Yesterday, the coalition showed the first real public signs of cracks, as Ministers and the Prime Minister spent the day contradicting each other over the future of the inter-island ferries.
The cracks between ACT and New Zealand First have always been there.
But what made yesterday’s exchanges different was that they involved the Prime Minister and subtle criticisms of him.
In the background is the fundamental issue of whether the ferries will be “rail enabled”, which may well be a bottom line for New Zealand First leader Winston Peters.
Peters may find an ally in Napier Port, which has commissioned an economic study showing that moving the ferry terminal to the present Wellington container port would reduce construction costs and also trim back likely losses from the current container operation.
But yesterday, Peters had to contend with Prime Minister Christopher Luxon repeating that the ferries would be “rail compatible,” which means freight would be unloaded from trains, placed on trucks for the voyage across the Strait and then reloaded back onto trains.
Speaking to the media in Levin, Luxon emphasised that the Government had a solution ready to go, but Peters had until the end of March to come up with his own solution.
“We’ve got a good option in place, and if we can improve on it between now and the end of March, which is the window we still have before, we have to ultimately make a procurement decision and get that process up and running, you know. More power to him,” Luxon said.
Peters, however, interpreted his new role as Minister for Rail slightly differently.
He told “The Post” yesterday that everything was now on hold.
“Those plans are all on hold. There’s a new minister – well, the old Minister’s come back,” he said.
“We’re starting as fresh as we can, and we’re on day one.
“There are far more viable propositions that are yet to be considered.”
There were other problems.
Willis had said on Wednesday that the project’s funding envelope was commercially sensitive, but ACT leader David Seymour said on Wednesday that it was about half of the cost of the ferry project that the Government cancelled last December.
That estimated cost then was $3 billion so Seymour is suggesting that the total budget for the new ferries would now be $1.5 billion.
Seymour’s comment received an icy response yesterday from the Prime Minister.
“I’d just say to you, David Seymour is not the Minister for Rail,” he said.
When asked yesterday on RNZ’s ‘Morning Report’ if the Government had a sum in mind, Peters said it would be “stupid” and “imprudent” to name the price.
“I said on Wednesday] it would be most imprudent, politically and business-wise, stupid, to start saying what you’re going to buy them for because that’s the bottom line. They’ll start from there, and up it will go.”
He rejected Seymour’s statement that the new deal would cost a “fraction of the price” of the iRex project and that private investment would remain on the table.
“You’re talking to the minister in charge now, not the one that’s not in charge.”
In December 2023, the landside development of new terminals was $2.3 billion of the total ferry cost.
The problem in Wellington was the need to upgrade the Kaiwharawhara terminal, given the ongoing new seismic information supplied by GNS after the 2016 Kaikoura earthquake.
In documents submitted to the Environmental Protection Authority in 2022, engineers Tonkin and Taylor said earthquakes represented the greatest natural hazard risk to the terminal site, “with a maximum risk rating of “Very High”.
After that report, KiwiRail doubled the cost estimate for the Kaiwharawhara terminal.
That has subsequently increased by another 25 per cent.
There were always two other alternatives: Kings’ Wharf, which was much closer to the city but opposed by a wide range of entities because it could potentially interfere with other activities in the inner harbour if it were to become a ferry wharf.
There was also the container wharf operated by CentrePort, which is owned by the Greater Wellington and Horizons (Manawatu) Councils.
That was originally favoured by KiwiRail in 2020.
Daran Ponter, the chair of the Greater Wallington Council, wrote to then-Finance Minister Grant Robertson in May of that year, complaining about KiwiRail’s hard-hitting approach.
He revealed that KiwiRail CEO Greg Miller had told him in a meeting that KiwiRail locomotives might no longer be available to support the movement of CentrePort containers and log freight trains.
Ponter said the significant threat to CentrePort operations posed by KiwiRail’s bullish and unsubstantiated proposals compeled him to highlight a number of issues.
He said the proposal would seriously compromise CentrePort’s container operations.
“It is likely that the container operations would cease altogether to make way for railyards associated with the rail ferry,” he said.
He also said it would provide no seismic benefits over the Kaiwharawhara location.
But what is also revealing about Ponter’s letter is that he told Robertson that “Greater Wellington has been informed that KiwiRail is looking to go down the “shovel ready” path to unilaterally pursue its preferred option under some form of compulsory acquisition, which would involve the loss of the port’s container operations.”
In 2020, “shovel ready” referred to the $1 billion Covid infrastructure fund administered by NZ First Minister Shane Jones and announced on April 1 that year..
That would have meant the terminal would have been financed by Jones’ fund.
Jones and Peters were both close to KiwiRail’s Miller, and it was therefore not surprising that they may have been prepared to support his proposal for the terminal to be built on the container wharf.
But in December, KiwiRail buckled to the weight of the Council’s opposition and agreed to build the terminal at Kaiwharawhara.
In the meantime, using insurance money paid out after the 2016 Kaikoura earthquake damaged the container wharf, CentrePort rebuilt and strengthened it to bring it up to current seismic standards.
No seismic strengthening has yet been undertaken at Kaiwharawhara.
Then, in March this year, with the ferry project essentially back to square one after the cancellation, Napier Port proposed reconsidering the Container Wharf option and shipping Wellington’s containers through their port at Napier.
The proposal envisaged the Container Wharf being used by both KiwiRail and Blue Bridge.
The proposal pointed out that the Container Wharf was already configured for rail traffic.
However, Kaiwharawhara would require new rail tracks and a marshalling area, which the Container Wharf already has.
But the big selling points were that it had already been seismically strengthened and that Wellington’s share of the country’s container trade was dropping.
This was backed up in another report produced in October this year by the economic consultancy Informetrics, which showed that Wellington was the country’s seventh busiest port out of nine.
Six other New Zealand ports (including Nelson) shipped more containers than Wellington, which had only three per cent of the country’s total container traffic.
The NapierPort document says that CentrePort’s container wharf generated a negative return on capital investment and was kept afloat by cross-subsidisation from other Centreport activities.
The Napier proposal is now attractive because it offers what is likely to be a much cheaper option for rail-enabled ferries.
POLITIK understands that the New Zealand First Ministers, Winston Peters and Shane Jones, are closely monitoring it.
All Peters would say last night was that “all options are possible.”
That suggests it is likely to be one of the “far more viable propositions that are yet to be considered” that Peters discussed yesterday morning.
However, Luxon hardly sounded enthusiastic.
“What we’ve got is a great solution. We’ve got two rail-compatible ferries that we are ready to commence at the end of March. That means that those ferries can arrive here in 2029 when the old ferries actually timeout,” he said.
It is clear that Peters and Jones have been on top of the ferry replacement issue since 2020.
There are also hints that both are beginning to get frustrated with the Prime Minister’s “Christopher from marketing” approach to political issues.
Peters said on Wednesday that he didn’t have “this sort of dashboard crap that I see other people perform on and a 50-point plan, or a 100-point plan, or a quarter-year plan.”
He denied that he was talking about Luxon, but few believed him.
And Luxon, perhaps not knowing what Peters had said, appeared to vindicate him with a comment in a media standup in Levin.
“We’ve done 160 actions, I think, over the last 12 months, we’ve got 43 to close out before December 31,” he said.
“All of those actions are designed to do three things. To rebuild the economy, restore law and order and deliver better health and education.”
Peters, who first entered Parliament in 1978, does not do politics by numbers.
The ferry decision is now clearly a standoff between him and Luxon. And if what we have seen so far is anything to go by, it will be resolved through a political brawl within the coalition.
