How New Zealand Saved $2.3B with a Smart, No-Nonsense Ferry Solution

Good afternoon. Thank you, Lachie, for the introduction.

And thanks to CentrePort for having us here.

We selected this site as it was the scene of the iReX pyramid scheme. This was one of two large spaces rented for Project iReX. By contrast, the new Ferry Holdings office is so small that there isn’t room to host you there.

That is because we have shifted from ‘wasteful spending’ to ‘waste not, want not.’ It is good to see various leaders here today, including rail and maritime unions, iwi, and the chairs, chief executives and team members of CentrePort, Port Marlborough, and KiwiRail. These ferries are for all New Zealanders, and we appreciate the support for commonsense.

Marlborough Mayor Nadine Taylor, Wellington Mayor Andrew Little, Greater Wellington Chair Daran Ponter, welcome and thank you for being here.

Chris Mackenzie, Heather Simpson, Greg Lowe, Katherine Rich, Captain Iain McLeod and the entire Ferry Holdings team, thank you. New Zealand owes you a debt of gratitude.

And thanks extends to the pragmatists from CentrePort, Port Marlborough, and KiwiRail too. To the teams gathered today: a genuine, heartfelt thank you for your work. My reputation is the beneficiary of your work.

These teams picked up a clarion call for fiscal discipline, without compromising on the ships and infrastructure New Zealanders want and need.

At our behest, and then with Cabinet’s support, we safeguarded the long-term future of the Interislander, preserved rail on the Strait, and saved the taxpayer billions.

In fact, we have saved the taxpayer $2.3 billion.

Ferry Holdings, the ports and KiwiRail have agreed to the programme of work to be delivered by 2029. The programme will be less than $2 billion, but the taxpayer contribution is within the $1.7 billion Cabinet allocated when we started our no-nonsense ferry solution.

That is $2.3 billion less than the $4 billion cost explosion Treasury warned of in 2023, after project managers pushed egregious, wasteful and unnecessary scope into the infrastructure programme.

And before the apologists start saying the cancelled ferries would have been here in 2026. No major construction contracts were entered under iReX, but they still said they could complete work in 2026 within two years. They were in La La Land.

It could not be done. We would have ended up, as they have in Tasmania, where ferries arrived long before the infrastructure was ready. The Tasmanian Devil was in the detail all along.

Instead, we have brought this back to the programme we agreed in 2020, before the Labour Party went away with the ‘ferries’, so to speak.

Two new ferries, replacing infrastructure where it is needed, but keeping infrastructure where it can be kept – with three years of build programme.

We will rebuild the marine infrastructure in Picton and Wellington but keep the assets that still have life left in them, and make use of the yards, buildings, and road and rail infrastructure. That saves billions.

We know this will work because the idea came from the ship masters’ union and has been assiduously tested by the ports; people in the practical business of ship and freight movement, not boffins and bean counters.

Ask yourself, who is more likely to deliver value for money, safe services, and a viable business: the people whose livelihoods are on the line, or the expensive contractors who hijacked the iReX project?

This is not a free-for-all either. Interislander is a commercial business operating in a competitive market. Funding put in by the ports and Ferry Holdings will be recovered over the 30-year life of the ferry and infrastructure assets, through port fees paid by Interislander revenue. Interislander revenue will also need to build sufficient reserves to buy new ferries in thirty years.

When this basic principle of business is taken into account, it brings into stark relief why a no-nonsense ferry solution is the only way forward. If we lumped in high costs, like they sought to do in iReX, then it will ultimately flow on to New Zealanders through higher Interislander fares.

By keeping costs low, we have saved the Interislander for road and rail and kept costs to an economic minimum for you, the consumer.

Oh and by the way, that is why we are staying in Picton and not going to Clifford Bay. Their own estimates say their project will cost $900 million, while works in Picton are a bit over $500 million. The higher the cost, the more expensive the Interislander ticket.

Instead, we thank the two ports for their willingness and straightforward approaches. We know that this attitude will be expected from the major construction contractors who will soon be joining this project: programme and cost efficiency will win those construction contracts, so put your best foot forward.

And we are still buying what New Zealanders want: two new ferries.

We are buying exactly the type of ferries people want: big enough to carry freight and families for the next 30 years, designed for comfort and freight capacity, and meeting modern safety requirements.

We will enter a new era of ship quality on the Cook Strait with these new ferries.

They will have road and rail decks. We have never wavered in our support for rail. It is not an anti-truck position, is it simply commonsense. If rail cannot haul heavy industries, then thousands of trucks as heavy as a small house would. More of those means more trucks adding road costs, road works, and road cones.

We are about balance: road and rail. We are about commonsense: using what New Zealanders built to benefit New Zealanders, not leaving rail to waste on the side of the road.

And the fixed price for these two ferries is $596 million, just a fraction more than the cancelled ferries with its famously good price – not hundreds of millions more as the naysayers have been shouting for months and months.

We have also secured a ship builder of serious quality.

Guangzhou Shipyard International is the largest modern integrated ship building enterprise in Southern China. They received the highest overall rating through Ferry Holdings’ competitive tender process, impressing with their technical expertise and ability to deliver on time and on budget.

Next week, we will travel to Guangzhou with the Ferry Holdings Chair and Ships Programme Director to acknowledge this significant agreement, not just between the shipyard and Ferry Holdings but also as a significant contribution to economic relations with China.

Finally, we intend to move forward.

Despite the risible attempt to turn iReX into a pathway to prosperity for the consultant class, hijacking a project founded on prudency in 2020; we saw through them, we kicked them out, and we took control again.

We saved $2.3 billion in the process, retained rail ferries, and have now secured the ferry contract and the path to completion in 2029. We did what we said we would do.

Work has already started. KiwiRail retired the Aratere, making way for the demolition and rebuild work. CentrePort has already built the laydown area, and they have a barge on site. Port Marlborough is about to start demolition works on the Aratere linkspan to make way for the new infrastructure.

This is a programme with real energy and excitement behind it. That focus will carry the day, because on this occasion: commonsense won.

We are, after all, charting the same course as those who came before us, albeit on new tides and with the pragmatists at the helm once again.

Thank you.