Category: Kiwirail

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Kaitaki sentencing underscores need for new ferries

Source: Maritime Union of New Zealand

The sentencing of KiwiRail today for a 2023 incident on the Kaitaki interisland ferry highlights the urgent need for replacement ferries, says the Maritime Union of New Zealand.

KiwiRail was fined $432,500 for a charge under the Health and Safety at Work Act brought by industry regulator Maritime New Zealand, following loss of engine power on the Interislander ferry Kaitaki on Saturday 28 January 2023. 

Hundreds of passengers and crew were left adrift on the ferry in severe weather conditions and a ‘May Day’ call was issued as the ferry drifted towards the Wellington coast, before power was restored.

Maritime Union of New Zealand National Secretary Carl Findlay says the failure should never have happened. 

“It’s pretty clear that this is a failure by KiwiRail to do some basic maintenance. They’ve copped that and so they should.

“But you can’t look at this without the bigger picture. This is critical infrastructure that is ageing out and has been underfunded by successive governments for years.

“As far as MUNZ is concerned the last government’s plan to replace this fleet with the iRex project was already coming later than it should have.

“The cancellation of the new ferry deal by Minister of Finance Nicola Willis has put us back to square one at massive expense to the taxpayer. It’s gross negligence.

“The Government must provide a plan and a timeline for safe, publicly owned and rail enabled ferries as soon as possible.

“If they don’t. it should be them standing in the dock if this kind of failure happens again.”

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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.

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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.”

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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.

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Ferry debacle means New Zealand is ‘steering blind’

Source: Maritime Union of New Zealand

Confusion around the future of KiwiRail’s Cook Strait ferries has left New Zealand ‘steering blind’ with its main inter island transport link, says the Maritime Union.

The latest development in the ferry saga is a suggestion in ministerial documents that KiwiRail might exit the Cook Strait ferries altogether if it is commercially unviable without subsidy.

Briefing documents from the Ministerial Advisory Group and Ministry of Transport have been released to the media under the Official Information Act.

Maritime Union of New Zealand National Secretary Craig Harrison says this scenario is deeply concerning and shows the Government has dropped the ball on transport.

Mr Harrison says he is surprised no one in the Government could foresee the consequences of cancelling iRex project funding last year.

“Within a few months we have gone from looking forward to modern ferries and fit for purpose terminals that would support our economy and producers for decades, to the future of interisland transport and everyone who relies on it being in free fall.”

He says while Strait Shipping currently offer ferry services that complement KiwiRail ferries, the scenario of putting the entire connection in the hands of a single overseas-owned monopoly would be a grave error, and would probably not be viable.

“The idea there is some magic market solution is not credible, because any operator will still have to source and pay for suitable vessels.”

He says the primary focus of interisland ferries should be their importance in the supply chain and the national economy, which included rail capability.

“The Cook Strait is part of the ‘blue highway’ – an extension of our national road and rail links.”

Mr Harrison says the current ferries are nearing end of life and are experiencing ongoing maintenance issues, with potentially catastrophic outcomes.

Interisland ferry Kaitaki lost power on its approach into Wellington Harbour on 28 January 2023, and was left drifting towards the coast in heavy weather with more than 800 passengers and 80 crew on-board. It issued a mayday before managing to restart engines and returning to port.

KiwiRail is now facing a health and safety charge relating to this incident brought by regulator Maritime New Zealand.

“Continuing to lease second hand vessels would still be costly, and mean there will still be ageing ferries on Cook Strait, increasing the risk of mechanical failure, delays, maintenance costs, and safety risks.”

Mr Harrison says the costs of cancelling the project at Korean shipbuilders Hyundai has not yet been confirmed but could run into hundreds of millions of dollars.

A suggestion by KiwiRail that the ferries be built, then on sold in order to try and recoup some of the cost of the cancelled project, was quashed by the Minister of Finance.

However, it has been reported the new Ministerial Advisory Group on the ferries has suggested this could be a potential option to avoid a massive financial loss.

Mr Harrison says further drawbacks include the failure to move to new low-emission technology and the implications for our climate change response.

Globally-recognised Climate Bonds Initiative certification issued to KiwiRail for a $350 million green loan has been revoked due to the cancellation of the ferry purchase.

The Maritime Union view is the Government should review the entire decision to cancel the new ferries and new terminals, says Mr Harrison.

“There is an opportunity to revisit the project, seek cost savings if required, then get on with the only responsible course of action which is a fit for purpose Cook Strait ferry link with modern vessels and terminals.”

He says it is now clear that planned tax cuts are not feasible as essential infrastructure investment has to take priority.

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Prosecution exposes lack of Government ferry plan  

Source: Maritime Union of New Zealand

The Maritime Union is calling on the Government to review its decision to dump planned new Cook Strait ferries after the prosecution of a ferry operator.

Industry regulator Maritime NZ has filed a charge under the Health and Safety at Work Act against KiwiRail this week in relation to the January 2023 loss of propulsion incident involving the Interislander ferry, Kaitaki.

The Kaitaki lost power on its approach into Wellington Harbour on 28 January last year, with more than 800 passengers and 80 crew on-board. It then issued a mayday. After regaining limited power, the ferry made its way to port where its passengers were able to safely leave it and come ashore.

Maritime Union of New Zealand National Secretary Craig Harrison says the most important sea link in the country is in jeopardy.

“We have a ridiculous situation where the Government regulator is having to prosecute a State owned enterprise for ferry problems, but the Government has just cancelled new ferries that would solve the problem.”

He says Maritime New Zealand is simply doing its job, but KiwiRail has been placed in an impossible position by the Government due to long term underfunding. 

“The real issue here is historic underinvestment in ferries and coastal shipping over several decades, which has led to a crisis point in the safety and reliability of our supply chain.”

Mr Harrison says two new modern ferries and new terminals had been planned as part of the iRex ferry upgrade project, but were effectively cancelled in December 2023 when the new Government withdrew support for the project.

“The decision by the Government to walk away has left a credible solution to the ferry issue in limbo.”

Mr Harrison says the current Interislander ferries are at their end of life, and replacing them with other ageing vessels was just kicking the can down the road.

He says it would be unacceptable if State Highway One was allowed to fall to pieces, yet the ‘blue highway’ of Cook Strait was an extension of our main road and rail links.

Mr Harrison says the possibility of another serious incident is very real despite the best efforts of KiwiRail. 

He says failure to modernize this essential infrastructure leaves New Zealand exposed to further delays, service outages, expense for industry, and safety issues, with our main inter-Island connection. 

A review of the ill-judged decision to cancel the iRex project needed to take place, he says.