Photo source: Wikimedia Commons
The New Zealand government has unveiled plans to replace the ageing Cook Strait Interislander ferry fleet by 2029, promising a more efficient and reliable service connecting the North and South Islands. The announcement, made by Finance Minister Nicola Willis and newly appointed Minister for Rail Winston Peters, displays a major shift in strategy compared to the previous iRex project while leaving some critical questions unanswered.
A Crown-Owned Company to Spearhead the Project
At the heart of the plan is the creation of a new Crown-owned company tasked with procuring two purpose-built ferries. The company, structured under Schedule 4A of the Public Finance Act, will also oversee coordination with KiwiRail, port authorities, and other stakeholders to ensure a smooth transition. Shareholding responsibilities will fall on the Ministers of Rail, Finance, and Transport.
“This decision will ensure New Zealand has a safe, reliable, and resilient service to move people and freight between the North and South Islands,” Willis said. However, the government has kept the project’s cost under wraps, citing commercial confidentiality during ongoing procurement and landside infrastructure negotiations.
Replacing the Ageing Fleet
The new ferries are set to replace the three existing Interislander vessels, which are approaching the end of their operational lives. Willis emphasised that the new ships would be larger and tailored to meet New Zealand’s unique requirements, ruling out secondhand purchases as unsuitable.
The projected operational start date of 2029 is significantly further down the line compared to the now-cancelled iRex project, which aimed to have two rail-enabled mega ferries operational by 2026. Labour’s iRex project, originally budgeted at $775 million, ballooned to an estimated $3–$4 billion, driven largely by the need for extensive port upgrades in Wellington and Picton.
By leveraging existing infrastructure, the government aims to reduce costs significantly. “a funding envelope has been established and the costs are expected to be much less than would have been the case with Project iRex,” Willis said, although critics argue the long-term costs of this strategy remain uncertain.
A Return to Rail Advocacy
Winston Peters’ appointment as Minister for Rail marks the re-establishment of a dedicated portfolio for the sector after more than 30 years. Prime Minister Christopher Luxon expressed confidence in Peters’ ability to oversee the ferry replacement project and improve KiwiRail’s performance.
Given Mr Peters’ experience and expertise, I am confident he will ensure this project delivers in full, on time and under budget,” Luxon said.
Peters, who previously held oversight over KiwiRail as Minister of State-Owned Enterprises (SOEs) from 2017–2020, has a history of championing rail investment. In his announcement, Peters referenced historical figures and projects, emphasising rail’s strategic importance to the nation.
A Divisive Decision
The new ferry plan has ignited political debate. Labour finance spokesperson Barbara Edmonds criticised the government’s decision to cancel iRex without a clear alternative.
“[Nicola Willis] has taken a whole year to come up with smaller ferries that are going to cost the country more money in the long run,” Edmonds said. She argued that the portside infrastructure upgrades required for the new vessels would still need to be funded eventually, creating financial burdens for future taxpayers.
Green Party transport spokesperson Julie Anne Genter was similarly critical, describing the decision as “catastrophic” for the country’s rail network. The Hyundai order for two rail-enabled ferries for $550 million was “one of the best deals the country ever signed up to,” Genter said, lamenting the delay in delivery until 2029.
Conversely, ACT Party leader David Seymour welcomed the government’s approach. “Taxpayers are the winner from today’s Cook Strait Ferry announcement,” he said.
Lingering Uncertainty
The government’s refusal to disclose the projected cost of the new ferries has drawn widespread criticism, with some describing the announcement as an “announcement of an announcement.” While Willis has assured that costs will be significantly lower than those associated with iRex, the absence of detailed financial projections has left stakeholders sceptical.
Additionally, the question of whether the new ferries will be rail-enabled remains unresolved. Willis confirmed that rail freight capabilities would continue to operate regardless of the ferry design, but industry experts and advocates argue that rail-enabled ferries are essential for integrating New Zealand’s intermodal transport system.
Stakeholder Reactions
KiwiRail CEO Peter Reidy welcomed the announcement, and highlighted the need for collaboration between all parties to ensure a smooth transition. “The specifications that the Government has indicated mean the ships will be larger than the current ships, so there will be room for future growth,” Reidy said.
However, others were less optimistic. Mainfreight managing director Don Braid described the announcement as a “holding pattern” rather than a decisive plan. “It’s not an announcement, it’s a holding pattern until March,” Braid said, referencing the expected timeline for final procurement decisions.
Historical Challenges
The iRex project’s downfall has cast a long shadow over the new ferry plan. Initially celebrated as a bold vision for modernising Cook Strait transport, iRex became mired in controversy as costs spiralled out of control. A significant portion of the budget overrun was attributed to unforeseen complexities in upgrading port infrastructure.
Peters has been quick to distance himself from the previous project, describing its management as “haywire.” Now tasked with revitalising both the ferry replacement and KiwiRail’s operations, Peters has vowed to apply stringent oversight and avoid repeating past mistakes.
What Comes Next
The new Crown-owned company will report back to the government in March 2025 with the results of the first procurement stage, including any private sector proposals. This milestone will set the course for final decisions on ferry specifications and associated infrastructure investments.
Meanwhile, port authorities in Wellington and Picton are resuming discussions on infrastructure needs, while local councils are beginning preliminary work on cost assessments and design plans.