Transport Minister Simeon Brown

The problems at KiwiRail go further and deeper than the maintenance issue, which caused the inter-island ferry Aratere to run aground on Saturday.

The company is also the subject of a damning report published last week about the way it runs its rail operations from the Transport Accident Investigation Commission.

Meanwhile, there is confusion—or obscurity—about whether the Government has actually cancelled the two mega ferries that KiwiRail proposed to replace the present ageing fleet.

Prime Minister Christopher Luxon yesterday said that the Government now had recommendations on how to proceed with commissioning new ferries after the announcement last December that the two “mega” ferries were to be cancelled.

However, government ministers have persistently refused to confirm that the contract to build them has been cancelled.

That means that work on them has continued.

Any hope that a quick purchase of a second-hand ferry might plug the gaps has been dashed by KiwiRail executives, who POLITIK understands have told the Government they can find no suitable second-hand ship.

Starting from scratch to design and build new ferries- as Luxon said yesterday, that was what could happen- means that the first might not arrive for at least another five years.

That is despite numerous reports over the years saying the present ferries would become increasingly unserviceable from next year.

That then leaves open the possibility that the only alternative might be to proceed with the ferries which were supposed to have been cancelled.


They appear not to have been, and work seems to have continued on them.

In answer to a recent Parliamentary question, State Owned Enterprises Minister Paul Goldsmith said for the first ship, “the four generator sets (diesel engine and alternators), frequency converter for azimuth thruster system (propulsion), and azimuth thruster mounting seats had been built, tested, and accepted.”

And: “For the second ship, all four alternators were built, tested, and accepted. The Safety Management and Control System for both ships had been tested and accepted. The dockyard also blasted and primed some metal for later stages and produced five plates.”

In a series of written questions, Labour Christchurch Central MP, Duncan Webb, pressed Goldsmith as to whether the contract had actually been cancelled.

On April 30: Webb: Has the contract for the purchase of two new ferries by Kiwirail from Hyundai Mipo Dockyard been cancelled?

Goldsmith: “KiwiRail is still in discussions with Hyundai Mipo Dockyard, as it announced on 14 February 2024. A further announcement will be made once these discussions have concluded.”

On May 14: Webb: Is the government committed to the cancellation of the two new ferries by Kiwirail from Hyundai Mipo Dockyard?

Goldsmith:  I refer the Member to the answer to Written Question 9201. (That is his April 30 answer).

On May 23: Webb: Has the contract for the two new ferries purchased by Kiwirail from Hyundai Mipo Dockyard commenced, if so when and has it subsequently been paused?

Goldsmith: I am advised that KiwiRail signed a contract with Hyundai Mipo Dockyard on 30 June 2021. For the second part of the question, I refer the Member to the answer to Written Question 9201. (That is his April 30 answer).

Webb’s fellow Labour MP, Tangi Utikere, raised the question of whether work was continuing at last Thursday’s select committee “Scrutiny” hearing with Transport Minister Simeon Brown.

Utikere: “My question to you was whether or not you were aware as to whether the company is in the process of continuing with the construction of the two vessels that were on order by the New Zealand government.?”

Brown: “What I’m aware of is that they have particular components of the construction materials, and determining what makes that do I want to ultimately, that’s the commercial imperative of that company as to what they do next.”

So, has the contract now been cancelled?

It has to be concluded that so far it has not.

One informed source told POLITIK that the contract has not yet been cancelled because the so-called “break fee” was so large that it would be more economic to continue building the ships. If they weren’t taken delivery of, they could then be sold.

Otherwise, starting again by designing and building two smaller vessels could delay their arrival for another five years after repeated reports have warned successive governments that the existing ferries would become difficult to maintain after 2025.

That design and build process could take at least  five years.

By that point, all three current ferries will be well past their use-by dates, with the attendant safety risks that might entail.

And with that, KiwiRail will face an increasing maintenance bill.

POLITIK Labour Transport spokesperson, Palmerston North MP, Tangi Utikere

Brown claimed to the Scrutiny Committee that though maintenance had been poor in the past, KiwiRail had now stepped up and things were improving.

(That was on Thursday before Aratere went aground on Friday night).

“They have in recent months been improving their maintenance protocols, significantly from the the poor maintenance protocols that they had in the last few years, because they understand, and having had impressed upon them the importance of having a well maintained Cook Strait theory, which, has not been the case in the last few years,” he said.

However he was not prepared to disclose what the maintenance bill might be. 

supplied The Aratere aground on Saturday

None of these issues have emerged overnight, and the previous Government will have to bear a substantial share of the blame for what has happened.

But the incident in the Sounds on Saturday will mean the coalition government will have to apply some urgency to the ferry situation and more generally to an overhaul of the internal practices and culture of KiwiRail.

There may have been a hint that the message is finally getting through with yesterday’s announcement that not only is the SOE’s chair, David McLean, to retire, but its shareholding Ministers are promising a board “refresh.”

However, there are suspicions within the opposition and New Zealand First that Luxon might try to use the current ferry situation to break KiwiRail up so that bits (like the ferries) could be partly privatised.

But defending KiwiRail will be a challenging task.

An indication of the core problems the SOE might have come in a Traffic Accident Investigation Commission report last Thursday.

The investigation was into the derailment of a train was travelling from Kawerau to Tauranga in January last year after heavy rain with flooding.

The train drove at about 60km/h along a section of track with floodwater crossing it. The emergency brake activated automatically, and the locomotive stopped.

Eleven wagons had derailed and lay strewn, some overturned, with disgorged freight in a chaotic pile across fields on either side of the track.

Chief Accident Investigator Naveen Kozhuppakalam said the train had been cleared to travel on this section of track.

“But it shouldn’t have been,” he said.

“The previous day, the same train crew told Train Control that they saw high water at what became the accident site, but they did so unclearly, and the track inspector inspected the wrong location.”

The problem appeared to originate within KiwiRail’s Train Control centre.

When the train crew radioed in about the high water, Train Control repeated back to the crew, “East side of Te Puke.”

The crew replied, “Yer roger the Mount side of Te Puke are all getting high”.

Kozhuppakalam’s report noted that the Mount is west of Te Puke, not the east.

Thus, the track inspector inspected to the east of Te Puke rather than the west, where the water was above the tracks.

The investigation found that KiwiRail’s response to adverse weather conditions was not fit for purpose and was not consistent throughout New Zealand’s rail network, increasing the risk of a rail accident occurring.

“The training given to locomotive engineers and other rail personnel on the procedures for reporting and receiving unusual weather-condition information was inadequate,” said the report, and it found that even after being advised of this, KiwiRail had taken no action to address this safety issue.

supplied Retiring KiwiRail chair, David McLean

KiwiRail is in for a shakeup, with both the report and the grounding pointing to fundamental problems within the organisation.

That may explain why Finance Minister Nicola Willis and Goldsmith issued a press statement yesterday promising to “refresh” the KiwiRail board.

As an SOE, KiwiRail is governed by its Board. As Ministers, we exercise our influence through our appointments to the Board and the expectations we set for it, Willis said.

“Unrelated to the Aratere incident, we can confirm that on Wednesday, KiwiRail Board Chair David McLean advised us of his intention to retire early, effective from July 31.

“His term was due to finish at the end of October.

“We will now conduct a search for his replacement and are considering additional changes to further refresh the KiwiRail Board.”