Interislander ferry: Government to set up expert advisory group

The government is seeking independent advice on KiwiRail's inter-island ferry service, after refusing to commit another $1.47 billion to replace three of its ageing ferries.

It has announced it will set up an expert advisory group to provide independent assurance on how to proceed with the ferry service.

The Ministry of Transport, supported by Treasury, is also being tasked with assessing the long-term requirements for a resilient connection across Cook Strait.

In a statement, Finance Minister Nicola Willis and State-Owned Enterprises Minister Paul Goldsmith said the group's membership would be finalised in the new year, after the plug was pulled on an earlier project to build two large new ferries and associate port infrastructure.

"The group will help to ensure that there are robust plans in place to support safe, resilient and reliable services in the coming years. The establishment of the group also recognises that the Crown has interests that may be wider than KiwiRail's commercial interests," Willis said.

She said she had met with KiwiRail's chair, who gave assurances that all options were on the table.

The two ministers had also met with representatives from CentrePort, Port Marlborough, the Marlborough District Council and the Greater Wellington Regional Council this week, she said.

"We share a determination to ensure ongoing reliable ferry services and will be engaging with them as we develop a solution that works better for all those with an interest in the inter-island ferry service."

Goldsmith said the government needed to ensure any replacement of the ferries was affordable, "at a time when there are many pressures on government spending".

Willis had last week rejected KiwiRail's request for a further $1.47 billion, which would have brought costs for the project provided by the taxpayer for the project to about $3 billion.

The two new ferries would have doubled the passenger and vehicle capacity, and tripled rail capacity, while reducing the service's carbon footprint by about 40 percent in the short term.

KiwiRail confirmed it would be taking the project back to the drawing board after the request for extra funding was rejected.

The matter has become politicised, with Willis putting the blame for cost blowouts on the project on the previous government, and her predecessor in the role Grant Robertson arguing it was KiwiRail at fault.

He pointed to Labour's rejection of a bid in February for $2.6b, and KiwiRail's claims of a much lower level of risk with the project.

The need for the new ferries has become more urgent after the Kaitaki lost power in Wellington harbour in January, drifting dangerously close to Red Rocks on the capital's south coast in rough evening conditions.

Another, the Kaiārahi, also sustained damage during berthing last month with a metre-long hole ripped in the hull above the water line.

KiwiRail had spent $400 million on its replacement project but construction had not yet started on the new ships, and it is winding up spending on the project.