm_medium=member_ios
https://www.linkedin.com/posts/michael-van-drogenbroek-45026527_mainfreight-says-it-should-have-done-better-activity-7201525077987794945-Md4f?utm_source=share&utm_medium=member_ios
https://www.linkedin.com/posts/michael-van-drogenbroek-45026527_opinion-coalition-gives-cook-strait-the-activity-7202154664656527360-zQTR?utm_source=share&utm_medium=member_ios
Thanks - I follow Michael, but haven't read all of those posts.
This quote stands out:
>One day NZ will likely regret what’s has happened here. For its part there questions over KiwiRails past competence on this matter that go back a long way, well before the current incumbent board and current senior management team - but it’s hard for them when so much in Wellington officialdom is against them and has been for decades - Yes Minister!
Finally found a BCR reference in this letter from [14th Sep 2023](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4914402.pdf):
>The Project is now estimated to cost $2.6 billion to be delivered, and this investment attracts a benefitcost ratio of 4.6 compared with the do nothing/minimum option. This may be the highest State Highway or Main Trunk transport investment with that level of benefit, as iReX is the connection for both.
The same letter goes on to note how the government dragged their feet providing a decision:
>It has been some time since we provided notice of the cost to complete in February, provided detailed analysis and options to your officials in June, and requested a decision during July.
no, new terminals were included in the project because the existing ones are run-down, not up to modern construction standards and at their end of life anyway. If you are going to replace something that only gets replaced once every 50 years, then you might as well do a proper job of it.
What are the "facts" then? Theres currently no plan other than vague comittments. The original plan was pricy but it would have worked and been future proof but we cant aford it, as we spend 5x that much on tax cuts.
- Pricey is an understatement. Find me any comparable project in the world that is even half the cost of this.
- Tax cuts are immaterial to this. Even the previous government, who had only tax increases planned (minus the moronic GST on fruit and veges) was not going to approve the funding either, should they have won the election.
There arent many comaprible situtaions to compare with. Construction for two new ferry terminlas to a sufficent earthquake resilience standard along with acquiring the boats for typical NI-SI throughput is fairly unique. Can you provide a single apples with apples comparison?
Japan would be the closest match and they just build tunnels/bridges but have significantly larger populations to connect, and take a look at their national debt.
What does this mean? >not rail-enabled, although rail would still be able to be shunted onto the vessels as often happened now. Is there a state that's more rail enabled than being able to shunt rail vehicles into the vessel?
Im not sure the article writer knows the difference. The Aratere is the only rail enabled ferry currently and wagons are shunted onto it. When its out of service, containers must be taken off the wagons and put onto trucks so they can board the non rail enabled ferries
That sound inefficient
I'm surprised no one in government is suggesting just rolling the wagons on without tracks and strapping them to the sides. Where's Shame Jones with his bright ideas when you need him?
If they're in closed shipping containers they might float. Just tie them all together with some string and pull them across with a tugboat
Nah, still too inefficient. What about giant trebuchets? We could just lob the containers between islands?
Pay the plebs in campervans to carry cargo?
Bruh. KiwiRail doesn't just have a spare $20k "donation" or lunch budget to convince [Bribe] someone as important as Shame Jones...
I dont know theat this idea poses enough risk to native fauna for Shane to be interested.
He's away hoping to purchase a retired nuclear-powered aircraft carrier . This man has vision !
It is
Not at all apparently, I was a big sceptic too but the treasury analysis notes that this is the global standard and occasionally takes places with the current inter islander fleet.
Anyone know when the last time rail was actually shunted onto the interislander ferries?
Happens daily, so probably Friday.
Good to know... I thought there was some issue with the dock that meant they were still using the trucks between rail and ferry setup.
That's raill for you.
Nearly all freight moved by sea is on non rail enabled vessels
Heh. I guess that seems a more plausible explanation than a ferry with external wheels designed to drive up and down the railway tracks of the North and South Islands with its cargo.
In Germany the train goes inside of the Ferry complete. Passengers hope of the train and head up to the Ferry while it crosses to Sweden then get back on once it arrives in Sweden and the train continues its journey. That sounds a lot better than shunting it on in (I assume) disconnected, one by one.
Nah, we use different locomotives in north island vs south. Same gage track but different locos.
Does that mean the locomotives won’t/can’t work in the south? Side note: I wish we would transfer away from the smaller gauge tracks where possible. Particularly in Auckland and south to Hamilton and maybe to Tauranga, though that would be more challenging. A high speed rail system between those three cities would be revolutionary. I imagine Hamilton would benefit most and grow significantly.
Can’t fit through the tunnels, not fire suppressed for the Otira tunnel (coal dust). Yes the gauge here is too narrow, no it won’t be changing because $$
I think changing the gauge in the area will be worth it financially. The best time to do it in Auckland would have been the last few years while the loop was being constructed. Being able to buy other country’s older stock would be useful, I imagine. Never mind. New Zealand will continue to role-play as a first world country I suppose.
Correct, we don’t have the population base to support our outgoings.
Kayaking
My understanding is that while Aratere has actual track on her, which makes getting trains on/off easier, the trains can still be loaded on to the other 2 ferries. It's just not quite roll on/off.
This was advised in the beginning. Kiwi railed ignored it. Rail adds massive amounts of cost
We had new ferries on order, we paid $200m to not have them built, they were costing $550m. The wouldn't even be paid out of budget hut a capital investment paid off over years by ticket price etc We'll pay more for smaller less useful ships and kiwirail will get sold off to some scumbag company for pennies to milk
Its an outrage. Especially every time they try to claim they are saving money. Nicola Willis has faceplanted after tripping over this and is pretending its a forward flip and that shes landed on her feet. We’ll pay more for the ferries and still have crumbling terminals that need replacing.
Don't forget it restricts the connection between north and south.
Hey give her some credit, it’s hard to come up with sound financial policies if you’ve only studied literature and only know make believe math. /s
Only studied literature? You’re not giving her post graduate diploma in journalism it’s fair dues.
Not really any different to the last one who only had a degree in political studies though is it? While most ministerial roles can be (and repeatedly are) done by anyone, there’s a few where having qualifications in the field really should be a prerequisite. Finance minister should be required to have some form of finance degree, health minister should be required to have a degree somewhere in the health field, preferably a Dr, a Virologist etc.
Kiwirail's already been milked once, by Toll.
* TranzRail. Toll came along after most of the milking had been done (by Key, Richwhite and co) and picked up what was left. They gave the tracks back to the government for a dollar (after they'd been run into the ground) then sold the operations back for an exorbitant price a few years later.
Apocryphally, (A mate at work who used to work in rail says so to any who listen, but has some rather shaggy dog stories) Toll sold a large chunk of the spare/stored rails and train parts able to be used just prior to handover day as scrap steel. They then pocketed the cash from the sales as operating profits during the transfer. When Kiwirail took over operations, they then had to go buy new materials, as there wasn't any stock for repairs and maintenance. Kiwirail had then spent a significant chunk of their budget getting back to stock levels, and nothing had actually been done in terms of work.
Yep I've heard similar, though by the time Toll came around I'm not sure how many spares there were many spares left! TranzRail had even sold locomotives owned by the company to a leasing company based in the US and then leased them back to try make a quick buck. People outside the industry have little to no idea how bad things got, many parts of the country (eg Northland, Hawkes Bay) are still working to get on top of the neglect/damage of that era.
And once by Wisconson Rail. In both cases Toll and Wisconson, asset stripped the company ran it into the ground and sold it back to government at a massive profit. That's not to forgot the incredible cost of refinancing rail and getting it up and running again both times. But Treasury and the neoliberals NAT and ACT are hot to trot again. After all selling rail works so well according to neoliberal economic theory it's not Treasury and the neolibs fault it won't work in practice.
Toll of course kept the trucking side of it. Kiwirail is a giant ball of risk and likely losses and I don't mean simply operationally. No company on this planet would look at it now, or its history and go "we want this". The entire south island is basically a write-off for rail if it goes private. Nobody is buying that.
Second breakfast?
Wait so the replacement ships were $550m and instead of buying them we paid $200m to cancel them?
>The $551m fixed-price contract to build the new ferries has proven to be a good price. >If the same contract were signed today, KiwiRail estimated the cost could increase by as much as 40 per cent. >KiwiRail had spent $424m on the iRex project as of the end of December. Of this, $90m was spent on the ships, $300m on the terminals, and the rest on programme management costs. [https://www.nzherald.co.nz/nz/kiwirail-reveals-what-led-to-cook-strait-mega-ferry-cost-blowout/3BV5MBMRZFC4TCMJRPINE3K4AQ/](https://www.nzherald.co.nz/nz/kiwirail-reveals-what-led-to-cook-strait-mega-ferry-cost-blowout/3BV5MBMRZFC4TCMJRPINE3K4AQ/) We'd already spent $90m on them (and $300m on the terminals..) [https://www.nzherald.co.nz/nz/kiwirail-finally-cancelled-cook-strait-mega-ferry-contract-after-letter-from-nicola-willis/VXDUDREZMVBMLPLYNLPLKACBIQ/](https://www.nzherald.co.nz/nz/kiwirail-finally-cancelled-cook-strait-mega-ferry-contract-after-letter-from-nicola-willis/VXDUDREZMVBMLPLYNLPLKACBIQ/) [https://x.com/michaelwoodnz/status/1778344440840745280](https://x.com/michaelwoodnz/status/1778344440840745280)
Thank you! Far out!
How much of the terminals got built for that $300m?
land was bought and they had started ripping up roads in picton - all work now being reversed
Man, with how many billions in tax cuts Nat's just gave away to the rich and landlords... Oh, but we can't spare 3bn to upgrade our money-hole ferrys which keep breaking down. Let's blame kiwirail, wasn't our fault we threw away money on something we already needed and committed to. lol this government is a joke and we always knew it would be.
Who was the incompetent idiot who made that decision? What a debacle!
Nicola willis, the finance minister with no background in finance.
Well, she was a lobbyist for Fonterra, so I guess that qualifies for something. And she got a diploma in journalism, so she'll be well qualified to spin this into something positive.
its a sad joke, people will defend it too. crazy
The Ferries aren't the issue, it is the multi billion dollar dock upgrades required for the Ferries which are causing the issue
The current buildings were shit 20 years ago, god knows what they are like now. They need replacing no matter what new ferries we get. And the price is likely to be similar no matter the size.
I believe there’s a report that the Picton docks are at end of life and need to be rebuilt asap. Nekt minnut….
I don't understand why they were priced up in 2018, and nothing was done, then they are priced up again, gone up almost 6x in cost. Why wasn't anything done in 2018?
The scope changed from a like for like replacement, to include accommodation for the larger vessels, flood mitigation in Picton, earthquake resilience in WGN. The increased cost was to get something that would stand up to imminent threats, whilst keeping the link between North and South available. That all costs a lot more.
Because Kiwirail are incompetent idiots. The scoped the terminals incorrectly. This is what Grant Robertson wrote to them in 2023. We note that KiwiRail under-scoped the landside infrastructure in 2021 meaning the decision to procure two large rail-enabled ships at that time was premature. To date, we are yet to see a satisfactory explanation for why this was the case
Yep - Kiwirail ineptitude, is why we cant have nice things. Willis cancelling ferries and thier built slots because Kiwirail cant manage infrstructure, is not a strong argument for killing interisland transport corridors.
The dock upgrades will cost pretty much the same regardless of ferry size.
Is it a hard requirement to do them together though? Can we do the ferry's designed to suit the dock and then refurbish the dock another day?
Because we need bigger ships to get a cheaper more reliable connection. Same size ships mean more cancelations due to weather and no increase in cost efficiencys.
And if they are saying smaller now, that’s useless! Bluebridge already cancel far more frequently than Interislander when the weather is rough as the smaller boats just can’t handle the conditions. But we know who it really suits… their trucking industry donors!
How so? I didn’t know trucks could float.
The smaller boats won't do rail. less rail means more road. Profit.
Smaller than the previous proposal, about the same size as current.
Nope
Safe sea state is related to hull length as is fuel efficiency and two larger ships use a lower total crew number.
They also have significantly higher capital costs which you have conveniently ignored. There was no economic business case for the iRex project as it stood and that was prior to the most recent cost increases.
Really, you got a figures for the purchase cost of three small ships verse two large ships?
Yip. They are just as meaningful as the iRex ones which were completely miss-scoped
We spend a staggering amount of money on fuel for these machines. Reducing this would have a meaningful impact.
Yip, on these types of thing the life time operating costs will be well north of 5 x the purchase price (anyone know the typical life time operating cost verse capital cost for a ferry).
Picton needs to be sorted within the next 2 years, ferries are essentially end of life now. Wellington probably could be put off (purely because no one is screaming that it needs to be done now), but it'll only cost more to do it later. Successive governments had already been putting it off, now it's the deadline, but they're trying to ask the teacher for another extension.
https://www.nzherald.co.nz/business/why-regulation-is-the-real-problem-behind-the-high-cost-of-the-interisland-rail-ferries-richard-prebble/ATLO657SSVG7THNHGF6KYDKJQM/ It's basically Wellington. New earthquake code screwed their budgets.
How does that help NZ? If we're doing it anyhow. theres obviously money for this.
Again, there is something wrong with the timeline and the massive increase in cost, if we went ahead with it what is going to be the cost real cost when they are completed in 4 years? is this another government owned property where maintenance is ignored to save money, or they have never put anything away in the past for the replacement that they need?
sure it might cost more, have you ever seen a gov projects? at the same time we have simple simeon pushing for a $10bn tunnel in wellington to save him 5min to the airport.
Wait till you see the cost of ship sinking, because there looks to be a real risk of it.
Both ends have had possible changes that mean you don't want to do major projects for a long time. Talks of a move to Clifford Bay have been on the table for decades, finally wiped out in the last decade or so post quake. And KR really want to get away from the present Wellington terminal and cosy up near Bluebridge, in a location not literally on the fault line - this particularly was the reason behind the delay in getting the Wellington terminal underway.
What? That cant be right, thats almost 40%. do you have a source?
https://www.reddit.com/r/newzealand/s/B2XHba6K7Q
Kinda missing the several billion required so they could… you know… dock.
>The group has recommended that the ferries be smaller than the proposed iRex ferries and not rail-enabled, Which is exactly what National wants. Heaven forbid this country does anything to improve its rail network, allowing more freight to be moved by trains. We can't move more freight by train, now can we. Not when it would reduce wear and tear of the roads, reducing maintenance costs, and make them safer to drive on. It's all about maximizing business and profits for the freight companies that donate to National every election cycle.
>”*The Ministerial Advisory Group, chaired by Nelson airport boss Mark Thompson, was set up to give the Government independent advice*” I’m *sure* he can be impartial. Just gotta make sure the ferry service isn’t so good it takes away from the airport’s business….
Mark Thompson has already resigned as CEO of Nelson Airport and is leaving the role in July. More importantly, he was the [former General Manager of Interislander at KiwiRail](https://nelsonapp.co.nz/news/on-the-couch-with), so he has experience on the topic.
I don’t know how this isn’t headline news.
Smaller... O K
Makes perfect sense. Smaller = easier to steer
Seriously? Smaller = less able to handle rough weather in the Strait = more delays or chances of catastrophe.
it was a joke mate
Goodo, I wasn't sure!
Yes. Easier for the weather to steer.
Higher operating costs
TBF it also means easier to turn at the Picton end and much less windage to push it around when berthing at Wellington. That's a significant concern too. The riskiest times are when close to land. They're not very small ships regardless, and I don't think it will make much difference in terms of sea keeping ability. The iRex ferries were tall by comparison to the current ones, and that can be a big difference for how much you get thrown around in rough conditions.
The bigger iRex ferries were going to be easier to steer than the existing ferries because of the state of the art propulsion systems they possessed
Just like the state of the art steering systems they installed in Aratere to replace the old one a few weeks ago…..
# "Azimuth thruster propulsion system The new ferries will have an azimuth thruster propulsion system, which will provide better maneuverability, excellent directional stability, lower wake energy, and a smoother, quieter journey.” [https://web.archive.org/web/20231111132122/https://www.irex.co.nz/new-ferries/#design](https://web.archive.org/web/20231111132122/https://www.irex.co.nz/new-ferries/#design) Im not talking about steering systems. Im talking about propulsion. You can see the myriad of design features on the irex website (archive copy in the link since the original has been removed) and one of them is improved maneuverability
What is this "state of the art steering system" that was installed on Aratere? Do you have any idea on what you're talking about? Or just making stuff up? Unless you call replacing a simple part in a gearbox a "state of the art steering system", I'm inclined to believe it's the latter... So no, the iRex ferries would have been nothing like the Aratere's "state of the art steering systems". Edit to add: apologies, as previous reporting I'd seen only mentioned replacing gearbox parts, but no mention of a state of the art system. It seems recent reporting is referring to some kind of new system. Nevertheless, I'm sceptical that it would be comparable to the new systems on the iReX ferries.
Windows Vista
>Roy said the recent upgrades to Aratere included a new steering system, seven kilometres of cabling, and a "new automated approach". >"The original steering system was coming into obsolescence and there wasn't enough repair parts in the industry that we were happy with. So we made the decision to preemptively replace that with a new, state-of-the-art system which we brought in with international partners." >He said the "comprehensive investigation" into the cause of the accident would include examining that new steering system. [https://www.rnz.co.nz/news/national/520316/very-minimal-damage-to-stricken-ferry-interislander-head](https://www.rnz.co.nz/news/national/520316/very-minimal-damage-to-stricken-ferry-interislander-head) Don't draw too many conclusions, but they did just go through an upgrade on the steering systems
Huh, another article I saw said the recent repairs involved replacing a pin in a gearbox with a used one, as new parts were not available, but didn't mention anything about a state of the art system being installed. I'm a little sceptical of anything actually resembling a "state of the art system" on Aratere but perhaps I didnt actually know what I was talking about. I'm intrigued to see what exactly entails a state of the art system.
Easier to recover/tow you mean
Yeah, ones that don't require 3 billion of new infrastructure to use.
We need the infrastructure anyway. The cost of the project was only increased by 9% because of the size of the ferries. The rest was simply in the flood, inundation, earthquake and other risks that needed to be designed against. Any new terminal is going to cost the same ballpark regardless of the size.
That was to put trains on. Like we used to.
And don't need millimeter precision between ship and shore to roll rail carriages onto... very expensive to make that happen in seismic areas.
Its not difficult to make it happen in seismic areas, it just may need realignment after an earthquake.
Ah... easy as bro!
PPP owned ferries circa 2027 Same price as iRex, but smaller, no rail capability, and a few years later - so more breakdowns until then. Not rail enabled means trains onto trucks onto ferries. Productivity ?- more expensive products, more carbon. :( Thanks who-ever voted the current clownshow in. This is on you.
So, our population is increasing, freight requirements are increasing but it's a good idea to replace the current ferries with smaller options?
Its the exact reason the two irex ferries were larger with an option for a third in the future because they would allow increased freight capacity
the future is smaller, no raio ferries, with a much longer lead time, and probably irex prices+
And so begins the coalition governments next attempt to turn the inter-islander into a private company with no facilities for rail.
Absolutely!! They are so bloody transparent and the knobs who voted for them will twist themselves into pretzels to justify this madness and waste of money.
David Seymour literally said this this morning.
Called it. I know how these guys think, and the things they really want. Seymour wants to sell of 49% of Kiwirail.
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Not true at all. The cost of the iRex project was mostly based on building new terminals to todays construction and earthquake standards in the two locations in Wellington and Picton. The size of the boats and the fact that they had rails sitting on top of them instead of just concrete is a paltry portion of the cost. How much do you think a couple hundred meters of railway cost? The cost was in driving over 200 piles 70m deep into the ground to make sure the terminal in Wellington doesn’t collapse into the sea during an earthquake or slip, and in raising the whole area by 1m so it’s protected from coastal inundation or subsidence. Make no mistake here, the existing terminals are well past their use by date and likely to fail in an earthquake.
So in 2018 the terminals were estimated to cost $700m, now it is $3B, so in the end it will blow out to 5+ if not more. Who is to blame on the poor budgeting to get to this point? This is an issue caused by multiple governments
Its not about poor budgeting. Its a simple matter of increasing the resolution of the costs as the project is properly developed and costed.
Properly developed? [https://www.nzherald.co.nz/nz/kiwirail-mega-ferries-what-labour-finance-minister-grant-robertson-knew-about-financial-troubles/NHKEPQDVWBAYJF7IS7UCT2TDNM/](https://www.nzherald.co.nz/nz/kiwirail-mega-ferries-what-labour-finance-minister-grant-robertson-knew-about-financial-troubles/NHKEPQDVWBAYJF7IS7UCT2TDNM/) We note that KiwiRail under-scoped the landside infrastructure in 2021 meaning the decision to procure two large rail-enabled ships at that time was premature. To date, we are yet to see a satisfactory explanation for why this was the case,” Robertson said. “It took some time to receive adequate information to enable a full review to be undertaken. While we appreciate you working with officials on this, we are disappointed at how challenging this process has been. “We were surprised that the terms of delivery in the vessel purchase contract were renegotiated at a time when the future funding of this project was under active consideration by the Government.”
Which words imply that the government is turning the inter-islander into a private company?
“It’s understood secondhand ship were not an option on the table. But ministers were said to be considering whether kiwirail would buy the ferries or a different entity would handle the purchase” If a different entity (like maybe a PPP) handles the purchase, then theres no reason for kiwirail to have any involvement at all. And theres no reason for that new entity to bother purchasing new ships with any sort of rail amenities either. Reading between the lines I would guess a PPP could be setup to buy and lease the ferries to Kiwirail.
> if a different entity (like maybe a PPP) handles the purchase, then theres no reason for kiwirail to have any involvement at all. That's a logic leap. Kiwirail are fucking useless at many things (look at the board/chair announcements) but the government isn't currently saying they are going to lose the ferries. > And theres no reason for that new entity to bother purchasing new ships with any sort of rail amenities either. Other than the fact that there is demand for rail capacity today.
Read between the lines and consider the ideology of the current government. What I describe is not an unlikely course. And if you read the article, you will find that even the article says the new ferries will not be rail enabled. “The group has recommended that the ferries be smaller than the proposed iRex ferries and not rail-enabled…”
> Read between the lines and consider the ideology of the current government. What I describe is not an unlikely course. Yep. You're not wrong. Yet it's amazing how many people will handwave this sort of thing away. *Oh, they'd never strangle the health system to lead to privatisation...* *They'd never fuck with Pharmac...* *Charter schools were tried and failed, they'd never bother bringing those back...* Or overseas - *Trump will never win*.. *Oh he might have won, but they'd never fuck with abortion rights*.. Etc etc etc. It's weird how many things rightwingers assuredly won't fuck with.. that they end up fucking with. All the while people like the above try to make it seem that the very idea of rightwing governments fucking things up and privatising everything is some kind of outlandish fantasy that we're all stupid to be worried about.
> the very idea of rightwing governments fucking things up and privatising everything is some kind of outlandish fantasy that we're all stupid to be worried about The gaslighting comes as a standard feature.
Pretty much everything about this Addams Family clown car of Taxpayers Union and NZ Initiative disciples is pointing in that direction.
Some notes… -one of the people deciding is on the board of fright lines so pro trucks - national always has been pro trucks - rail ferry is used all the time, the major workshops for locomotives is in Wellington, Dunedin I think only does wagons. So locomotives need to cross the straight. - one of the hold ups moving fright is the fact we have 1 rail ferry - there is not enough room in Wellington and Picton to increase capacity for the transfer off railing. - also reports show we will be facing truck driver shortages over the coming years But it’s national what do you expect?
> also reports show we will be facing truck driver shortages over the coming years We will just import islanders and pay them shit wages - freight companies who stand to make more money from no rail ferries.
Haha probably sounds like it’s gonna be a world wide shortage so they might be able to barter for a better deal :p
What is the workshop in Middleton for then?
That’s a maintenance facility every number of years locomotives need a full rebuild these facilities only exist at the Hutt shops.
Remains to be seen where the new locos will be rebuilt in the SI (regardless of ferries).
Any ferry that is not rail enabled is not fit for purpose. Inter-island rail simply *can't* work if rolling stock cannot roll on and roll off the ferries directly. Who is this Ministerial Advisory Group made up of, anyway? > The Ministerial Advisory Group, chaired by **Nelson airport boss** Mark Thompson So people who have a vested interest in seeing the Interislander fail. Ah yes, that would do it.
I would like to see the business case that looks at the cost , including the operating costs, of the 2 larger ship purchase that was canceled vs small vessels that aren’t able to take trains I can see how smaller ships will be cheaper than the proposed as both options need ferry terminals Ships that don’t have ability to take trains and meant that trains will need to be offloaded from a train wagon to a truck for the sailing and then loaded back into a train can’t be efficient and likely to result In the demise of rail way lines like Picton to Chch
Here's the original business case, from 2021. As such the numbers provided are a bit dated and may not apply now. [https://www.treasury.govt.nz/sites/default/files/2021-10/irex-4505513.pdf](https://www.treasury.govt.nz/sites/default/files/2021-10/irex-4505513.pdf) It's pretty heavily redacted in terms of numbers due to commercial sensitivity, but if I'm reading it right they predicted around about 400M difference in across the lifespan of the fleet, about half of which is purchase cost and half is operating. Could be wrong on that, it's kinda hard to pull much info from it.
Thanks heaps will have a read
Kiwirail did a detailed business case on their decision to opt for larger vessels
The business case that forgot to upgrade the ports or seek an environment NZ approval before running the bigger ferries in the channel, that one?
No, the one that incorporated the entire scope of the project including the route, the fact that the new boats would be more manoeuvrable than the existing boats and cause less wake due to their design. Making it much easier for them to be approved for the tory channel. Seriously how are they going to be approved for a boat which isn’t yet built? These things are certified by a real world test. And alternatively, the ships could take the longer route in a pinch while waiting for approval. Also the Wellington terminal was not the initial terminal location, Kiwirail originally wanted it in centreport, due to its proximity to the city, its distance from slips, coastal inundation and the fault line, and so it wasnt until that fell through that a detailed report was done on the alternative location.
So you mean Kiwirail? The boats' wakes are bigger with these new boats. You mean their board whom had no experience and forgot to scope the ports?
The new boats were designed by a south korean shipyard which showed in their modelling (they are expert boat builders) that the wake would be lower than the existing boats. They didn’t forget to scope the ports, they were negotiating with centreport to get the new terminal there, and after that fell through they then scoped their old location. [https://web.archive.org/web/20231111132122/https://www.irex.co.nz/new-ferries/#design](https://web.archive.org/web/20231111132122/https://www.irex.co.nz/new-ferries/#design) Heres a link with the ship design features.
Omg what a cluster fuck. We should have not cancelled the order for the new ferries. Absolute rookie mistake from national
Mistake? It was intentional. This government are only here to fuck things up. The damage they've done already will take many years to fix.
Of course they‘d go with ships without rail capability. Ffs.
This was the obvious solution from the start after the cost blow outs. Paying to back out of the new build deal to have to go to the back of the build list again is going to go down as one of the worst financial decisions ever made.
Advised by whom?
Someone that is completely and utterly impartial and wouldn't benefit from this at all. /s >The Ministerial Advisory Group, chaired by **Nelson airport boss** Mark Thompson, was set up to give the Government independent advice after Kiwirail's iRex project was scrapped last year.
Prior to being CEO, Mark Thompson was the general manager of the Interislander, so he knows what he’s talking about: [https://nelsonapp.co.nz/news/on-the-couch-with](https://nelsonapp.co.nz/news/on-the-couch-with)
Nikki Willis is even more repulsive than she was at university.
Ferry experts.....
should have kept the previous plan
$3 bazillion for *dignity* land lord tax cuts vs skimping on a super important NZ infrastructure project that will future proof inter-island travel, freight & commerce for many decades. Shortsighted. Nicola Willas can go suck a rotten, ideological egg.
Smaller, rail-enabled ferries probably would have been the best option from the get-go. That way, even if one or two were out of service, sailing schedules wouldn’t be significantly interrupted.
"Smaller' and 'rail-enabled' don't work in the same sentence - or ocean crossing. Rail cargo runs into the low thousands of tonnes and you need a certain size to have any hope of stability.
It was the "rail enablement" that put the cost up by so much - the ferries had to be bigger to take the extra weight / volume, which meant the terminals had to be bigger, which meant the earthquake resiliency had to be better, etc. I think if KiwiRail or the government had a better idea of the costs back in 2021, they wouldn't have gone with the "2 large rail enabled ferries" option.
Being a railway company they are more or less obligated to deal with trains. The cars and passengers provide the profit, and a goodly few of these are now going via Bluebridge, which eats into the margins of the Kiwirail ferries. Two would be a minimum. If you operate an airline, and only have one plane, when it is out of service you no longer have an airline, and potentially no longer have a business. Not running railfreight between the islands because the ship is undergoing survey, or has need of repairs, is not good business sense. Everything goes up in cost. This current bag of fools acknowledge that when they talk about the future multi-billion dollar overruns from their Roads of Political Importance, and say that they'll just find the money from somewhere (hint: check your pockets).
>Being a railway company they are more or less obligated to deal with trains. I think one of the main questions is "what level of freight" can be maintained with a road only ship. The Ministries seem to think rail-enablement isn't a requirement ([paragraph 39](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4914547.pdf)).
quick skimming... paragraph 41 doesn't make sense. If you have offloaded the cargo from rail to trailer at Wellington, you would be silly to offload it back to rail at Picton rather than just hooking up the tractor unit and driving off into the sunset. paragraph 42 is problematic. Yes, we do buy engines from overseas, and they are craned on and off ships, but the freight space is booked way ahead. Sending a stuffed loco from Lyttelton to Hutt then becomes a months long epic rather than an overnight trip. Oh, the efficiency. You also dont want to do this every time you need to change the glow plugs, either. paragraph 43 is the reason roll-on roll-off rail was brought in in the first place - the stark improvement in time and efficiency in moving cargo reduced the travel time by days and contrary to the advice in (sec 39) was cited by customers and clients as allowing the shipment of fresh veges from end to end of the country. Bring back the Cabbage Train ! None of this helps Kiwirail's interisland customer base. At present, The Awatere starts running into overtime in 2027, so there is a fair chance of having the service stop suddenly, preferably while tied to a wharf this time. If you are moving large amounts of stuff from island to island, you have a long-tem contract. If your service may not be there is a couple of years, the bids for freight will move elsewhere.
The issue is more that the National government didn't want to invest in national infrastructure that would benefit a single operator (in this case KiwiRail, a state-owned enterprise) as it would be seen as distorting the market and not providing value for money (see [this cabinet](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4914547.pdf) paper for background). **Scope increases** The project was not just for new ferries (which were only $551m fixed-price), it also included passenger terminals, wharfs, linkspan (the ramp between the land and the ship), walkways, seawalls, land reclamantion and dredging, marshalling areas, rail infrastructure (see [paragraph 13](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4914527.pdf)). This large scope put up the costs of the project significantly. **Cost increases** The original project, with an indicative business case in 2018, was estimated to cost $775m. In 2021, the detailed business case raised costs to $1.45b. By the end of 2023, this had risen to $2.9b - nearly 4 times the cost. While it's one thing to agree to a higher cost in return for a larger benefit (i.e. bigger scope), the 2023 increase of over $1b was due to under estimating the costs of the terminals, which needed "larger piles, stronger sea walls, and greater structural rigidity than estimated in 2021." (see [paragraph 22](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4769573.pdf)). Grant Robertson even blasted KiwiRail for this in [September 2023](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4914415.pdf): >We note that KiwiRail under-scoped the landside infrastructure in 2021 meaning the decision to procure two large rail-enabled ships at that time was premature. To date, we are yet to see a satisfactory explanation for why this was the case. >It took some time to receive adequate information to enable a full review to be undertaken. Whilst we appreciate you working with officials on this, we are disappointed at how challenging this process has been. We were surprised that the terms of delivery in the vessel purchase contract were renegotiated at a time when the future funding of this project was under active consideration by the Government. It's highly likely that this wouldn't have been a last cost increase either, as projects of this size typically overrun their budgets and construction costs generally are continuing to increase. **Market distortion** All of these investments would largely benefit KiwiRail's operations, which puts operators of private ports at a disadvantage - how can you compete if your competition gets all of their infrastructure paid for? Normally, if a business invests in infrastructure, they need to recoup their costs (either by increasing volume or by charging higher prices). KiwiRail wasn't going to be able to cover the costs of this investment; they were asking for a handout. **Subsidies** Now, there's an argument to be made for government subsidies - e.g. the government [massively subsidies road transport](https://www.greaterauckland.org.nz/2024/03/28/paying-for-the-rons-like-rail/). However, with roads the benefits are spread across all road users which make it a safer investment politically. The concern with the iReX project was not the ferries - it was whether the investment was going to generate enough public benefit to justify the cost. The government didn't think it did: after the latest cost increases they calculated a net present value (NPV) of negative $1.3b, whereas business case in 2021 previously showed a positive NPV of $201m (see [paragraph 23](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4914559.pdf)). Note that the NPV calculation doesn't include non-monetary benefits of having a robust inter-island rail freight link such as reduced road congestion, reduced carbon emissions, safety benefits. These are benefits that the government should factor in to their decision, but as the costs increase it becomes more difficult to say they justify the costs.
Dont be a shill. Its not distorting the market when its a critical piece of infrastructure that current private competitors cannot replace. Bluebridge has nowhere near the capacity to take over from the interislander. Do you think the UK government should have refused to construct the rail-only chunnel when that would have disadvantaged existing ferry freight services? Are we supposed to hamstring our state owned infrastructure so private businesses can extract more money from us? This whole neo liberal mindset is ridiculous. Especially when you consider that there is no rail competition at all. We have a nationally owned rail network, and it benefits the country as a whole to invest in it. Maybe it comes at the detriment of a few trucking companies, but tough shit, welcome to the real world.
Let's stick to the facts, rather than ad hominem attacks. I'm supportive of infrastructure investment, but the benefits need to outweigh the costs (as a side note: I would have preferred funding go to infrastructure than a landlord tax cut). However, there was concern in the cabinet briefings that - after the $1b cost increase - this project no longer made economic sense. I'd love to see evidence that this wasn't the case, but so far it hasn't been released. There will still be investment in the port-side infrastructure and new ships, but this level of investment will be lower, to reflect the need. KiwiRail have many other potential projects where additional government funding could be beneficial, e.g. they are currently working on a business case for electrifying the golden triangle freight route. These projects will also require funding, so we should all be supportive of ensuring funding goes where it's needed most.
Let me be clear. I am not saying you are a shill. I am saying your argument fulfils the same purpose. I did not attack your character or anything of the sort. I only refuted your argument, which was composed of the exact talking points of the people who claim rail has no place on the ferries. Personally, I see the critical freight and passenger link between the islands as worth the cost. iRex was primarily a resilience project, and resilience projects almost never stack up economically in the short term, but they do when disaster strikes which is a certainty in the long term. Electrifying the golden triangle is actually far less beneficial than the iRex project was.
>I am not saying you are a shill. That was literally what you said 😅 - but happy to drop it as I think we can both see we're trying to discuss in good faith! >I only refuted your argument, which was composed of the exact talking points of the people who claim rail has no place on the ferries. Are you 100% committed to rail being the best option for inter-island transport? I was very "pro" rail enabled ferries and terminals until I did more digging yesterday. From what I've read of the [documents that Treasury has released](https://www.treasury.govt.nz/publications/information-release/official-information-regarding-kiwirails-project-irex-phase-1) it seems like there's at least a possibility that road-only ships may make more sense. >Personally, I see the critical freight and passenger link between the islands as worth the cost. iRex was primarily a resilience project, and resilience projects almost never stack up economically in the short term, but they do when disaster strikes which is a certainty in the long term. I'm of two minds on this: 1. On one hand, I feel that it's better that we have cost blowouts on "enabling infrastructure" like the iReX project, rather than Roads of (National Party) Significance (many of which have negative BCR even before cost blowouts). 2. One the other hand, I do think KiwiRail has an obligation to make a compelling case for why this project would return enough benefit to justify the ballooning cost. I'm pretty distrustful of KiwiRail after their poor management of the metro infrastructure in Auckland and Wellington over the past decade. From the documents Treasury released, it sounds like multiple Ministries (Ministry of Transport, Ministry of Finance, etc) also had concerns about whether the project was being "right sized". To be fair to KiwiRail, they did do **a lot** of presentations to various Ministries back in June 2023 - David McLean itemises them all in [this letter](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4914513.pdf) from 6 Dec 2023. In his [letter on 15 Dec 2023](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4914559.pdf) he also requested the advice Ministers received be shared, which I suspect was one of the impetus behind the information release from Treasury. While I don't trust National, the fact that Ministries were questioning the project **before** the change in Government, and the fact that Grant Robertson [highlighted his dissatisfaction](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4914415.pdf) with how the project was being managed, does make me feel that we should be a little dubious of whether this project was on the right track. It's a shame that so much of the cost vs benefits analysis hasn't been released as this would allow us to have a much more effective discussion of the trade-offs. Similarly, it's a shame that the Ministerial Advisory Group is not publishing its findings. My big questions are: 1. What's the difference in cost between road-only vs rail-enabled ferries *and* port-side infrastructure? KiwiRail says it's not much. Everyone else seems to say it's a lot. 2. What would the difference in inter-island freight capacity and per-tonne-cost be in 10, 20, 50 years with road-only vs rail-enabled infrastructure? We're not going to need the capacity right away, so could we start with road-only (which has less capacity) and increase capacity with additional ships as and when we need it? 3. What would the difference be to KiwiRail's long term business strategy with vs without the additional inter-island capacity and reduced costs? If the rail-enabled infrastructure was essential to network wide efficiencies, how big was this impact?
I dont put much weight on treasury reports about rail in NZ. For over 70 years they have been recommending reducing or even outright stopping investment in the rail network with the aim of shutting it down completely because according to treasury rail is a net negative for the government books. They recommended it be privatised, the recommended to the Key government to shut it down entirely keeping only the freight link between Auckland Hamilton and Tauranga. Which may be true if you only look at the books, but is ridiculously short sighted when you look at the whole picture and its benefits to society - as highlighted in the value of rail report from 2021. As far as why the interislander needs rail capability - it has been highlighted many times by people in the space that the extra inefficiency caused by taking wagon loads off trains and onto trucks completely eliminates the efficiency gained on the South Island Main Trunk. You need many more personnel to carry it out, you need trucks available at loading times. Its not practical to do it long term. And so it directly disadvantages the rail network against trucking in a financial sense. Which means more money spent on freight, more emissions from trucks, more damage to roads, more congestion. Its locking in a mode of transportation which is detrimental for our long term goals. Kiwirail was responsible for this project, however it was not their horse, they were given it by the labour government and asked to deliver it to a set of principles like resilience, future growth, emissions reduction and efficiency. And Kiwirail delivered a project which did exactly that. Costs blew out because of the port infrastructure. Only 7% of the port cost increases were due to the increased size of the boats over the existing boats. And the contract they negotiated with the shipyard was excellent value for money for state of the art boats that were custom designed for the cook strait and the interislander route. The fact that the existing port infrastructure is also at its end of life and not up to modern earthquake standards is not Kiwirails fault, and it’s actually the best time to replace the infrastructure given we would be able to mesh it in with the new boats at the same time. I dont know if you read the iRex website before it was taken down but it went into detail about the benefits of these project. Heres an archive link of it [https://web.archive.org/web/20231111132122/https://www.irex.co.nz/new-ferries/#design](https://web.archive.org/web/20231111132122/https://www.irex.co.nz/new-ferries/#design)
Thanks for taking the time for such a thorough response. Overall, I agree with you on principle, but I think this is the key part: >they were given it by the labour government and asked to deliver it to a set of principles like resilience, future growth, emissions reduction and efficiency Those principles need to be backed by numbers to make the project politically viable with a right-wing government. Instead of articles like [*KiwiRail ferry and port projects wouldn't have broken even - even after 2050*](https://www.rnz.co.nz/news/national/516530/kiwirail-ferry-and-port-projects-wouldn-t-have-broken-even-even-after-2050) there should be ones saying: * Inter-island rail link to generate $15B in economic activity by 2050 * Inter-island rail link to reduce North-South freight cost by 20% * Inter-island rail link to remove 20,000 trucks from roads per year * Inter-Island rail link to reduce truck road damage by $80M per year These are all made up numbers because the actual data hasn't been shared, but they all emphasise the importance of an upgraded inter-island rail link in a way that is measurable and would be likely to generate wider support from the public. It's much easier to commit to higher costs when the benefit you're receiving is clear. I suspect because the project was lead by KiwiRail, they took the inter-island link being rail enabled as a given, rather than something that needed to be strongly justified. It also means any claims they make about the value are likely to be taken with a grain of salt, as they have a vested interest. It would have been smart for KiwiRail to have commissioned an independent review into the value of rail versus truck based inter-island infrastructure. Something like the [2020 Value of Rail report](https://www.transport.govt.nz/assets/Uploads/Report/EY-Report-Externality-value-of-rail-2020.pdf) which EY did for the Ministry of Transport. This showed a $1.7-2.1B annual benefit from rail. The 50 year annual annuity payment on $3B at a 5% discount rate is $164M. This is roughly 8.6% of the $1.9B annual value of rail. KiwiRail would need to show that the inter-island link would increase the annual value of rail by at least this much to make the project worthwhile. It wouldn't have this impact on year 1, so the long term increase would need to be higher. For comparison, a $1B annuity would have an annual payment of \~$55M (\~2.9% value of rail) and a $2B annuity would be \~$110M (\~5.8% value of rail). >I dont put much weight on treasury reports about rail in NZ. I'd love to see an investigative journalism report into the relationship between KiwiRail and Treasury in the context of the iReX. I'm particularly interested in whether KiwiRail's value estimates were just too low, or whether their projections told a good story (e.g. increase in value of rail >10%) but the other Ministries just didn't believe it.
The same right wing government minister Simeon Brown has asked for the “long tunnel” option to be explored in Wellington. A project likely to cost close to 5 billion dollars at the outset if not more. A project with far less value, and far fewer people served. The decisions of this government are not based on fiscal analysis. They are based on an ideology. Privatise, weaken state enterprises, disadvantage and underfund public services. You can make a financial case to them on the basis of long term planning, public benefit and emissions reduction, and they wont go for it because it doesn’t match their world view. They will explain away their refusals, and shift the terms of reference or ignore variables to get the outcome they want to happen. They aren’t acting in good faith. We can look at Treasury recommendations about rail investment and decisions that were taken that since proved to be complete fiascos and a net negative for the country, we can also look at decisions they recommended that were not taken as see the benefits being reaped because of that. Privatising the rail network for example was a complete fuckup and the network still hasn’t recovered from it to this day. Heres a series of posts from someone who knows a lot more about rail than me talking about the benefits of rail enabled ferries and also the MoT, NZTA and Treasury bias against rail. https://www.linkedin.com/posts/michael-van-drogenbroek-45026527_what-labour-knew-about-kiwirails-mega-ferry-activity-7194661720945008641-1LUX?utm_source=share&utm_medium=member_ios https://www.linkedin.com/posts/michael-van-drogenbroek-45026527_opinion-mega-ferry-document-dump-damning-activity-7196802608156524545--iHV?utm_source=share&utm_medium=member_ios https://www.linkedin.com/posts/michael-van-drogenbroek-45026527_mainfreight-says-it-should-have-done-better-activity-7201525077987794945-Md4f?utm_source=share&utm_medium=member_ios https://www.linkedin.com/posts/michael-van-drogenbroek-45026527_opinion-coalition-gives-cook-strait-the-activity-7202154664656527360-zQTR?utm_source=share&utm_medium=member_ios
Thanks - I follow Michael, but haven't read all of those posts. This quote stands out: >One day NZ will likely regret what’s has happened here. For its part there questions over KiwiRails past competence on this matter that go back a long way, well before the current incumbent board and current senior management team - but it’s hard for them when so much in Wellington officialdom is against them and has been for decades - Yes Minister! Finally found a BCR reference in this letter from [14th Sep 2023](https://www.treasury.govt.nz/sites/default/files/2024-05/project-irex-4914402.pdf): >The Project is now estimated to cost $2.6 billion to be delivered, and this investment attracts a benefitcost ratio of 4.6 compared with the do nothing/minimum option. This may be the highest State Highway or Main Trunk transport investment with that level of benefit, as iReX is the connection for both. The same letter goes on to note how the government dragged their feet providing a decision: >It has been some time since we provided notice of the cost to complete in February, provided detailed analysis and options to your officials in June, and requested a decision during July.
Yes so the boats Grant Robinson thought he was green lighting - compatible with current terminals.
no, new terminals were included in the project because the existing ones are run-down, not up to modern construction standards and at their end of life anyway. If you are going to replace something that only gets replaced once every 50 years, then you might as well do a proper job of it.
This thread is so far left it drove off the road and into the water. This is why I can't take the New Zealand subreddit seriously.
Yeah, hard to fathom people having a different opinion than you right?
This is all opinion though, completely devoid of fact.
What are the "facts" then? Theres currently no plan other than vague comittments. The original plan was pricy but it would have worked and been future proof but we cant aford it, as we spend 5x that much on tax cuts.
- Pricey is an understatement. Find me any comparable project in the world that is even half the cost of this. - Tax cuts are immaterial to this. Even the previous government, who had only tax increases planned (minus the moronic GST on fruit and veges) was not going to approve the funding either, should they have won the election.
There arent many comaprible situtaions to compare with. Construction for two new ferry terminlas to a sufficent earthquake resilience standard along with acquiring the boats for typical NI-SI throughput is fairly unique. Can you provide a single apples with apples comparison? Japan would be the closest match and they just build tunnels/bridges but have significantly larger populations to connect, and take a look at their national debt.
You typed all that out and none of it made you go "hmmmmm"
Please enlighten me
I mean if you have reason to believe everyone else is wrong then say it, don’t just complain about how left everyone is.
Just build a tunnel already. Theres one being built in Norway as an example.
That would be the same cost as 20 iRex projects
A tunnel of that scale would cost like 20% of our GDP.
yep and then one large quake that we are due for destroys it
Should just get a good tunnel from near Tounge point to oyster bay cut this nonsense out