The Government has announced a major cost-saving achievement with the Cook Strait ferry replacement programme, revealing two new ferries will be delivered under budget and enter service in 2029. The $596 million fixed-price contract has been signed between Ferry Holdings and experienced Chinese shipbuilder Guangzhou Shipyard International.
Rail Minister Winston Peters said the total programme, which includes new infrastructure at ports in Picton and Wellington, will cost less than $2 billion. This comes in well under the $1.7 billion budget allocation announced earlier in the year, delivering savings of $2.3 billion compared to earlier projections.
“Two new ferries serving road and rail will enter Cook Strait service in 2029, thanks to a $596 million fixed price contract between Ferry Holdings and experienced shipbuilder Guangzhou Shipyard International,” Mr Peters says.
“Spending less than $1.7 billion means the taxpayer has saved $2.3 billion while still getting the ferries and infrastructure they want, because we have done away with the expensive consultants who hijacked the project by adding more and more infrastructure until Treasury warned the project would cost $4 billion.”
He said the new approach focused on essential infrastructure only, structured like a business rather than a government project. “Funding spent on infrastructure will be recovered over the life of the new Interislander ferries and infrastructure through port fees paid from Interislander revenue, and Interislander will be expected to build sufficient reserves to buy new ferries again in 30 years – or put simply, structured like a normal business.”
Mr Peters acknowledged the work of all key parties involved, including Ferry Holdings, CentrePort, Port Marlborough, and KiwiRail.
“We extend our thanks to the Ferry Holdings board and management team and the pragmatists at CentrePort, Port Marlborough and KiwiRail who heard the clarion call for fiscal discipline to secure the Strait.”
He confirmed Ferry Holdings would take the lead on infrastructure development, supported contractually by the port companies and KiwiRail. Measures will be taken to reduce disruption to both Interislander and Bluebridge ferry services during the construction phase.
“Ferry Holdings will be in the driving seat for the infrastructure, ably and contractually backed by CentrePort, Port Marlborough and KiwiRail, and accommodations will be made to minimise disruption to Interislander and Bluebridge.”
Mr Peters also announced a planned trip to China next week. “Next week we will travel to Guangzhou with the Ferry Holdings Chair and Ships Programme Director to acknowledge the significant agreement, not just between the shipyard and Ferry Holdings but also as a contribution to economic relations with China,” he says.