THE INADVERTENT revelation of some details of New Zealand’s Cook Strait ferry replacement program has led to accusations of misleading behaviour by the government and its special-purpose company established to manage the project.
Last week, freedom-of-information applications by Wellington-based online publication The Post revealed the Ferry Holdings Ltd replacement ferry program was already over budget and that’s without finalisation of costs and arrangements at terminal ports Wellington and Picton.
"The current cost estimate has hit NZ$1.867 billion, already exceeding the $1.7bn Crown-tagged contingency approved by Cabinet in March 2025. The government is relying on council-owned ports to plug the gap, but the amounts are unknown or not yet approved by ratepayers,” the publication reported. The government says the figures are inaccurate.
However, the FHL briefing to the NZ Treasury was briefly posted on-line late last week and when reproduced on social media, redacted sections were easily removed. The document was then taken off-line.
The Post has reported that the figure of NZ$596 million for the pair of Chinese-built rail/ro-paxes, heavily promoted by rail minister Winston Peters, covers only the fixed-price ship contracts themselves, with expected cost overruns built into the wider project budget.
Delivery costs, contingencies and currency movements amount to a further $120m, and there is a $241m infrastructure contingency. Treasury noted there remained only $30m of ‘headroom’ in the project budget before it breached the government’s absolute $2bn cap.
Treasury then warned the government that considerable uncertainty remained over how much of the terminal costs would be agreed by CentrePort Wellington and Port Marlborough, with FHL committing only to a ‘minimal level’ of transitional infrastructure, despite Picton in particular facing a complex series of berth shuffles for both KiwiRail and StraitNZ’s Bluebridge.
The exposed briefings also detailed how KiwiRail itself described the replacement project as “not an economic option” for the government-owned company, disagreeing with consultants’ financial modelling that underpinned the government’s costings. The consultants replied the modelling was based on KiwiRail’s own figures.
FHL was established by the NZ Government to take over the procurement of the new ferries after it forced KiwiRail to abandon the iReX project in December 2023 due to cost overruns. Accordingly, Mr Peters and the government have been at pains to position their plan as saving taxpayers millions of dollars. At time of writing there had been no government reaction to the exposure of the unredacted information.
The new Guangzhou Shipyard International-built rail/ro-paxes are not due to enter service until 2029 whereas, under iReX, the first proposed vessel would have been delivered this year.
Cook Strait service have been in peak season chaos lately, with KiwiRail’s Kaiārahi out of service for over a week awaiting spare parts and Bluebridge’s Connemara cancelling voyages due to technical issues.