December 10, 2024 • 7 mins
The Government says it'll set up a new company to procure two new Cook Strait ferries to replace the ageing Interislander fleet.
It's been under pressure to offer alternatives after scrapping plans for rail-enabled ferries and upgraded port infrastructure about a year ago.
Finance Minister Nicola Willis says they'll get two smaller ferries by 2029, but commercial sensitivities mean the cost can't be revealed.
Winston Peters has also been appointed as the Minister for Rail.
Infrastructure NZ CEO Nick Leggett told Matt Heath and Tyler Adams the announcement gives some details on the direction the Government is going for the ferries.
He says it does look a lot cheaper than what was previously announced, and Winston Peters believes in getting a bang for your buck.
It is a good step, Leggett says, but further details will be needed,
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:09):
You're listening to a podcast from News Talks'd be follow
this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
To chat further about this, we're joined by Infrastructure New
Zealand CEO Nick leg at gett A. Nick, nice to
have you on the program.
Speaker 3 (00:23):
Hi, how are you both very good?
Speaker 2 (00:25):
So effectively, Nick, this is an announcement of an announcement,
isn't it. There's not much detail in this particular stand
up from the Finance minister. That's my reading what you're
reading about it?
Speaker 3 (00:35):
Oh, look, it sets the it gives us a bit
more information. It sets the sort of the direction they're
going to how they're going to procure these ferries, and
they've asked that the private sector can put in bids
to that, and then obviously how they're going to structure
the approach. So they're going to get the ferries sorted
(00:55):
and then work on the port side infrastructure. And it
does look a lot cheaper than what was previously announced.
And I think also having Winston Peters's Minister of Rail,
has a good idea. He's passionate about rail, but he
also believes that you've got to get a bang for
your buck and so I think that's I think all
round we like what we hear because safeguards are the
(01:17):
service across the cock Strait. It's got to be safe
and reliable. But we've also we also sent to forget
in these discussions that there is actually a private sector
provider in the form of blue Bridge, that's doing this
work every day. So we don't I think there's been
a lot of fuss made about this over the last year,
(01:38):
but actually what we've got to remember is that the
services has been delivered at the moment by the private sector.
Key we railer is obviously a key component to that.
But we want it to be done efficiently and we
want we don't want to spend we don't want to
write checks that the country can't cash, right, and that's
what this has been about.
Speaker 4 (01:56):
So when she mentions a private sector you know possibilities.
Is she talking about an investment in the fairies or
is the government saying, in your opinion, that they're going
to buy the fairies and potentially look at someone operating them.
What did you take from that?
Speaker 3 (02:12):
I didn't that level of detail wasn't there. What I
took to mean from it was that when they they
put together their proposal for the fairies they buy or build.
The private sector will be invited to put in what
they call an unsolicited bid, which which will mean that
they can't they can come forward and put a solution
(02:34):
on the table to this new entity that's going to
be responsible for that. I didn't get any sense that
there was a sort of a decision made about how
Kiwi Rail's future involvement is going to be. I thought
they might look at something where there was some government
ownership of Kiwi Rail and there might be some sort
of private sector ownership of an entity as well that
that delivered the service. But that, look, that might be
(02:57):
off the table, or it might be yet to come.
But I think those are the sort of the questions
that some of us are going to have in the
months ahead. But look, it's good to get this stair today.
I mean, people do want to know that the this
is a service that is going to be safeguarded. Thirty
billion dollars of goods a year goes across the Cook Strait.
(03:18):
It's the extension of you know, it's a bridge across
between the South and the North Islands, and you know
it keeps New Zealand fed. It keeps our exporters being
able to get their goods to market, and of course
it's great to tourism and just people movement. So I
think we've you know, I think today's a good step,
but we do need to see a little bit more detail.
And as I say, having Winston Peters as Minister of
(03:40):
Rail is good because we you know, rail is important
to our freight task. But there are some true believers
out there that think that it can do everything and
that we should just spend billions and we've we've got
to be more sensible than that.
Speaker 2 (03:53):
These are going to be brand new fairies, Nick. And
there was concern when the i Rex project was canceled
that the second hand ferry market, they just don't exist
out there. There's no Toyota Corollas that are up for sale.
So building these two new fairies, is it your understanding
that it is relatively easy to find a ferry builder
a boat builder within the international space and get that
(04:13):
contract in place pretty quickly.
Speaker 3 (04:16):
Well they did it with Irex right. The problem with Irax,
of course, was that they were very specialized because they
were rail roll on roll offs, you know, rail enabled,
and these new theories won't be that's where the massive
cost was not just for the boats, but actually also
for the for that port side infrastructure. And yeah, there
wasn't a hell of a lot of resilience in what
(04:37):
was proposed. Now I think that you know, there will
of course, there'll be a market they could find. I mean,
the challenge they will have is the same challenge that
New Zealand as a small country has with much of
its infrastructure and what it needs to get built. It's
you know, can they get a competitive price? And that
will be on people's minds, particularly given the fact that
the Irex project was canceled to costs. So I think
(04:59):
we'll be looking to make sure they're getting the best
thing for Keywi Rail and New Zealand's buck.
Speaker 4 (05:05):
So rail freight capability as opposed to roll the trains on.
She was quite clear that she said it would have
rail freight capability. So is that that the trains come up,
you aren't you unload them, load them onto the onto
the ferry and then I unload them onto the trains
at the other end.
Speaker 3 (05:20):
Yes, that's that's that's what That's what she means, and
it's what we've got at the moment, right so and look,
we were the only country in the world they're actually
building rail enabled ferries, so it's not something that you know,
is a particularly contemporary thing to be going for. So
and as I say, it added a lot of cost.
I mean it was going to cost. They estimated about
(05:41):
three billioned Man and the estimate I think I've seen
from David Seymour has said, you know, this is great
because we think it'll be about half that. So but
this is important, right, we don't need we don't need
the flesh's most sophisticated service. We do need something that
feature proof. So we we know that we've got some
you know, resilience in that in there and it's not
(06:01):
going to fail. And actually, you know, safety is really
important across the Crooks Straight as well, so we should
be looking for the safety part of this proposal, you know,
and ensure that that's covered at either end.
Speaker 2 (06:15):
So the big blowout with the i REX project neck
was clearly on those landside operations, the infrastructure for these
new ferrari ferries that were planned. Have you got confidence
that under this plan that those infrastructure needs are not
going to be to the same extent as the previous project.
Speaker 3 (06:34):
I would have confidence because they're not having to build
rail enablement. It's also important who pays, so you know,
like should keep e railvant forking out for infrastructure at
ports which the ports can charge for use and you know,
make money off. So I think it will be important
to see who's going to pay for the port side
(06:55):
infrastructure and how that's going to be brought around. Yeah,
I think lots of questions, and we've got to ensure
that this is an unpleased to hear your services is
going to keep running. The other thing i'd just say
about those rail enabled theories, what was the sort of
(07:16):
the thing that kind of went unreported was that the
first those ferries was going to turn up i think
next year, and there was going to be no port
side infrastructure ready for them. So I mean that would
have been horrific. I mean the lost the lost cost
and you know, the sunk cost and the lack of
productivity the projects would have eaten its head off. So
(07:37):
cancelation actually, when you think about that and you think
about this much lower cost we're actually going to end up,
I think you a head wellyed.
Speaker 2 (07:46):
Nick, great to get your expertise. Thank you very much
for coming on.
Speaker 3 (07:50):
Thanks both that.
Speaker 2 (07:51):
Is Nick Legant Infrastructure New Zealand CEO.
Speaker 1 (07:54):
For more from News Talks B listen live on air
or online, and keep our shows with you wherever you
go with our podcast on iart Radio
You're listening to a podcast from News Talks'd be follow
this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
To chat further about this, we're joined by Infrastructure New
Zealand CEO Nick leg at gett A. Nick, nice to
have you on the program.
Speaker 3 (00:23):
Hi, how are you both very good?
Speaker 2 (00:25):
So effectively, Nick, this is an announcement of an announcement,
isn't it. There's not much detail in this particular stand
up from the Finance minister. That's my reading what you're
reading about it?
Speaker 3 (00:35):
Oh, look, it sets the it gives us a bit
more information. It sets the sort of the direction they're
going to how they're going to procure these ferries, and
they've asked that the private sector can put in bids
to that, and then obviously how they're going to structure
the approach. So they're going to get the ferries sorted
(00:55):
and then work on the port side infrastructure. And it
does look a lot cheaper than what was previously announced.
And I think also having Winston Peters's Minister of Rail,
has a good idea. He's passionate about rail, but he
also believes that you've got to get a bang for
your buck and so I think that's I think all
round we like what we hear because safeguards are the
(01:17):
service across the cock Strait. It's got to be safe
and reliable. But we've also we also sent to forget
in these discussions that there is actually a private sector
provider in the form of blue Bridge, that's doing this
work every day. So we don't I think there's been
a lot of fuss made about this over the last year,
(01:38):
but actually what we've got to remember is that the
services has been delivered at the moment by the private sector.
Key we railer is obviously a key component to that.
But we want it to be done efficiently and we
want we don't want to spend we don't want to
write checks that the country can't cash, right, and that's
what this has been about.
Speaker 4 (01:56):
So when she mentions a private sector you know possibilities.
Is she talking about an investment in the fairies or
is the government saying, in your opinion, that they're going
to buy the fairies and potentially look at someone operating them.
What did you take from that?
Speaker 3 (02:12):
I didn't that level of detail wasn't there. What I
took to mean from it was that when they they
put together their proposal for the fairies they buy or build.
The private sector will be invited to put in what
they call an unsolicited bid, which which will mean that
they can't they can come forward and put a solution
(02:34):
on the table to this new entity that's going to
be responsible for that. I didn't get any sense that
there was a sort of a decision made about how
Kiwi Rail's future involvement is going to be. I thought
they might look at something where there was some government
ownership of Kiwi Rail and there might be some sort
of private sector ownership of an entity as well that
that delivered the service. But that, look, that might be
(02:57):
off the table, or it might be yet to come.
But I think those are the sort of the questions
that some of us are going to have in the
months ahead. But look, it's good to get this stair today.
I mean, people do want to know that the this
is a service that is going to be safeguarded. Thirty
billion dollars of goods a year goes across the Cook Strait.
(03:18):
It's the extension of you know, it's a bridge across
between the South and the North Islands, and you know
it keeps New Zealand fed. It keeps our exporters being
able to get their goods to market, and of course
it's great to tourism and just people movement. So I
think we've you know, I think today's a good step,
but we do need to see a little bit more detail.
And as I say, having Winston Peters as Minister of
(03:40):
Rail is good because we you know, rail is important
to our freight task. But there are some true believers
out there that think that it can do everything and
that we should just spend billions and we've we've got
to be more sensible than that.
Speaker 2 (03:53):
These are going to be brand new fairies, Nick. And
there was concern when the i Rex project was canceled
that the second hand ferry market, they just don't exist
out there. There's no Toyota Corollas that are up for sale.
So building these two new fairies, is it your understanding
that it is relatively easy to find a ferry builder
a boat builder within the international space and get that
(04:13):
contract in place pretty quickly.
Speaker 3 (04:16):
Well they did it with Irex right. The problem with Irax,
of course, was that they were very specialized because they
were rail roll on roll offs, you know, rail enabled,
and these new theories won't be that's where the massive
cost was not just for the boats, but actually also
for the for that port side infrastructure. And yeah, there
wasn't a hell of a lot of resilience in what
(04:37):
was proposed. Now I think that you know, there will
of course, there'll be a market they could find. I mean,
the challenge they will have is the same challenge that
New Zealand as a small country has with much of
its infrastructure and what it needs to get built. It's
you know, can they get a competitive price? And that
will be on people's minds, particularly given the fact that
the Irex project was canceled to costs. So I think
(04:59):
we'll be looking to make sure they're getting the best
thing for Keywi Rail and New Zealand's buck.
Speaker 4 (05:05):
So rail freight capability as opposed to roll the trains on.
She was quite clear that she said it would have
rail freight capability. So is that that the trains come up,
you aren't you unload them, load them onto the onto
the ferry and then I unload them onto the trains
at the other end.
Speaker 3 (05:20):
Yes, that's that's that's what That's what she means, and
it's what we've got at the moment, right so and look,
we were the only country in the world they're actually
building rail enabled ferries, so it's not something that you know,
is a particularly contemporary thing to be going for. So
and as I say, it added a lot of cost.
I mean it was going to cost. They estimated about
(05:41):
three billioned Man and the estimate I think I've seen
from David Seymour has said, you know, this is great
because we think it'll be about half that. So but
this is important, right, we don't need we don't need
the flesh's most sophisticated service. We do need something that
feature proof. So we we know that we've got some
you know, resilience in that in there and it's not
(06:01):
going to fail. And actually, you know, safety is really
important across the Crooks Straight as well, so we should
be looking for the safety part of this proposal, you know,
and ensure that that's covered at either end.
Speaker 2 (06:15):
So the big blowout with the i REX project neck
was clearly on those landside operations, the infrastructure for these
new ferrari ferries that were planned. Have you got confidence
that under this plan that those infrastructure needs are not
going to be to the same extent as the previous project.
Speaker 3 (06:34):
I would have confidence because they're not having to build
rail enablement. It's also important who pays, so you know,
like should keep e railvant forking out for infrastructure at
ports which the ports can charge for use and you know,
make money off. So I think it will be important
to see who's going to pay for the port side
(06:55):
infrastructure and how that's going to be brought around. Yeah,
I think lots of questions, and we've got to ensure
that this is an unpleased to hear your services is
going to keep running. The other thing i'd just say
about those rail enabled theories, what was the sort of
(07:16):
the thing that kind of went unreported was that the
first those ferries was going to turn up i think
next year, and there was going to be no port
side infrastructure ready for them. So I mean that would
have been horrific. I mean the lost the lost cost
and you know, the sunk cost and the lack of
productivity the projects would have eaten its head off. So
(07:37):
cancelation actually, when you think about that and you think
about this much lower cost we're actually going to end up,
I think you a head wellyed.
Speaker 2 (07:46):
Nick, great to get your expertise. Thank you very much
for coming on.
Speaker 3 (07:50):
Thanks both that.
Speaker 2 (07:51):
Is Nick Legant Infrastructure New Zealand CEO.
Speaker 1 (07:54):
For more from News Talks B listen live on air
or online, and keep our shows with you wherever you
go with our podcast on iart Radio
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