Winston Peters says rail-enabled ferries are a “no-brainer” and insists they will be the cheaper option for the Interislander replacements.
Speaking to RNZ from his Beehive office on Thursday, the new Minister for Rail confirmed the coalition government would not be able to get out of a break-fee for the previous iRex contract with Korea’s HMD, but that any penalty cost won’t come out of his funding envelope.
“My best knowledge of it is that they don’t build boats of the size we’re talking about, we’re talking about 200-metre ferries, something around that length, and they don’t do ferries of that size.
“That’s why those huge boats were brought in under that previous contract.”
That means HMD wouldn’t be in a position to renegotiate a new contract with the coalition, and the full break-fee would apply, but Peters said that has “already been siloed off elsewhere”.
“It’s not part of any costings I’ve inherited, no, it’s not part of our, or my, forward costing considerations.”
The coalition of National, Act and NZ First parties has promised to deliver a replacement project that would cost much less than the $3.2 billion iRex had ballooned to by the time the new government was sworn in last year.
Peters said in reality, Treasury had warned the costs were more likely to reach $4 billion and that’s the price he promises to significantly undershoot. He said even with a break-fee included that would be achieved.
“It won’t be remotely within the old amount of iRex that was heading for $4 billion … that I can be utterly confident about.
“As for specifying what this will cost and what that will cost, it begs you to make a silly statement that then tells the market what you’re prepared to pay, and if the market knew what I was prepared to pay they’d use that as a bottom line and try and screw a bigger figure out of it,” he told RNZ.
Yesterday, Peters and Finance Minister Nicola Willis announced a company was being established to come up with a replacement project and options would be taken to Cabinet in March for decisions to be made.
Two smaller ferries, which take more passengers and freight than the current Interislanders, will be procured – but whether or not they’re rail-enabled is being left to Peters to negotiate.
An undisclosed amount of funding has been set aside by Cabinet, and Peters will need to convince his coalition partners rail-enablement is worth the extra cost if it comes to that.
But Peters told RNZ ferries that can carry trains are always cheaper in the long-run because the other associated bridging costs – moving freight off a train and onto a ferry and back off again on the other side – have to be taken into consideration.
“The overall cost in my view will be much less if it’s rail-enabled.
“Rail-enabled ferries is part of our considerations, yes, and that is a no-brainer,” he said.
“You might talk about greater cost to be rail-enabled, but then there’s a much lesser cost in terms of cartage and use.”
Prime Minister Christopher Luxon and Willis pointed out yesterday that the majority of the ferries using the Cook Strait are not rail-enabled and bridging was already working.
Asked what he made of those comments, Peters told RNZ: “It is not wise in politics to rush to judgement until you’ve got all the facts – and I’ve been around politics long enough to know that I’m going to get all the facts before I have a go at what I’m going to decide upon”.
“I’m seeing others making comments from other political parties and I’m just scratching my head and wondering on what on earth they’re basing those statements, because it cannot be on the evidence, on the facts, and with the latest information.”
The new ferries have been promised to arrive in 2029, but Peters was optimistic it could be sooner.
“I have thought the end of 2029 is easily obtainable, and maybe earlier.”
Peters has already been doing work behind-the-scenes in the past twelve months since Willis cancelled the iRex project, having conversations with potential ferry-building companies about the options.
“Have I had some of those conversations? Yes, I have, confidentially and quietly trying to find out what on earth has been going on downtown.”
He anticipates having a solution “well before the end of March” deadline.
Peters has been the Minister for Railways in a former political life and said the experience of 40 years doing “legwork on railways”, seeing two privatisations he called a “disaster, and seeing the government buy the services back twice, has prepared him well to “hit the ground running – not learning on the job so to speak”.
In a press release from Luxon yesterday announcing Peters as Minister for Rail he said: “Given Mr Peters’ experience and expertise I am confident he will ensure this project delivers in full, on time and under budget”.
Asked if National was washing its hands of the replacement project and putting the future success or failure of it squarely in his hands, Peters confirmed he was fully responsible “as I was between 2017 and 2020 when we did some marvellous things”.
“I’m very confident going forward we can do everything that the Prime Minister has said, in fact I perhaps wrote that myself.”
Peters confirmed he helped draft Luxon’s comments but denied he had written the more flattering remarks.
“No, I didn’t put it that way, he just put it better than I did.
“I just had it oozing modesty, but he’s changed it.”