Category: Interislander

Auto Added by WPeMatico

Posted on

Ferry fiasco hangs over PM’s South Korea trip

Source: Maritime Union of New Zealand

Sorting out the mess his Finance Minister has made of the interisland ferries deal should be the key outcome of the Prime Minister’s visit to South Korea, says the Maritime Union of New Zealand (MUNZ).

The cancellation of the deal, which has been under negotiation for eight months now, is expected to cost the taxpayer up to a half a billion dollars – a cost that comes on top of another half a billion dollars of sunk costs in the project.

MUNZ National Secretary Carl Findlay says the current state of limbo created by this failure is unacceptable. “It is astounding that more than a half a year after the Finance Minister cancelled this vital project there has been no resolution.

“It is bad enough that the government clearly had no plan B for the only rail-freight service we have on Cook Strait – the fact that we are still waiting for final cancellation or renegotiation of this deal is madness.

“Nicola Willis’ ferry fiasco isn’t just costing us money, it has put the kibosh on the biggest economic deal between South Korea and New Zealand in years, and risks souring relations between our countries. 

Prime Minister Luxon needs to use his much-vaunted international business experience to sit down with the South Koreans and find a way through this expensive fiasco as soon as possible.

“We have to get on with replacing the ferries we have. At best Kiwirail will be able to eke out another five years of service from them; it can take longer than that to design and build new ships. If the government doesn’t settle this cancellation soon, or renegotiate to get Hyundai to build new ferries, we will run out of time.

“That’s a huge and urgent threat to freight customers, our economy, and our international reputation.

“No matter what happens, the reckless decision to cancel the build contract, just days before the steel was to be cut for the hulls, has put New Zealand in a terrible position.

“We need the Prime Minister to call time on the situation, front up on the cost his government has put on us and work to get a contract struck for publicly owned, rail-enabled ferries immediately. 

The foolish decision to cancel a project that was more than six years in the making has cost us too much already.”

MUNZ is New Zealand’s largest Maritime union and is affiliated with more than 200 maritime unions internationally.

Posted on

Finance Minister needs to explain ferry decision cost to taxpayer

Source: Maritime Union of New Zealand

The Maritime Union of New Zealand says the cancellation cost for the iRex ship build is likely to come in at more than NZ $300 million, and could run up to a maximum cost approaching a half a billion dollars (NZD) at current rates. 

This would be on top of around a half a billion NZD in sunk cost on the cancelled iRex project – figures the Maritime Union has been advised on after consulting with the maritime industry here and offshore.

Maritime Union of New Zealand National Secretary Carl Findlay says the Finance Minister needs to explain how this happened and why she should keep her job. 

“This single decision is likely to have torched a billion dollars of taxpayer’s money with nothing to show for it. It’s fiscal arson.”

Mr Findlay says on top of this cost, New Zealand still needs to buy new ferries. 

He says unlike the iRex ferries cancelled by the Minister, which were purchased at a fixed price in 2021, their replacement will have to be bought at 2024 shipbuilding prices, which are currently at their highest since before the global financial crisis of 2008.

“Between that and our dollar being much weaker than it was when we struck the 2021 deal, the Government’s replacement ships could cost twice as much to build as the cancelled ones.”

Mr Findlay says industry players believe the Government is looking to hide some of this cost through a Private Public Partnership. 

He says we’ve seen time and time again all this would do is increase the expense, and shift it onto users and future taxpayers.

“Putting a private for-profit gatekeeper on the key freight route between our main islands is a recipe for economic disaster.

“Prime Minister Luxon needs to bite the bullet, try to salvage the iRex deal in whatever way he can, and admit the cost his Finance Minister’s commercial blunder has put on the taxpayer.

“He should also ask himself whether his Finance Minister should be left in charge of running our economy after making this colossal economic and commercial mistake.”

Posted on

Government ferry decision a case of political steering failure

Source: Maritime Union of New Zealand

The Maritime Union says the Government’s U-turn on purchasing new Interislander ferries is the predictable but costly outcome of flawed decision making.

The Government has said it is now looking at building new ferries again following the advice of the Ministerial Advisory Group.

Maritime Union of New Zealand National Secretary Carl Findlay says the grounding of the Aratere last week has now brought home the seriousness of the situation of our inter-island ferries.

“The iRex project for new ferries and terminals should have been reconfigured rather than cancelled outright.”??

He says the claimed savings by the Government do not stack up.  

“There needs to be an accounting of costs incurred up to now, including any break fees, a far higher price point for new builds ordered now, and a probable five year wait for new vessels to come into service.”

Mr Findlay says industry sources have suggested that the all up cost of the new builds could be up to $1.2 billion – more than double the $551 million cost of the vessels for the cancelled iRex project.

The current ferries will all be well over thirty years old by 2029. Maintenance costs have doubled on the ageing ferries to an estimated $65 million a year.

Mr Findlay says it is unacceptable that crew and passengers will be exposed to risk caused by failure to invest in ferries and infrastructure.

He expressed grave concern the proposed new ferries would not be rail capable.??

“This means double handling of containers, adding substantial costs for freight customers, delays and undermining the supply chain.”

Mr Findlay says none of this takes into account that the Picton and Wellington ferry terminals both still require modernization.

The Maritime Union says new ferries have to be rail capable and there needs to be a plan for terminal upgrades in both Wellington and Picton.