Wed, Dec 13, 2023 4:47 PM
A lack of funds means plans to further develop a KiwiRail led project for new ferry terminals has been derailed.
The Inter-Island Resilient Connection (iReX) project needed an extra $1.45 billion in the wake of rising costs.
But a bid to secure extra funds has failed, it was revealed this afternoon.
The project, which aimed to futureproof the Cook Strait crossing, will now be wound down.
“The KiwiRail Board was yesterday advised by the Government that it has decided not to provide further funding for the Inter-Island Resilient Connection (iReX) project”, said KiwiRail Chair David McLean
“Unfortunately, we cannot proceed without further Government funding. We respect the Government’s role as shareholder and funder to make this decision”.
The KiwiRail led project, which experienced cost inflation developing both Picton and Wellington Kaiwharawhara Terminals, has been denied an extra $1.45 billion of funding by the National-led Government to go towards the harbourside facilities for the new mega-ferries, which were scheduled to arrive in 2026.
This decision now means that future of the upgraded ferries being built promised to fix persistent issues with the Interislander ferry fleet and streamline cross-island travel, are unsure - as well as the regeneration of the ferry terminals.
Finance Minister Nicola Willis said due to how iReX’s costs have blown out, the incoming Government doesn’t have confidence in funding the existing planned project further.
”The Government remains committed to a resilient, safe and reliable Cook Strait connection, but the cost of this project has almost quadrupled since 2018 to approximately $3b,” she said.
”Furthermore, agreeing to KiwiRail’s request would reduce the Government’s ability to address the cost pressures that are impacting on New Zealanders, fund other essential projects and get the Crown’s books back in order”, she continued.
”We want a resilient, safe and reliable Cook Strait service and we are committed to ensuring that is available to New Zealanders.”
KiwiRail’s board will now transition to the wind down of the project and reviewing future Cook Strait connection plans.
“The Board acknowledges the disappointment of our team and stakeholders involved in this project", continued David.
"We sought a strong outcome for New Zealand through this project for a more resilient State Highway 1 across Cook Strait for exporters, domestic freight forwarders, tourism and domestic commuters”.
David said KiwiRail will continue find a way forward, but “an alternative suitable long-term solution could take years to develop”.
“In the interim, KiwiRail will continue to invest in the safety and reliability of the existing Interislander fleet, through strong asset management practices”.
The Government said that to date $435.1 million of Crown funding has been appropriated for the project, of which approximately $63 million remains.
Marlborough Mayor Nadine Taylor said she is shocked and disappointed by the news that KiwiRail is cancelling the iReX project.
She said while the decision will not directly impact Marlborough’s ratepayers financially it will have an impact on New Zealand’s long term inter-island infrastructure.
“This will come as a particular shock to the Picton community who are most directly affected by this decision. The town has been very engaged in the new ferries project and have been a great supporter of it.”
“A large number of workers had been expected to work on the iReX project over the coming years.
“I want to emphasize to Kiwis and overseas travellers that Picton is open for business. The Interislander and Bluebridge ferries are working as normal across Cook Strait.”
“I would like to sit down with the new Government and talk through what the future looks like for our inter-island infrastructure. There is no doubt that we need to invest in this national transport connection for the long term. The question now is how and when we will do that.”
The Mayor said Port Marlborough, which is wholly owned by Marlborough District Council, has robust agreements in place with KiwiRail that require the completion of early works at the port of Picton and the reinstatement of any affected assets.