Interislander ferries: Should a new entity be set up to run the vessels?

As the government mulls over options for how new ferries could operate, political and industry leaders are weighing in on the debate.

Transport Minister Simeon Brown says the government has received recommendations by an independent advisory group on a range of options for new ferries and how they would operate.

He would not confirm a report by 1News that the advisory group suggested KiwiRail no longer run the ferries, and that a separate entity, like a new State Owned Enterprise, be created.

Brown said Cabinet was considering the report.

Greater Wellington Regional Council chair Daran Ponter has sounded caution over wholesale changes to KiwiRail.

The council is a majority owner of Centreport where the Cook Strait ferries run from.

Ponter told Nine to Noon he had not seen the group's report, although he was interviewed for it.

He believed current options available were either to split up KiwiRail's workload, for example, having them focus solely on running the ferries instead of also portside activities, the government creating a new entity for operations and privatisation.

Ponter said creating a new entity could sound "very attractive initially" but it was likely it would also walk into the same problems.

Running a ferry service on the Cook Strait was not an easy operation, he said.

KiwiRail had some "significantly difficult times" recently with its ships in operation, but usually ran a good service, he said.

"Its sounds like you're sort of just hopeful that in creating a new entity you will get something better than what you've got now.

"Having been in this type of situation, a little bit in the past in our Greater Wellington operations, I can certainly say it's never quite like that.

"Those greener pastures ... they're never quite as green as you think they are."

Ponter hoped the government did not go down the privatisation route after the then-Labour government bought back state control of the operation in 2008.

"I hope that we've put the days of Wisconsin Rail and Toll Rail behind us. It is a period that we are still paying for in New Zealand," Ponter said.

"I'm still in ongoing conversations with the government about rail renewals many which come from that period, a huge lack of [investment]. If we transfer KiwiRail to a private operation, issues will arise in a different way and the government is going to have to be very sure that its contractual arrangements are sufficiently robust to hold the operator to account.

"It is the government after all who has talked about this route being State Highway 1 and being material to [the country] ... and so the thought of it being privatised doesn't bear thinking about at the moment."

Treasury advice on overarching holding company

Earlier this year, the Treasury also provided advice on the creation of one overarching holding company that would own all state assets - not just KiwiRail, but the likes of KiwiBank, Transpower, and TVNZ.

Under that model, KiwiRail and its ferry operations could be separated, but kept under the same umbrella.

But Regulation Minister David Seymour was not sure another layer of management was needed.

"It's not actually obvious what problem that solves, other than the fact that it's been a success apparently in Singapore, which in fairness has quite a different political and economic system from ours. It's something I'm looking into, it's just not something that jumps out at you of having an obvious advantage," he said.

Seymour questioned what taxpayer equity in a company was achieving, if the State Owned Enterprises were not delivering.

"The government has a lot of debt on its balance sheet, it needs to use its capital very, very carefully. And people might ask 'is the taxpayer's best interest served by owning shares in what is really a commercial company', or should that capital be recycled into building more roads, for example?"

Labour, meanwhile, was banging the drum for rail-capable ferries - its transport spokesperson Tangi Utikere said taking one part of the country's transport network out and giving it to a new entity - or privatising it - could kneecap it.

"Setting up a new entity would only serve the purpose of making it look like Ministers are busy doing something, when they aren't fixing the problem. The reality is that six months on, they have no solutions. The ferries are old and the ports on both sides of the Strait are falling apart. The government must invest in rail-capable ferries that are safe, reliable and will last," he said.

Safety, reliability and resilience at core for road freight representative

Transporting New Zealand - which represents road freight companies - said the question of who owned what was not the right debate.

Its interim chief executive, Dom Kalasih, said people just wanted to know their ferry services were safe, reliable, and resilient.

"We need boats that are reliable, we need enough boats so there's enough capacity to service the need of freight and passengers that need to cross the Cook Strait, and we need the cost of those systems [to be] commercially viable," he said.

Kalasih said Transport New Zealand had spoken to the Ministerial Advisory Group (MAG), but not about any proposals of structure, and he had not seen details of what the MAG was reporting to the government.

"I'd hope the work it's done has clearly established why things haven't worked, and if its recommendation is to change ownership because of that, then so be it, but we're not privy to those details."